Question

What relationship exists between financial institutions and financial markets? g

Answer 1

Answer:

Access and price relationships

Explanation:

Financial institutions - organizations operating in the financial and credit system. In the interpretation of the Western economic tradition, financial institutions are intermediaries between investors (households) and entrepreneurs (consumers of investments).

Financial markets are mechanisms that enable funds to be transferred from those with excess funds to those with few funds. Financial markets are divided into two as money markets and capital markets in terms of maturity. Money markets are markets where short-term funding supply and demand meet. Here, a short term is a year and a shorter term. Capital markets are the markets where long-term fund supply and demand are encountered. Here, long term is meant for over a year. Financial markets also provide low transaction cost value and prices that reflect the effective-market hypothesis.

We can think of basic relationships. The first concerns about the access. Financial institutions provide access to financial markets on behalf of investors seeking financial assets, such as institutional investors. The second relationship can often be claimed as "price." Financial asset prices (traded in financial markets), research and trading activities in financial assets, the actual cost or price of a particular asset affect the performance of financial institutions that affect the market outlook. For example, if a financial institution holds a significant stake in a particular company, it is a sign of markets (good or bad) and ultimately affects the price that a company is willing to pay for a financial asset. (e.g. stocks, bonds, etc.).