Editing Financial market (section)

==Raising capital==
Financial markets attract funds from investors and channels them to corporations—they thus allow corporations to finance their operations and achieve growth. Money markets allow firms to borrow funds on a short-term basis, while capital markets allow corporations to gain long-term funding to support expansion (known as maturity transformation).

Without financial markets, borrowers would have difficulty finding lenders themselves. Intermediaries such as [[bank]]s, [[investment banking|Investment Banks]], and [[boutique investment bank|Boutique Investment Banks]] can help in this process. Banks take deposits from those who have [[money]] to save on the form of savings a/c. They can then lend money from this pool of deposited money to those who seek to borrow. Banks popularly lend money in the form of [[loan]]s and [[mortgage loan|mortgage]]s.

More complex transactions than a simple bank deposit require markets where lenders and their agents can meet borrowers and their agents, and where existing borrowing or lending commitments can be sold on to other parties. A good example of a financial market is a [[stock exchange]]. A company can raise money by selling [[Share (finance)|shares]] to [[investor]]s and its existing shares can be bought or sold.

The following table illustrates where financial markets fit in the relationship between lenders and borrowers:

{| border="1" cellpadding=2 width="600" style="margin-left:1em; margin-bottom: 1em; border-collapse: collapse; font-size: 95%;"
|- align="center" style="background:#181818;color:white;font-size:120%;"
| colspan="4" | '''Relationship between lenders and borrowers'''
|- align="center" style="background:#EFEFEF;font-weight:bold"
| Lenders
| [[Financial intermediary|Financial Intermediaries]]
| Financial Markets
| Borrowers
|- align="center"
| Individuals<br>Companies<br>Banks
| Banks<br>Insurance Companies<br>Pension Funds<br>Mutual Funds<br>
| Interbank<br>Stock Exchange<br>Money Market<br>Bond Market<br>Foreign Exchange
| Individuals<br>Companies<br>Central Government<br>Municipalities<br>Public Corporations
|}

===Lenders===
The lender temporarily gives money to somebody else, on the condition of getting back the principal amount together with some interest or profit or charge.

====Individuals and doubles====
Many individuals are not aware that they are lenders, but almost everybody does lend money in many ways. A person lends money when he or she:

* Puts money in a savings account at a bank
* Contributes to a pension plan
* Pays premiums to an insurance company
* Invests in government bonds

====Companies====
''[[Company (law)|Companies]]'' tend to be lenders of capital. When companies have surplus cash that is not needed for a short period of time, they may seek to make money from their cash surplus by lending it via short term markets called [[money market]]s. Alternatively, such companies may decide to return the cash surplus to their shareholders (e.g. via a [[share repurchase]] or [[dividend]] payment).

====Banks====
[[Bankers|Banks]] can be lenders themselves as they are able to [[Money creation|create new debt money]] in the form of deposits.

===Borrowers===

* ''Individuals'' borrow money via bankers' [[loan]]s for short term needs or longer term mortgages to help finance a house purchase.
* ''Companies'' borrow money to aid short term or long term [[cash flow]]s. They also borrow to fund modernization or future business expansion. It is common for companies to use mixed packages of different types of funding for different purposes – especially where large complex projects such as company management buyouts are concerned.<ref>''The Business Finance Market: A Survey'' ISR/Google Books, 2013.</ref>  
* ''[[Government]]s'' often find their spending requirements exceed their [[tax revenue]]s. To make up this difference, they need to borrow. Governments also borrow on behalf of nationalized industries, municipalities, local authorities and other public sector bodies. In the UK, the total borrowing requirement is often referred to as the [[Public sector net cash requirement]] (PSNCR).

Governments borrow by issuing [[Government bond|bonds]]. In the UK, the government also borrows from individuals by offering bank accounts and [[Premium Bond]]s. Government debt seems to be permanent. Indeed, the debt seemingly expands rather than being paid off. One strategy used by governments to reduce the ''[[Value (economics)|value]]'' of the debt is to influence ''[[inflation]]''.

''[[Municipality|Municipalities]] and [[Local government|local authorities]]'' may borrow in their own name as well as receiving funding from national governments. In the UK, this would cover an authority like Hampshire County Council.

''[[Government-owned corporation|Public Corporations]]'' typically include [[Nationalization|nationalized]] industries. These may include the postal services, railway companies and utility companies.

Many borrowers have difficulty raising money locally. They need to borrow internationally with the aid of [[Foreign exchange market]]s.

Borrowers having similar needs can form into a group of borrowers. They can also take an organizational form like Mutual Funds. They can provide mortgage on weight basis. The main advantage is that this lowers the cost of their borrowings.