What are the 5 roles of Financial Markets?

By Ritesh|Updated : September 7th, 2022

The 5 roles of financial markets are to ensure low transaction and information costs, to provide liquidity by providing a mechanism for the investor to sell financial assets, to provide certainty in the trading of financial assets, and to provide a facility for interaction between investors and borrowers.

5 Roles of Financial Markets

  • It also provides price information resulting from the interaction between buyers and sellers in the market as they trade financial assets.
  • Financial markets provide a framework where different participants, such as investors and creditors, are treated fairly and equitably, regardless of the size of their businesses. or other factors.
  • The financial industry also provides various employment opportunities, which helps reduce the unemployment rate in the country.
  • Like other financial markets, the real estate market is a financial market because funds are provided for purchasing and selling physical real estate.
  • The financial market plays a vital role in the economy of any country.
  • It provides a framework that allows various participants, such as investors and creditors, companies and traders, to trade fairly, regardless of the size of their business or other factors.


What are the 5 roles of Financial Markets?

Financial markets, in a nutshell, serve as venues where buyers and sellers can exchange, trade, or transact with different financial products.

  • A market where individuals trade involves a lot of work and time.
  • The financial market offers detailed information on the cost of various financial securities, the availability of pertinent derivatives, and the price of securities.
  • Companies and investors do not need to spend much money on resources to obtain information because financial markets have easy access.


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