The Core Role of Financial Markets
The Core Role of Financial Markets
Financial markets channel funds from savers to borrowers. They match households and firms with surplus money to businesses, consumers, and governments that need finance.
Different financial-market channels perform different roles. In financial intermediation, savers place deposits with banks and banks lend pooled funds to borrowers. In equity markets, issuing firms sell shares to investors, transferring funds from investors to the firms. In forward markets, trading counterparties enter agreements to exchange an asset or make a payment at a future date; these contracts are not loans made from pooled bank deposits.
Step-by-step lessons covering Edexcel A A Level Economics 4.4.1 Role of financial markets for A Level Economics. Each lesson works through exam-style questions in Paper 1, Paper 2 and Paper 3 format. Start with the core supply-and-demand models before moving on to the more evaluation-heavy macroeconomic policy topics.