Financial Institutions & Markets Set-2

Set 2

Financial Industry an evolving industry Different from what it was 30 years ago and what it is today Earlier It had distinct segments-commercial banks, securities firms, insurance industry All segments are distinct in business and they rarely compete with another
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 Instability not there Bank failures and stock market crash rare Foreign institutions and markets not open to international competition and low trading in securities and international trade. Futures market not developed Savings main source of lending Life insurance source of long term saving
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Present System
Financial system segmentation has disappeared Banking, insurance and securities all are being provided together Instability no longer a thing of the past. Bank failures reached epidemic proportions in 1980s;Stock market crash of 1987 was most severe. FIM now globalised; huge cross border trading Principal vehicle for long term trading is pension funds
Set 2

 Need to understand all aspects of financial industry- its products, structure, its purpose and technology used by the sector. The financial intermediaries banks, payments and foreign exchange, insurance, pension plans and mutual funds.
Set 2

Financial Markets
Types and characteristics Market for Government securities Mortgage markets Debt market Equity market Derivatives- futures , options and swaps. Regulations , stability and liquidity of FI
Set 2