Financial Markets – Means to Foster Economic Development
Financial markets are efficient means to direct savings and investments in the economy. It helps in to facilitate the accumulation of capital that is required for the production of goods and services. The availability of well-developed financial institutions and markets which present diverse financial products will help address the financial needs of both lenders and borrowers alike. Together the financial markets and institutions contribute to the growth and development of the economy.
Large financial markets provide a ready market for these securities thereby providing more liquidity and marketability. Most developed countries have advanced financial markets that deal in sophisticated instruments. A well-developed financial market in a nation suggests that it is a prosperous nation. The existence of a robust financial market also facilitates international flow of funds between nations.
With the availability of efficient financial system borrowers and lenders need spend less cost and time to get their financial needs met. Individuals, entrepreneurs, and governmental organizations can easily find sources to raise and invest their capital. The ready market for the financial products helps the participants compare the cost involved or the return on the investments among the different institutions. This allows them to choose the best-suited option.
In developing countries, the financial markets are not so advanced and hence they have access to limited financial products. As a result is it is difficult to raise the capital required for the economic activities. The cost of raising capital is more and the return on the investment is comparatively low. With lesser options for investment and capital raising, the growth of the economy is at a slower pace. However some of the developing or emerging markets are presenting a profitable outlook by adopting the sophisticated financial system and liberal foreign investment policies. Most international players are concentrating on the emerging economies as they present profitable opportunities.
With financial markets providing better means of managing the risk in investing more people and institutions come forward to explore new options for investments. This further provides more mobility to capital required for the production of goods and services. New investment options will also alternately provide more returns to the investors which will lead to more purchasing power in the hands of consumers. This will again mean that they will either re-invest or use it for consuming other goods. Thus it will foster further development in the economic activity.
Investing in cryptocurrency is the new trend in the financial markets that provide the investors with trading opportunities in the virtual currency markets. Bitcoin Trader is one such online trading website that enables traders earns a profit without having to deal with the technicalities of trading complex instruments.