Course Title:
Development of Financial Markets and Institutions
Course Code: MBA-4333
Text Book: Financial Markets and Institutions by Anthony Saunders
and Marcia Millon Cornett, Tata Mcgraw Hill, Latest Edition.
Prepared by:
Md. Saiful Islam,
Assistant professor,
Dept. of Finance and Banking, University of Barishal
Financial Markets
Overview of Financial Markets
Financial Instruments are :
Financial Markets
• Stocks
• Bonds Financial markets are essentially
• Derivatives marketplaces where the buying and
• Currencies selling of financial instruments
• Commodities happen.
Types of Financial Markets :
• Stock Markets Financial markets can be
categorized based on several
• Bond Markets factors, including the type of asset
• Money Markets traded, the maturity of the
Financial markets
instrument are vs.
(short-term essentially
long-
• Foreign Exchange Market (Forex Market)
marketplaces where
term), and the the platform.
trading buying and
• Derivatives Markets Here are
selling of some commoninstruments
financial types:
• Over-the-Counter (OTC) Markets: happen.
Functions of Financial Market
Financial markets serve several important functions in the economy:
Financial Markets
• Price Discovery
• Capital Formation
• Risk Management
• Liquidity
• Additional Points
Overview of Financial Institution
Types of Financial Institutions:
Financial Institutions
• Banks Financial institutions are the backbone
• Non-Bank Financial Institutions (NBFIs) of any economy, acting as
intermediaries between those with
• Credit Unions
money (savers) and those who need
• Investment Banks
money (borrowers or investors).
• Insurance Companies
Why they do ?
Financial institutions essentially perform four key functions:
Financial Markets
• Mobilization of Savings
• Allocation of Credit
• Management of Risk
• Payment System Facilitation
Importance
Financial institutions play a crucial role in a healthy economy:
Overall, financial institutions are
• Promote Economic Growth essential for a well-functioning
• Financial Stability financial system. They provide a
variety of services that help
• Efficiency
individuals, businesses, and
• Financial Inclusion governments manage their finances
• Choosing a Financial Institution and contribute to economic growth
and stability.
Concept and Difference between bank and non-bank financial
institutions:
Concept :
Financial Institutions
Bank NBFIs
Financial institutions are the backbone
Traditional financial institutions that act (NBFI) is a financial institution that does
of any economy, acting as
as intermediaries between savers and not have a full banking license and
intermediaries between those with
borrowers. They accept deposits from cannot accept deposits from the public.
individuals and businesses and then use
money (savers) and those who need
those funds to provide loans, mortgages, money (borrowers or investors).
and other credit products.
Key Functions of BANK and NBFIs:
Financial Institutions
Bank NBFIsare the backbone
Financial institutions
of • Investment
any economy,
Products acting as
• Deposit Taking
intermediaries
• Insurance between those with
• Loan Providing
money (savers) and
• Consumer Finance those who need
• Payment Services
money (borrowers or investors).
• Leasing
• Microfinance
Regulations:
Bank NBFIs
Heavily regulated by government agencies to
Financial institutions are the backbone
Subject to regulations, but these are
ensure the safety and soundness of the of less
typically any stringent
economy, actingfor as
than those
financial system. These regulations cover banks.intermediaries between depend
The specific regulations those onwith
areas like capital adequacy (having enough money
the type (savers)
of NBFI and and
the those
serviceswho
theyneed
reserves), liquidity (having enough cash on
offer. money (borrowers or investors).
hand), and consumer protection
Globalization of Overview of Financial Markets and Institutions:
Financial Markets
Key Drivers:
• Technological advancements
• Deregulation
• Trade liberalization
• Integration of financial markets
Impact of Globalization:
FinancialofInstitutions
Examples
FinancialGlobalization:
Markets
• Increased Investment Opportunities
• Lower Borrowing Costs
• Economic Growth
• Financial Volatility
• Regulatory Challenges
Examples of Globalization :
• Multinational corporations raising capital in foreign markets through
FinancialofInstitutions
Examples
stock offerings or bonds. FinancialGlobalization:
Markets
• Individuals investing in stocks or mutual funds traded on foreign
exchanges.
• Banks offering financial services in multiple countries.
• The emergence of global investment banks and asset management firms.
The Rise of Fintech
FinTech
Financial institutions are the backbone
Financial technology (fintech) is a rapidly growing sector
of that
anyleverages technology
economy, to
acting as
provide financial services. Fintech companies are playing an increasinglybetween
intermediaries importantthose
role with
in the globalization of financial markets by offering innovative solutionsand
money (savers) thatthose
transcend
who need
geographical boundaries. money (borrowers or investors).
Benefits and Challenges:
Benefits Challenges
• Increased efficiency and • Increased financial volatility and
innovation Financial institutions
risk of contagion are the backbone
of any economy, acting as
• Improved access to capital and • Regulatory challenges in
intermediaries between those with
financial services overseeing a complex global
money (savers) and those who need
• Potential for faster economic system
money (borrowers or investors).
growth • Potential for wider income
inequality
Thank You
