• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
The many roles of financial markets Fatih Ayık

The many roles of financial markets Fatih Ayık






Total Views
Views on SlideShare
Embed Views



0 Embeds 0

No embeds



Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

    The many roles of financial markets Fatih Ayık The many roles of financial markets Fatih Ayık Presentation Transcript

    • Outline
      • Introduction
      • Choice of Consumption
      • The Role of Management
      • Financial Markets and Information
    • Introduction
      • The Growth of Financial Markets
      • The Share of Banks Fall
      • Securities Markets and Financial Derivatives increase
      • The role of banks in the economic system
    • Introduction
      • Securities markets criticized:
      • they are driven by speculation
      • they consume too many resources
      • Financial markets for effective allocation
    • Choice of Consumption
      • Financial markets:
      • Enable to consume and to exchange
      • Allow efficient risk-sharing
      • Two types of risks:
      • Diversifiable
      • Nondiversifiable
    • Choice of Consumption
      • Diversifiable risk can be eliminated
      • Transfer of non-diversifiable risk
      • Financial markets offer an array of financial instruments
    • Choice of Consumption
      • For example:
      • Extremely risk-averse investors may invest to risk-free securities.
      • More risk tolerant investors may invest risky stocks.
      • Intermediate risk preferences may choose a conbination of bonds and stocks.
    • The Role of Management
      • Financial markets enable seperation of ownership
      • A professional maneger can be delegated
      • Managers do not need:
      • to know anything
      • to consult shareholders’ own tastes
      • The Role of Management
      • Managers need :
      • to follow only one objective
      • to invest in projects
      • The Role of Management
      • Managers’ objective:
      • is investing in positive net present value projects.
      • maximizes the market value
      • is in the best interest
    • Financial Markets and Information
      • The stock market ;
      • aggregates the diverse opinions of market participants
      • conveys how much the equity of a company is worth
      • leads to the more efficent use of assets
      • enables poor management to be disciplined
      • Financial Markets and Information
      • Stock price may respond in two ways ;
      • Negative way
      • Positive way
      • Stock price is negative:
      • re-examine calculations
      • re-consider plan
      • Financial Markets and Information
      • Monitoring needs to be done by one party
      • Duplication:
      • may not result in better monitoring
      • would waste resources.
    • Financial Markets and Information Stockholders cannot profitably combine to hire a monitor because of bearing the costs of monitoring to the others.