What are financing methods and financial market participants?

In this article, we continue the series of financial investments with a discussion of financing methods and financial market participants in macroeconomics.

I. Financial Markets

The health and functioning of the economy is affected by many components, none of which is more important than the segment known as financial markets. The financial markets influence growth, prices, the exchange rate and the distribution of wealth and income. For the economic system to function well, money must flow from those who have it (the savers) to those who need it (the borrowers).

1. Direct Funding

The borrower goes directly to the investor to borrow money.

2. Indirect funding

Indirect funding uses a financial intermediary or middleman to provide the funds, e.g. B. Funds flow from savers to financial institutions and then to borrowers.

II. Participants in the financial markets

There are four main participants

1. The Central Bank

The central bank is the federal government’s bank and has the following roles in the financial market:

a) Is the lender of last resort.

b) Supervises and implements monetary policy.

c) Preserves the value of the dollar.

2. Deposit Agent

The deposit brokers include the following institutions:

a) Banks

b) credit unions

c) Mortgage and loan companies.

d) Mortgage and loan agencies.

3. Contracted Savings Agents

Contractual savings brokers come in the form of:

a) Life insurance companies.

b) pension funds.

c) property and casualty insurance companies

d) State pension plans.

4. Investment Intermediary

Investment brokers include:

a) investment fund companies,

b) Investment Dealers.

c) consumer credit companies.

d) corporate finance companies.

I hope this information helps. If you would like more information on the above topic, you can find this series of articles on my homepage: