Financial Markets

Lecturer: Selim MANKAÏ

Université d’Auvergne
Semester 1, 2023

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Learning objectives

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Course content

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Prerequisites and Math

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 References
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Assessment

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 Chapter 1
Overview of the Financial System

Lecturer: Selim MANKAÏ

Université d’Auvergne
Semester 1, 2023

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Learning outcomes

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Economy financing

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Economy financing

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Direct finance

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Costs of direct finance

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Indirect finance

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Indirect finance (Features)

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Decentralized Finance

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Decentralized Finance

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Decentralized Finance

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Financial system: A first definition

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Financial system structure

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Role of the Financial System

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Financial markets

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Examples of Traditional Financial markets

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Structure of financial markets

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Debt and Equity Markets

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Debt Markets

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Equity Markets

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 Money and Capital Markets

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 Primary and Secondary market
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 Primary and Secondary market
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 Exchanges and Over–the-Counter Market

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Financial assets

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Financial Instruments: characteristics

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 Money market instruments
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 Capital market instruments
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Derivatives instruments

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Hybrid instruments

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Financial markets and their economic functions

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Price discovery

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Liquidity

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Risk Sharing

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Financial markets imperfections

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Financial intermediaries

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Types of Financial Intermediaries

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Depository institutions

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Depository institutions (U.S)

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Contractual Savings Institutions

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Investment Funds

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“Other” Financial Institutions

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Types of Financial Intermediaries : summary

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Reasons for Financial Intermediation

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Reasons for Financial Intermediation

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 Asymmetric Information

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Adverse Selection

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Moral Hazard

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Functions of financial intermediaries

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Transform fund efficiently

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Lower transaction costs

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Reduce risk

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Provide liquidity services

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Reduce information asymmetry

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Regulation of the financial system

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Objectives of financial regulation

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Regulatory institutions : missions

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Regulatory institutions : Examples

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To summarize

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Financial Instruments (summary)
Financial Instruments

Direct Investment Indirect Investment

- Investment Funds
Participations;
Money Market: Capital Market - Insurance Policies;
• Treasury Bills; - Pension Funds
• Negotiable Participations.
bank certificates
of deposit;
• Commercial Fixed Income Instr.: Equities: Derivatives:
papers; •T-bonds; •Common stocks; •Futures;
• Banker’s •Municipal Bonds. •Preferred Stocks; •Options;
acceptances; •Corporate Bonds. •GDR. •Swaps;
• Repurchase
Agreements;
• Government
Funds.

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