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Ch.2 Overview of the Financial System - mishkin -part 1 of 2.ppt

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This document discusses the financial system and financial markets. It defines the financial system as the set of financial markets, institutions, and regulatory bodies. It explains that financial markets channel funds from those with excess funds to those needing funds. They promote economic efficiency and improve consumer well-being by allowing better timing of purchases. The document outlines the structure of financial markets, including classification by financial instrument, maturity date, and security issue.

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息 2013 Pearson Education, Inc. All rights reserved. 2-1 Topics include: 1. Meaning of Financial System. 2. Function of financial Markets. 3. Structure of Financial Markets Chapter Preview
息 2013 Pearson Education, Inc. All rights reserved. 2-2 Why Study Financial Markets? Financial System: is a set of Financial Markets, Financial institutions, and Regulatory and supervisory bodies. Financial markets: are markets in which funds are transferred from people and Firms who have an excess of available funds to people and Firms who have a need of funds.
息 2013 Pearson Education, Inc. All rights reserved. 2-3 2. Function of Financial Markets Perform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage of funds. Promotes economic efficiency by producing an efficient allocation of capital, which increases production. Directly improve the well-being of consumers by allowing them to time purchases better.
息 2013 Pearson Education, Inc. All rights reserved. 2-4 Figure 1 Flows of Funds Through the Financial System
息 2013 Pearson Education, Inc. All rights reserved. 2-5 Segments of Financial Markets Direct Finance Borrowers borrow directly from lenders in financial markets by selling financial instruments which are claims on the borrowers future income or assets. Indirect Finance Borrowers borrow indirectly from lenders via financial intermediaries (established to source both loanable funds and loan opportunities) by issuing financial instruments which are claims on the borrowers future income or assets.
息 2013 Pearson Education, Inc. All rights reserved. 2-6 3. Structure of Financial Markets There are several basis for classification of Financial Markets: 3.1 Financial instrument Debt instrument. Equity instrument. 3.2 Maturity Date Capital Market. Money Market. 3.3 Security Issue Primary Market. Secondary Market.

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Ch.2 Overview of the Financial System - mishkin -part 1 of 2.ppt

  • 1. 息 2013 Pearson Education, Inc. All rights reserved. 2-1 Topics include: 1. Meaning of Financial System. 2. Function of financial Markets. 3. Structure of Financial Markets Chapter Preview
  • 2. 息 2013 Pearson Education, Inc. All rights reserved. 2-2 Why Study Financial Markets? Financial System: is a set of Financial Markets, Financial institutions, and Regulatory and supervisory bodies. Financial markets: are markets in which funds are transferred from people and Firms who have an excess of available funds to people and Firms who have a need of funds.
  • 3. 息 2013 Pearson Education, Inc. All rights reserved. 2-3 2. Function of Financial Markets Perform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage of funds. Promotes economic efficiency by producing an efficient allocation of capital, which increases production. Directly improve the well-being of consumers by allowing them to time purchases better.
  • 4. 息 2013 Pearson Education, Inc. All rights reserved. 2-4 Figure 1 Flows of Funds Through the Financial System
  • 5. 息 2013 Pearson Education, Inc. All rights reserved. 2-5 Segments of Financial Markets Direct Finance Borrowers borrow directly from lenders in financial markets by selling financial instruments which are claims on the borrowers future income or assets. Indirect Finance Borrowers borrow indirectly from lenders via financial intermediaries (established to source both loanable funds and loan opportunities) by issuing financial instruments which are claims on the borrowers future income or assets.
  • 6. 息 2013 Pearson Education, Inc. All rights reserved. 2-6 3. Structure of Financial Markets There are several basis for classification of Financial Markets: 3.1 Financial instrument Debt instrument. Equity instrument. 3.2 Maturity Date Capital Market. Money Market. 3.3 Security Issue Primary Market. Secondary Market.