Capital market and money market pdf

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capital market and money market pdf

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Comparison Study between Money and Capital Market Comparison Study between Money and Capital Market

This study is a comparative analysis of the effects of money and capital markets on the Ghanaian economy covering the period from to using the dynamic Auto Regressive Distributed Lag ARDL framework. Empirical results confirmed the existence of a unique and stable long-run relationship between the money market, capital market and economic growth. In respect of money market indicators, findings confirmed that monetary policy and treasury bills rate have had negative but significant impact on growth in the short- and long-run respectively. More so, total liquidity negatively and significantly influenced the Ghana-ian economy both in the short- and in the long run. Both market capitalisation and total value of stock traded, as proxies of capital market, had positive and significant effects on short-run growth, while both indicators as well as stock market turnover negatively and insignificantly affected long-run growth. The lesson relearned is that the money market propels the Ghanaian economy better than the capital market.

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The money market is a component of the economy which provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As money became a commodity , the money market became a component of the financial market for assets involved in short-term borrowing , lending , buying and selling with original maturities of one year or less. Trading in money markets is done over the counter and is wholesale. There are several money market instruments in most Western countries, including treasury bills , commercial paper , banker's acceptances , deposits , certificates of deposit , bills of exchange , repurchase agreements , federal funds, and short-lived mortgage- and asset-backed securities. Money market funds typically invest in government securities, certificates of deposit, commercial paper of companies, and other highly liquid, low-risk securities. The four most relevant types of money are commodity money, fiat money, fiduciary money, and commercial bank money.

The capital market is defined in the article as a system of transactions for the purchase and sale of financial assets, which include securities.

Financial market

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The primary role of the capital market is to raise long-term funds for governments, banks, and corporations while providing a platform for the trading of securities. Money Market is a market for short-term financial assets that can be turned over quickly at a low cost. A short-term financial asset in this context may be construed as any financial asset which can be quickly converted into money with minimum transaction cost within a period of one year.

Capital market

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A capital market is a financial market in which long-term debt over a year or equity -backed securities are bought and sold. Securities and Exchange Commission SEC oversee capital markets to protect investors against fraud, among other duties. Modern capital markets are almost invariably hosted on computer-based electronic trading platforms ; most can be accessed only by entities within the financial sector or the treasury departments of governments and corporations, but some can be accessed directly by the public. As an example, in the United States, any American citizen with an internet connection can create an account with TreasuryDirect and use it to buy bonds in the primary market, though sales to individuals form only a tiny fraction of the total volume of bonds sold. Various private companies provide browser-based platforms that allow individuals to buy shares and sometimes even bonds in the secondary markets.

Let us now see the main functions of financial market. Organization or Financial institutions having short term money requirement less than one year to meet immediate needs like buying inventories, raw material ,paying loans come to Money Market. It involves lending and borrowing of short term funds. Money market instruments like treasury bills, certificate of deposit and bills of exchange are traded their having maturity less than one year. Investment in money market is safe but it gives low rate of return. Money Market is regulated by R.

Money Market vs Capital Market


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