Download presentation
Presentation is loading. Please wait.
Published byJulia Wheeler Modified over 9 years ago
1
Financial Markets & Credit institutions
2
Practice Variety of teaching methodology Students participation Fair grading Care about st Quizz or viva Feedback Course obj completion Motivation & interest in cl Challenging course contents
3
Course assessment? Had you get handbook on time? Course objective explained? Study material covers course objective Variety for teaching like video & case study? Availability of teacher? Thinking skills improvement?
4
Lecture objectives To define financial markets. What are types of financial markets? What are segments of money markets? What are segments of capital market? How national and international financial institutes help economy to grow?
5
Financial Markets Financial markets in which funds are transferred from people who have surplus funds to people who have a shortage of funds. Financial markets thus allow movement of surplus funds from savers to investors. By facilitating transfer of funds, the financial markets contributes to higher production & efficiency in overall economy. Commercial banks, development financial institutions, micro finance, such as leasing companies, investment banks etc. are the examples of financial market in Pakistan
6
Segments of Financial Markets Direct Financing Funds are transferred directly from ultimate savers to ultimate borrowers. Indirect Financing A financial “ intermediary” transforms financial claims with one set of characteristics into financial claims with other characteristics e.g. deposits are used to make loans.
7
Transfer of funds on Financial Markets Surplus Spending Units House Holds Business Firms Governments Deficit Spending Units House Holds Business Firms Governments Finance Markets Financial Intermediaries Direct Financing Indirect Financing Funds
8
Classifications of Financial markets Money Markets Capital Markets
9
Money Markets The flow of short term is facilitated by Money Markets. It basically meets the short term requirements of the borrowers for money and provides liquidity of cash to the lenders.
10
Features of Money Markets Constituent of Money Market Borrowers & Lenders Short term funds like Treasury Bills & Commercial Bills Price in the form of rate of interest Dealers of Money Markets Heterogeneous Market Near Money assets
11
Instruments of Money Market Call Loans Treasury Bills Bankers Acceptance Commercial Bills Collateral Loans Sale / Purchase operations
12
Importance of Money Markets Financing Industry Financing Trade Profitable Investment Self sufficiency of Banks Effective implementation of monetary policy Encourage economic growth Help to the Government Proper allocation of Resources
13
Capital Markets The capital markets deals with the grant of medium term & long term loans. The capital markets thus refers to the institutional arrangements which facilitate the lending and borrowing of medium & long term loans.
14
Categories of Capital Markets Primary Markets Issue of Debt instruments such as a bonds or a Mortgage having a maturity more than one year. Primary markets facilitate the issuance of new securities. E.g. The sale of new corporate stock or new treasury securities. Secondary Markets Raising funds by issuing of equities (shares) by public limited companies. Secondary Markets facilitate the trading of existing securities Equity markets in Pakistan are Karachi Stock exchange, Lahore Stock exchange, Islamabad Stock Exchange. E.g. Sale of existing stock.
15
Securities Traded in Capital Markets Bonds Mortgage Government Securities Mutual Funds Stocks / Shares
16
Functions of Capital Markets Mobilization of equity Capital Savers & Borrowers Saving Incentives Balanced Economic Growth Attraction of Foreign investors Stability in Security prices
17
Difference Between Money Market & Capital Market Types of Loans Instruments of Markets Liquidity Rate Institutions of Markets Commercial Banks
19
Specialized Credit institutions - National Pakistan Industrial Credit & Investment Corporation(1957) PICIC Industrial Development Bank Of Pakistan(1961) IDBP Agricultural Development Bank of Pakistan(1951) ADBP/ZTBL (2002) Investment Corporation Of Pakistan (1966) ICP Small & Medium Enterprise Development Authority SMEDA(1998) House Building Finance Corporation(1952) HBFC
20
Specialized Credit institutions - International International Monetary Funds IMF (1944) International Bank of Reconstruction & Development IBRD(1944) International Development Association (1960)1960 IDA International Finance Corporation IFC Multilateral investment Guarantee Agency (1988) MIGA Islamic Development Bank (1973) IDB Asian Development Bank ADB
21
Important terms Money market Capital market Difference b/w bills and securities KIBOR and its brief function Mortgage, pledge, lien, hypothecation Difference b/w share, debenture.
Similar presentations
© 2024 SlidePlayer.com. Inc.
All rights reserved.