Page 35 - Banking Finance July 2022

ARTICLE

Financial rates of return
Financial Intermediaries
Financial instruments The term financial intermediary includes all kinds of
organizations which intermediate and facilitate financial
Financial Assets transactions of both individual and corporate customers
Capital market intermediaries
In any financial transaction, there should be a creation or
transfer of financial assets. Hence, the basic product of any Money market intermediaries
financial system is the financial asset. A financial asset is one
which is used for production or consumption or for further
Financial Markets
creation of assets.
Generally speaking, there is no specific place or location to
indicate a financial market. Wherever a financial transaction
Classification of Financial Assets
takes place, it is deemed to have taken place in the financial
Financial assets can be classified differently under different market.
circumstances. One such classification is:
Marketable assets Classification of Financial Markets
Non-marketable assets
Unorganised Markets
In these markets there are a number of money lenders,
Marketable Assets: Marketable assets are those which can
indigenous bankers, traders etc., who lend money to the
be easily transferred from one person to another without
public. Indigenous bankers also collect deposits from the
much hindrance. Examples are shares of listed companies,
public.
Government securities, bonds of public sector undertakings
etc.
Organised Markets
In the organized markets, there are standardized rules and
Non-Marketable Assets: On the other hand, if the assets
regulations governing their financial dealings.
cannot be transferred easily,they come under this category.
Examples are bank deposits, provident, funds, pension funds,
These organized markets can be further classified into two.
National Savings Certificates, insurance policies etc.
They are :
Capital market
Yet another classification is as follows:
Money market
Money or cash asset
Debt asset
Capital Market : The capital market is a market for financial
Stock asset assets which have a long or indefinite maturity. Generally,
it deals with long term securities which have a maturity
period of above one year. Capital market may be further
divided into three namely :
Industrial securities market
Government securities market and
Long term loans market

Industrial securities market
As the very name implies, it is a market for industrial
securities namely: (i) Equity shares or ordinary shares, (ii)
Preference shares, and (iii) Debentures or bonds. It is a
market where industrial concerns raise their capital or debt
by issuing appropriate instruments. It can be further
subdivided into two. They are :

BANKING FINANCE | JULY | 2022 | 35