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Financial Markets and Institutions ppt

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Financial Markets and Institutions ppt

  1. 1. VIVEKANANDA COLLEGE College with Potential for Excellence Reaccredited With ‘A’ Grade (CGPA 3.59 out of 4) by NAAC Residential &Autonomous - A Gurukula Institute of Life Training Affiliated to Madurai Kamaraj University Tiruvedakam West, Madurai-625 214 Tamil Nadu PG and Research Department of Commerce
  2. 2. Vivekananda College Tiruvedakam West Madurai PG & Research Department of Commerce
  3. 3. Financial Markets and Institutions Date: 08.12.2020 (Friday)
  4. 4. Dr.K.CHELLAPANDIAN M.Com., MBA., M.Sc (Psy)., M.Phil., B.Ed., PGDCA., DGT., Ph.D., NET Assistant Professor of Commerce Vivekananda College Tiruvedakam West Madurai
  5. 5. Dr.K.CHELLAPANDIAN M.Com., MBA., M.Sc (Psy)., M.Phil., B.Ed., PGDCA., DGT., Ph.D., NET Vivekananda College Tiruvedakam West Madurai Assistant Prof in Commerce
  6. 6. Financial Markets and Institutions
  7. 7. SEMESTER – IV (For those who join in June 2018 and after) PART – III : Core Course Theory Course Title : FINANCIAL MARKETS AND SERVICES Course Code: 41CT41 Hours per week: 6 Credit: 4 CIA: 25 Marks ESE: 75 Marks Total Marks: 100 UNIT-I [18 Hours] Financial System – Functions - Development of Financial System in India - Financial Markets – Classification –– Financial Instruments – Money Market – Features – Composition of Money Market – Features of Indian Money Market. UNIT-II [18 Hours] Capital Market – Types - New Issues Market – Functions of New Issue Market – Methods of New Issues – Secondary Market – Organisation and Functions of Stock Exchange – Method of Trading in a Stock Exchange -Listing of Securities – Advantages of Listing – Procedure for Listing – OTCEI – NSE – SEBI – Functions of SEBI UNIT-III [18 Hours] Financial Services – Meaning – Fee Based Services – Fund Based Services – Credit Rating Agencies – Mutual Funds – Classification of Funds - Asset Securitisation UNIT-IV [18 Hours] Leasing and Hire Purchase – Housing Finance – Credit Cards – Venture Capital. UNIT-V [18 Hours] Merchant Banking – Services of Merchant Banking – Progress of Merchant Banking in India – Factoring, Forfaiting and Bill Discounting - Benefits – Functions - Drawbacks TEXT BOOK: Gorden and Natarajan., “Financial Markets and Institutions”, Himalaya Publishing House, New Delhi. 2013.
  8. 8. THE FINANCIAL SYSTEM IN INDIA Introduction:  The economic development of any country depends upon the existence of a well organised financial system.  It is the financial system which supplies the necessary financial inputs for the production of goods and services which in turn promote the well-being and standard of living of the people of a country.  Thus, the 'financial system' is a broader term which brings under its fold the financial markets and the financial institutions which support the system.
  9. 9. Introduction….  The major assets traded in the financial system are money and monetary assets.  The responsibility of the financial system is to mobilise the savings in the form of money and monetary assets and invest them to productive ventures.  An efficient functioning of the financial system facilitates the free flow of funds to more productive activities and thus promotes investment.  Thus, the financial system provides the intermediation between savers and investors and promotes faster economic development.
  10. 10. Functions of the Financial System 1. Ensures Liquidity 2. Mobilisation of Savings 3. Settlement of Commercial Transactions 4. Implementation of Economic Policies of Government 5. Risk Transformation Function
  11. 11. 1. Ensures Liquidity The financial system provides liquidity in respect of many financial assets like equity, debt instruments etc. This encourage investors to invest in financial assets. Indirectly this help corporate to raise funds from financial markets through issue of financial instruments. The financial system ensures liquidity for many of these financial assets through strengthening secondary market.
  12. 12. 2. Mobilisation of Savings The financial system encourage individuals, corporate, and others to save for the purpose of economic development. The financial intermediaries play a significant role in mobilization of savings & making available funds to the entrepreneurs for investments. The household & corporate sectors saves through use of different financial products. For example, household sector uses bank deposit products & mutual funds products for the savings.
  13. 13. 3. Settlement of Commercial Transactions The financial system facilitates settlement of commercial transactions & financial claims arising out of sale & purchase of goods & Services. For this money is used as an instrument which is legally recognized. Therefore values of all transactions including sale & purchase of goods and services are expressed in terms of money only. Over a period of time, the financial system has evolved other instruments like cheques, demand drafts, credit card etc. for settlement of economic transactions. These instruments are recognized by law as a substitute for money. In view of this, market participants use new instruments like credit and debit card as well as new facilities like internet banking and mobile banking for settlement of business and commercial transactions
  14. 14. 4) Implementation of Economic Policies of Government The presence of strong financial system helps the Government to frame appropriate economic policies for increasing savings & investment, achieving desired economic growth in industry and agriculture sector, etc. It also facilities government borrowings from the domestic market for meeting planned budgetary expenditures. It also helps Government to attract foreign capital for its investment in domestic market.
  15. 15. 5. Risk Transformation Function The financial system not only facilitates to execute business and commercial transactions but also helps to manage risk in such transactions. On account of deregulation of financial markets, participants are exposed to various market risk. The financial system offers various financial products like derivative etc. to manage risk in commercial transactions. The players who are part of financial system use variety of derivative products or financial contracts like forward futures, options and swaps to manage variety types of risk in commercial and business transactions.
  16. 16. FINANCIAL COMPONENTS An understanding of the financial system requires an understanding of the following important concepts: (i) Financial assets. (ii) Financial intermediaries. (iii) Financial markets. (iv) Financial rates of return. (V) Financial instruments.
  17. 17. Your valuable feedback and questions are welcome to this mail id kchellapandian@vivekanandacollege.ac.in & kc.nithish@gmail.com
  18. 18. Thank You By Dr.K.CHELLAPANDIAN Assistant Professor of Commerce Vivekananda College Tiruvedakam West Madurai – 625 234 Tamil Nadu

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