Difference Between Money Market And Capital Market

by • 23/08/2011 • B.com part 2 Business CommunicationComments (0)869


Money Market

1. It is a market for short term loans.

2. The instruments of money market are (a) Promissory note (b) bills of exchange, (c) treasury bills and (d), call loans.

3. The instruments of money market are highly liquid.

4. The main institutions of money market are bill market, commercial banks, acceptance houses discount houses, central bank

5. The demand for short term loans comes from government industrial and commercial concerns, merchants, stock exchange.

6. The money market revolves mostly around the commercial banks.

Capital Market

1. This market is for long term loans

2. The instruments of capital market are (a) shares (b) debentures (c) Mortgages (d) FIB’s.

3. The instruments of capital market are not liquid.

4. The main institutions of capital market are insurance companies, investment banks, commercial banks, stock market.

5. The demand for long term loans comes from private sector manufacturing industries, companies and government.

6. Commercial banks play a part but they are not the centre of activation in the capital market.

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