Finance has tremendous impact on the economy of country
Finance is a movement of money in form of money fund from higher authority to the last end people standing for getting finance. Importance of finance markets on economy development of country has increased in modern market situation because finance has tremendous impact on the economy of country. Importance of financial markets on economy development finance has tremendous impact on economy of country.
Country economy efficiently growth happened when their population saving more money after spending on demand full filling and proper cashflow maintained coming from outside to inside of economy. Finance help to maintain efficiently flow of money and investment in the economy of country.
Country economy totally dependent on proper cashflow inside domestic market. Investors showed interest on India market because India market have an great potential of growth. Foreign direct investment (FDI) brought more inflows of money, technology and skills to country domestic market. FDI positive impact in form of finance has tremendous impact on the economy of country.
Finance has tremendous impact on the economy of country because financial system affects the economic development of the country. Well developed country financial system improve the efficiency of financing decision making.
Government of India taking many steps to boost up the economy of the country by increasing investment flow inside economy.
Investment in economic learning means financing particular buisness pattern and believe to gain inflation beating higher return in longer time duration. Investment is a part of finance and always remember investment is subject to market investment risk or market risk.
In well developed country like United States, Great Britain, Germany, and Russia etc has smooth running of financial markets which play an important role in development of economy of the country.
How does financial system affect the economy
Market place where various types of bonds, equity, shares, securities are buying and sold by investors known as financial markets. There are various types of financial sector inside markets where few financial sector markets do their economic activities in trillion dollars.
Financial system affect the economy directly by enabling risk diversification accross firms and industries. Allocation of resources influenced by financial system and hence economy growth of country achieved.
Investors keeping in mind 12 types of investment risk get a complete chance to earn more profit as in form of high return in comparison with bank return. Earlier investors go to bank for investing their savings but when financial markets comes in market investors now prefer to invest their savings in financial markets. Rate of interest earned by investors in fixed accounting period from financial markets much higher than bank return achieved by peoples.
Financial market make market integration interlinked with saving and investment. Interlinked saving and investment helped in creating wealth.
Long-term and short-term economy can be managed to calm down economy and increase rate of economic development of country.
Growth and proper financial functioning of a country totally dependent on important role in financial market. Benefits of financial markets in development of economy shown by maintaining proper flow of savings and investments inside market.
Proper continue movement of savings and investments inside economy results in proper utilisation of opportunity cost or capital and helpful in production of goods and services.
Which finance has tremendous impact on the development of the country economy
Finance has tremendous impact on the development of the country economy can be understood with help of an example of any particular economy of a country.
In case of developing countries like India, major finance coming inside in form of FDI ( foreign direct investment). Foreign direct investment as finance has tremendous impact on the development of the country economy. FDI brings more cashflow inside country economy from outside countries of the world.
Finance provide essential money supply at perfect time to any business, helped a lot to run buisness efficiently.
Every country of the world now interlinked with eachother and have investment of one country people on the business of the foreign country.
Every country economy has different types of finance impact on the development of the economy.
Finance brings domestic inflow of cash inside country economy. Finance tremendous impact can be seen by building new buisness inside country economy. Country economy growth only happens when country domestic buisness shows positive economic growth.
How is finance related to economics
Financial market term used in economics which tells us about a market place where buying of security occurred. Capitalist economy grow efficiently under financial market because trade of all types of securities and bonds are occurred.
Finance related to economics in a way of managing money of the company, individual, creating budget and forecasts in efficient manner to make economy balanced.
Finance related with eoconomics because economics concerned with study financial markets, as well as flow of goods and services inside nation economy.
Lets understand role of financial markets with an example, finance market place where trading of securities and bonds are done.
Financial market increase liquidity of market and reduce risks for investors. Investors and traders in financial market remain safe from many types of investment risks inside financial market because major benifits of financial markets is that all collected data publicly available for investors and traders.
Financial market like share market, commodity market and bond market etc can identify and manage economy for calm down and help to grow buisness by earning huge profit from inventory.
How does financial system affect the economy
Running any type of business and organization finance has tremendous impact on the economy of country. Financial system play an important role in economy development because any business and organization finance by financial institutions.
Financial institutions finance provided to buisness and organization leds to increase in production activities and economic development rate also increased.
This is clearly shows financial system affect the economy of country because high economic development of buisness and industries inside country directly play important roles in development of economy growth of country.
After getting financial support from financial systems to buisness and industries shows high economic activities growth rates and generate lots of employment opportunities for skilled professionals.
9 Types of financial markets
There are nine type of financial markets working all over world like stock market, capital market, money market, bond market, secondary market, primary market, derivatives market, commodity market, future exchange.
Capital market - Financial market
Capital market is market place where proper cash-flow maintained throughout financial activities. Capital market helped to mobilize long term saving money and finance longer duration investment. Capital is an important type of financial market.
Long and medium term equity and debt trading are done by making institutional setup inside capital market.
Financial assets can be sold by investors inside capital financial market because it provided liquidity in selling of assets. SEBI is main authority which controls and manage as functions of capital market. SEBI work for infrastructure development of economy of a country.
After selling of liquidity assets investors encourage for buying of long term assets used as productive also taken ownership by investors inside capital market.
Investors inside capital market act as participant ranges from retail investors to large sized financial entity.
Investors made classification of capital market in two types such as primary market and secondary market.
Primary market - Financial market
Primary market is a important classification of capital market which is type of financial market. Primary market play important role in economic development of fresh issued buisness. Primary market is sub category of capital market.
Long term funds procurement with new shares and bonds are present in primary financial market.
Secondary market- Financial market
Secondary market is one type of category of capital market which are studied under financial market. Secondary market also known as stock market.
Secondary market consists of long term securities buying and selling. Secondary market further consists of two components like over the counter market and exchange trade market.
Money market - Financial market
Money market considered as more liquidating market. Maturity period of money market equal and less than 1 year. Money market used by investors for short period of debt.
Investment risks are very less in money market because time period of investment of investors are done for short period of time.
Market place where securities and bond are buying and selling done large quantity is called money market. Money market is type financial market.
Assets brought for buying and selling inside money market are considered as risk free. Instruments used in money market are repo rate, call money market, certificate of money, certificate of deposit and etc.
Investors inside money market take part are large size financially strong entity like banks and mutual funds.
What do you mean by equity financing
Equity market play role important in economy development of of a country. Equity market also known as share market. Inside equity market investors buying and selling share of different companies.
Investors in equity financing buy any company share when particular company share price less than intrinsic value of particular company.
Financing in equity market means when company sell their stake in form shares to bring high investment in form of money. Investors earning profit in equity financing by buying share of any company at lower price than selling it higher price.
Investors can also hold any good growing company shares to grow their wealth with the help of power of compounding.