A financial market is crucial for the smooth functioning of the economics of money banking and financial market. Financial market refers to the place where creation and exchange of financial instruments take place.
Usually these are the stock exchanges in countries, but they also include online and distant communication and transactions between buyers and sellers. These include markets for transaction of stocks, bonds, foreign exchange. Money market and capital market are the two broad parts of a financial market. Money market deals mainly with short-term debt instruments such as Treasury Bills, commercial paper,banker's acceptance and certificate of deposits. The maturity period of most of these instruments are less than one year.
Capital market on the other hand mainly deals with equity and long-term debt securities. With a maturity period of more than one year.
