The role of financial markets

The role of financial markets

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Financial markets ensure that the currency is at the right place which gives strength to the economy. One of the roles of financial markets is that they mobilize and channel savings into more productive and useful ways. Financial markets give force to the saving of many individual by taking the money to where it is needed. The currency is therefore transferred from one side to another to ensure that it has been used giving the investors time and permission to invest in any way possible. In this case, investment institutions are responsible to perform different services to the people. The investment institution acts as the intermediate between the issuer and the investing public. They also act as the brokers for those clients using the institution. In every economy, there is need of the investment projects because many people would like to secure their savings in these projects (Stiglitz, 2009).

Investment banks have got a responsibility of offering some of the saving packages which have reasonable savings. The investment banks also provide ideas and researched advice to the bankers so that they can be able to provide adequate duration for the savings with the longer maturity. In addition, investment banks have the responsibility of mobilizing the funds in those underdeveloped countries. There is need to include those non-financial institutions to mobilize and also channelize the corporate funds because investment banks are not enough. As these institutions continuously grow, they mobilize the funds by acting as the intermediate between the issuers and the public whereby they give the funds as loans in order to benefit the economy. The most important thing the investment banks do to the economy is that they provide guidance to the people (Stiglitz, 2009).

References

Stiglitz, J. E. (2009). Financial markets and development. Oxford Review of Economic Policy, 5(4), 55-68.