The document provides information about money markets and capital markets. It defines money markets as markets for lending short-term funds using instruments like commercial bills, government securities, and bankers' acceptances. It then discusses various components of money markets like call money markets, functions like transferring funds and implementing monetary policy, and characteristics of developed versus underdeveloped money markets. It also discusses capital markets, where individuals and institutions trade financial securities, and their roles in mobilizing savings and encouraging economic growth.

1. Money Market
The organization for the lending of short-term fund,
through the use of such instruments as commercial
bills of exchange, short-term government securities
and bankers acceptance.

2. Functions of Money Market
•
transfer of large sums of money
•
transfer from parties with surplus funds to parties with a deficit
•
allow governments to raise funds
•
help to implement monetary policy
•
determine short-term interest rates
•
Medium to control creation of Credit

3. Composition of Money Market
Call Money
Market
Collateral
Loan Market
Acceptance
Market
Bill or
Discount
Market

4. Financial institutes of Money Market
The Central
Bank
Commercial
Bank
Institutional
Investors
Private
Individuals,
partnership
and
Companies

5. Characteristics of a Developed Money Market
Highly organized commercial Banking System
Presence of a Central Bank
Availability of proper Credit Instrument
Existence of a number of sub-markets

6. Usefulness of a Developed Money Market
Financing in Industry and Commerce
Investment of short-term Funds
Help to the Central Bank
Help to the Government

7. Structure of Money Market

8. Characteristics of Money Market
Lacking's of short term assets
No intermediaries between the Gov. and banking system
Doesn’t contain any sub-markets
Deficit of proper between different sectors of Money Market
BB has lack of enough power to control Money Market

9. Defects of Money Market
•
Loose and Disjoined Structure
•
Wasteful Competition
•
•
•
Shortage of Capital
Inadequate Banking Facilities
Seasonal Shortage of Funds
•
Disparity in Interest rates in
Different Centers
•
Undeveloped Bill Market
•
Inelasticity and Instability
•
Absence of Sub-Markets
•
Insensitive to International
Influence

10. Measure for Improvement of the Money Market
•
Steps has been taken to establish relations between indigenous bankers
and commercial banker
•
Reducing monetary shortages through open market operations
•
Diversifying the Market
•
Access to bill rediscounting market increasingly

11. Suggestion to remove defects
•
The activities of the money lender and chit fund should brought under
control
•
Banking facilities should be extended, especially in the unbanked and
neglected areas
•
The number of clearing house should be increased
•
Adequate and easy remittance facilities should be provided to the
businessman
•
Harmony between sub-markets and co-ordination of their activities
must be achieved

12. Recent innovations in the Money Market
•
91 days T- bill
•
182 days T- bill
•
364 days T- bill
•
2 years T-bond
•
5 years T-bond
•
10 years T-bond
•
20 years T-bond

13. The Repo Market
Repo is a money market instrument which helps in collateralized shortterm borrowing and lending through sale/purchase operations in debt
instrument. Under a repo transaction, securities are sold by their holder
to an investor with an agreement to purchase them at a predetermined
rate and date.

14. The Commercial Bill Market
The Commercial bill market is the sub-market in which the trade bills or
the commercial bills are handled. The Commercial bill is a bill drawn by
one merchant firm on the other. Generally, Commercial bills arise out of
the domestic transactions. The legitimate purpose of a commercial bill is
to reimburse the seller while the buyer delays payment.

15. The Certificate of Deposit Market
A Certificate of Deposit (CD) is a time deposit with a bank. CDs are
generally issued by commercial banks but they can be bought through
brokerages. They bear a specific maturity date (from three months to five
years), a specified interest rate, and can be issued in any
denomination, much like bonds. Like all time deposits, the funds may not
be withdrawn on demand like those in a checking account.

16. The Commercial Paper Market
In the global money market, commercial paper is an unsecured
promissory note with a fixed maturity of no more than 270 days.
Commercial paper is a money-market security issued (sold) by
large corporation to get money to meet short term debt obligations (for
example, payroll), and is only backed by an issuing bank or corporation's
promise to pay the face amount on the maturity date specified on the note.

17. Money Market Mutual Fund
A Certificate of Deposit (CD) is a time deposit with a bank. CDs are
generally issued by commercial banks but they can be bought through
brokerages. They bear a specific maturity date (from three months to five
years), a specified interest rate, and can be issued in any denomination,
much like bonds. Like all time deposits, the funds may not be withdrawn
on demand like those in a checking account.

18. Capital Market
A market in which individuals and institutions trade financial securities.
Organizations/institutions in the public and private sectors also often sell
securities on the capital markets in order to raise funds. Thus, this type of
market is composed of both the primary and secondary markets.

19. Classification of Capital Market
The Capital Market of Bangladesh consists of two part. They are1.
Primary Market: The Primary Market is a place where new shares and
bonds are offered.
2.
Secondary Market: Secondary market is a place where existing shares
and debentures are treaded.

20. Importance of Capital Market
•
Mobilizing Savings: The capital market plays a vital role in mobilizing savings to put it
in productive investment, so that the development of trade, commerce and industry
could be facilitated.
•
Stability in Value: In case of a developed capital market, the experts in banking and
non-banking intermediaries put in every effort in stabilizing the values of stocks and
securities.
•
Encouragement to Economic Growth: The various institutions of the capital market
give quantitative and qualitative direction to the flow of funds that cause economic
growth.
•
Inducement to Savings: Savings are the backbone of any nation’s economic
development. If capital markets are developed in less developed areas, people will get
induced to save more because savings are facilitated by banking and non-banking
financial intermediaries.

21. Functions of Capital Market
•
Mobilization of financial resources on a nation wide scale,
•
Securing the foreign capital and know how to fill up the deficit in the
required resources for economic growth at a faster rate,
•
Effective allocation of the mobilized financial resources by directing the
same to projects yielding highest yield to the projects needed to
promote balanced economic development.

22. Structure of Capital Market
Structure of
Money Market
Organized
Sector
Individual
Investors
Investment
Intermediaries
Financial
Institutions
Commercial
Bank
Government
Unorganized
Sector
Agricultures
Private
Individual

23. COMPONENTS OF BANGLADESI CAPITAL MARKET
•
New Issue Market: The new issue market is called primary market
where new shares or bonds are offered. Both the new companies and
existing ones raise capital on the new issue market.
•
Stock Market: Secondary or stock market represents the secondary
market where existing shares and debentures are traded. Stock
exchange provides an organized mechanism of purchase and sale of
existing securities.
•
Financial Institutions: Special financial institutions are the most active
constituents of Money Market. Such organizations provide medium and
long-term loans repayable on easy instalments to big business houses.

24. RECENT TRENDS IN THE CAPITAL MARKET
1. Growth of Capital Market
2. New Financial Instruments
3. New Specialized Financial Institution
4. Financial Services
5. Regulation of Capital Market

25. SIMILALARITES OF MONEY MARKET and
CAPITAL MARKET
•
Complementary: The Money Market and the Capital Market are
complementary to each other and are not competitive. The difference
between two is only of degree rather than of kind.
•
Same Institutions: Certain institutions operate in money as well as
capital markets. For example, commercial banks operate in money
market as well as in Capital Market.
•
Interdependence: Money Market and Capital Market are interdependent.
The activities and policies of one market have their impact on those of
the other.

26. DIFFERECES BETWEEN MONEY MARKET and
CAPITAL MARKET
1. Maturity Period
2. Credit Instruments
3. Institutions
4. Risk
5. Market Regulation
6. Relation with Central Bank

27. We present our gratitude to everyone for
listening
•
Any questions that have raised in your mind?