In common parlance, a market is an area where trading transpires. Whenever we take into consideration markets, a picture that flashes across our minds is of any place that is very busy, with buyers and sellers, some sellers, shouting on the top of their voice, looking to convince customers to get their wares. A place abuzz with vibrancy and energy.
In early stages of civilization, individuals were self-sufficient. They grew everything they needed. Food was the key commodity, which is quite easily grown within the backyard, and also for the non-vegetarians, jungles were open without having any restrictions on hunting. However, with the creation of civilization, the requirements every being grew; they needed clothes, wares, instruments, weapons and lots of other items which may not really easily made or manufactured by a person or family. Hence, the need of a common place was felt, where people that got a commodity to give and the people who needed that commodity, could gather satisfy their mutual needs.
With time, the manner that the markets functioned changed and developed. Markets became a lot more sophisticated and specialized in their transaction in order to save time and space. Different types of markets came into being which focused on a unique form of commodity or transaction. In today's world, you will find markets which meet the needs of the requirements manufacturers, sellers, ultimate consumers, kids, women, men, students and what not. For your discussion of your topic in front of you, the different types of markets which exist from the modern might be broadly considered goods markets, service markets and financial markets. The current article seeks to give a look at Financial Markets.
Just What Is A FINANCIAL MARKET?
According to Encyclopedia II, 'Financial Markets' mean:
"1. Organizations that facilitate trade in financial products. i.e. Stock Exchanges facilitate the trade in stocks, bonds and warrants.
2. The coming together of buyers and sellers to trade financial product i.e. stocks and shares are traded between sellers and buyers in many different ways including: the utilization of stock exchanges; directly between buyers and sellers etc."
Financial Markets, as the name suggests, is a market where various financial instruments are traded. The instruments which might be traded of these markets vary in general. They actually are tailor-made to suit the requirements of various people. At the macro level, individuals with excess money offer their cash to individuals who want it for investment in various kinds of projects.
To make the discussion simpler, let's take aid of an illustration. Mr. X has Rupees 10 lacs as his savings which happens to be lying idle with him. He desires to invest this money to make sure that over a duration of time he could multiply this amount. Mr. Y would be the promoter of ABC Ltd. They have an enterprise model, but he lacks enough financial way to start up a company. So in this scenario, Mr. Y can use the money that may be lying idle with individuals like Mr. X and start a firm. However, Mr. X is often a person in Kolkata and Mr. Y could be in Mumbai. And so the problem in the present scenario is how does Mr. Y arrived at understand that a definite Mr. X has money that he is willing to purchase a venture which is just like the one which Mr. Y wishes to start?