The Economic Development Of The Financial System Essay

The overall development of an economy is a major factor that has significant impacts on the development of the economy's financial markets. Since well-functioning financial systems offer good and easily accessible information, they lower the costs of transaction. This in turn enhances resource allocation and strengthens economic growth. The financial services industry consists of various systems such as stock markets and banking systems that enhance growth and help in poverty reduction. However, commercial banks tend to dominate the financial system during low levels of economic development while stock markets become more active and effective during periods of high levels of economic development ("Financial Sector", n.d.). The other important systems in the financial services industry include sound macroeconomic policies, shareholder protection, and good legal systems.

1. Using the five forces framework, how would you characterize the competition in the luxury goods industry?

The New York Stock Exchange is an auction market, and it has a physical location.

Financial and Monetary Economics ‘‘Should we consider the Stock Market an efficient market.’’ In theory the Stock Market is said to be efficient as stock prices should follow a random walk, which, means that stock price changes should be random and unpredictable, If stock prices were predictable then this would prove that the stock market is inefficient as this implies that all available information was not already impounded in stock prices. Hence the notion that stock prices reflect all available information is known as the efficient market hypothesis (EMH). It was Professor Eugene Fama who created the term EMH, in his paper ‘Efficient Capital Markets’ and claimed that in efficient markets

Capital Markets including stock markets and bond markets, commodity markets, money markets, futures markets, insurance markets, foreign

A stock market is also known as an equity market. A market is an open market for the trading of company-held stock as well as their derivatives at a consented price. It is a large network of several thousands of money-making transactions. It does not have a physical existence as an entity. But at one fell swoop the stocks are listed on an actually accessible unit known as the stock exchange.

An equity market is the general place where stocks are sold. The New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations System (NASDAQ) are two examples of equity markets. The market in which shares are issued and traded, either through exchanges or over-the-counter, is also known as the stock market. Investors bid for stocks by offering a certain price, and sellers asking for a specific price. When these two prices match, a sale occurs. Trading in the equity market is the cornerstone of a capitalistic economy because it helps facilitate capital formation and liquidity for entrepreneurs and businesses.

In general, stock markets provide two basic functions. They serve as a primary market and as a secondary market. It is worth keeping in mind that stock markets could not serve as a primary market if they did not serve as a secondary market. The primary market function refers to a market where investors first have the opportunity to acquire a security. A company that goes public for the first time during its initial public offering (IPO) is selling on the primary market, meaning that the buyers are the first buyers of those particular shares (Investopedia, 2012). On the primary market, stocks are sold by the company to investors, usually through an intermediary like an investment bank.

In the past two decades, economic analysts and policy makers have recognized that the financial system can significantly contribute to economic growth. Observing the changes that have taken place, a result has arisen that a liberalized financial sector operating in a competitive, open environment with market-based supervision based on international norms, is the best contribution to economic development. The new market-based paradigm for the design of financial systems contrasts with earlier thinking about the appropriate role for official intervention in the financial system. In the past, financial institutions, especially banks, were considered "special" entities in which it was appropriate for governments to intervene regularly in detecting a wide range of economic and social objectives . While, in earlier times, the financial sector differentiated strongly among countries and influenced by national rules .

I. Securities Markets A) Types of Securities Markets 1. The Primary Market a. Going Public: The IPO Process b. The Investment Banker’s Role 2. Secondary Markets B) Organized Securities Exchanges 1. The New York Stock Exchange a. Trading Activity b. Listing Policies 2. The American Stock Exchange 3. Regional Stock Exchanges 4. Options Exchanges 5. Futures Exchanges C) The Over-the-Counter Market 1. New Issues and Secondary Distributions 2. The Role of Dealers 3. Nasdaq 4. Alternative Trading Systems D) General Market Conditions: Bull or Bear Concepts in Review II. Globalization of Securities Markets A) Growing Importance of International Markets B) International Investment

The article is discussing of bank deposits and loans in the monetary transmission mechanism. It would lead the financial system to achieve monetary stability and creation of sound financial structure.

The world is confronting a period of changing inconspicuous some time recently. The retreat and the

The Great Reversal is a compelling paper written by Raghuram Rajan and Luigi Zingales exploring the facilitation of financial systems in financial development. The paper asks the question; why financial systems have appeared to be repressed despite the correlation between financial systems and financial development. The paper explains that historically not all countries have pursued policies that have encouraged financial development, it develops a political and social theory which explains how

Firstly we need to define what a market is, it is in its simplest form a place where buyers and sellers meet. We also need to understand that there are various forms of markets; commodities markets, money markets, virtual markets and bond markets to name a few. Kohi and Jawarski (1990) “the literature pays little attention to the contextual factors that may make a market orientation either more or less appropriate

For example, some insurance companies allowed brokers to keep premiums for as much as a year before remitting them to the insurance companies. The brokers invested these premiums and earned interest on them, and this gave them an incentive to steer business to these companies rather than to insurance companies whose policies might be better for the brokers’ clients.