Financialmarkets are the transactions and business deals that are conducted bykey players who demand and supply funds for various purposes(Mishkin, 2015). Financial markets have a great role when it comes totheir intensive contribution towards the health and efficiency of theeconomy. For the development and growth of the economy, a positiveand significant input from the financial market is necessary. Positive inputs that are drawn from primary financial markets includethe increment in the level of savings and investments, accumulationof capital, and increased production of goods and services. Theseaspects, in turn, contribute to the economic growth of a country.
Secondarymarkets refer to the markets that deal with the trading and ownershipof securities. An example of secondary markets is the New York StockExchange. Enormous and beneficial investments are made which directlycontribute to the growth of the economy. The benefits accrued to theeconomy from secondary markets are measured regarding how muchsavings are made in the form of securities. The transactionsconducted from the exchange of securities accrue as profits to theoverall economy.
Therelationship between financial institutions and financial markets isthat the participants from the intuitions invest through thefinancial markets, thereby, enabling growth in the overall economy.The key players in the financial institutions include governments,individuals, corporations, businesses, and companies. Thecontributors in the financial institutions, for instance, businessesand corporations tend to save more, thereby, raising the economicstandards of a country. Some of the players like governments tend toborrow more than they save (Mishkin, 2015). Relationships between thefinancial institutions and markets can be enhanced through positiveinteractions among the institutions which take part in financialmarkets by supplying and demanding funds.
Mishkin,F. S. (2015). FinancialMarkets and Institutions.Upper Saddle River (New Jersey): Pearson Education Limited.