Financial Markets
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Financial Markets
What you learn in the topic:
Financial Products – Shares
Financial intermediaries – banks
Reserve Bank of Australia
Government-
Interest rates (cash rates)
Australian Securities Exchange (ASX)
Stockbroker
Borrowing/lending
Exchange rate
Non-financial intermediaries - Insurance comp
Currency
Money supply
The Role of the Financial Markets
Financial markets perform the essential economic function of channelling funds from those with excess funds (savers), to those who have a shortage of funds (lenders).
Financial intermediaries are firms that receive the accumulated funds of savers, and then make loans out to lenders.
Sources of saving
The proportion of household income not consumed on goods and services. Y = C+S
Profits retained by business. Generally private firms.
Government budget surpluses.
Funds from overseas lenders.
Reasons for borrowing
Consumer borrow to pay fro excess consumption or finance large purchases such as a house or car.
Business borrow to finacne expansion.
Government borrow to finance a budget deficit.
Australian financial institutions lend money to overseas borrowers.
Factor Market for capital
Capital (Money capital is required by businesses as an input into the production process to make good and services.
Savings from various sectores is not only used for futures consumption, but also to invest in captal, which increase the productive capacity of the economy .
The Financial Sector
Consists of a wide frange of financial institutions.
Employs around 400,000 people.
Provides may different services including; Mortgages, credit cards, personal loans, superannuation, insurance and investment advice.
It contributed $130 billion to GDP (gross domestic product) 2010-2011. E.g. mining and tourism
Primary Financial Markets
Is where financial securities such as debt, shares,...
What you learn in the topic:
Financial Products – Shares
Financial intermediaries – banks
Reserve Bank of Australia
Government-
Interest rates (cash rates)
Australian Securities Exchange (ASX)
Stockbroker
Borrowing/lending
Exchange rate
Non-financial intermediaries - Insurance comp
Currency
Money supply
The Role of the Financial Markets
Financial markets perform the essential economic function of channelling funds from those with excess funds (savers), to those who have a shortage of funds (lenders).
Financial intermediaries are firms that receive the accumulated funds of savers, and then make loans out to lenders.
Sources of saving
The proportion of household income not consumed on goods and services. Y = C+S
Profits retained by business. Generally private firms.
Government budget surpluses.
Funds from overseas lenders.
Reasons for borrowing
Consumer borrow to pay fro excess consumption or finance large purchases such as a house or car.
Business borrow to finacne expansion.
Government borrow to finance a budget deficit.
Australian financial institutions lend money to overseas borrowers.
Factor Market for capital
Capital (Money capital is required by businesses as an input into the production process to make good and services.
Savings from various sectores is not only used for futures consumption, but also to invest in captal, which increase the productive capacity of the economy .
The Financial Sector
Consists of a wide frange of financial institutions.
Employs around 400,000 people.
Provides may different services including; Mortgages, credit cards, personal loans, superannuation, insurance and investment advice.
It contributed $130 billion to GDP (gross domestic product) 2010-2011. E.g. mining and tourism
Primary Financial Markets
Is where financial securities such as debt, shares,...