Channelling Funds Through the Economy
Channelling Funds Through the Economy
Financial markets channel funds from savers, who have surplus money, to borrowers, who need money for consumption or investment. This allows funds that might otherwise remain idle to be used elsewhere in the economy.
In equity markets, firms issue equities that are bought by investors. Funds paid by investors flow, via the stock market, to the issuing firms, while equities flow from firms to investors.
Step-by-step lessons on Edexcel A A Level Economics 4.4.1 Role of financial markets. Each one builds up to exam-style questions. Start with the core supply-and-demand models before moving on to the more evaluation-heavy macroeconomic policy topics.