What is the capital market? How is it different from the money market?

Capital market, also known as long-term capital market, is an important part of financial market. As a theoretical concept corresponding to money market, capital market usually refers to the market for medium and long-term (more than one year) lending and financing activities of funds (or assets). Because long-term financial activities involve long-term capital, high risk and long-term stable income, which is similar to capital investment, it is called capital market.

The difference between capital market and money market;

1, each with its own characteristics. The characteristics of the capital market are: the financial instruments traded have a long term; The main purpose of the transaction is to understand? Determine the demand and supply of long-term investment funds; Large amount of capital borrowing; Market trading tools have certain risks and? Speculation. The term money market refers to? 1? Short-term financing through financial instruments during the year? Market. Its characteristics are: short trading cycle, strong liquidity and relatively low risk.

2. Different functions. Capital market is an important channel for raising funds, an effective place for rational allocation of resources, and conducive to enterprise restructuring. The money market regulates the surplus and deficiency of funds. Meet short-term financing needs. It not only creates conditions for the development of various forms of credit, but also regulates policies? Provide conditions and places.

3. The sub-market is different. The generalized capital market includes two parts: one is the long-term deposit and loan market of banks, and the other is the securities market, including bond market and stock market; Narrow sense of capital market? In particular, it refers to the market where stocks, bonds, funds and other securities are issued and circulated, which is collectively referred to as the securities market. Is the money market dominant? It should be composed of interbank lending, commercial paper, national debt, repurchase agreement and other sub-markets.

Extended data:

The capital market has the following characteristics:

1. Long-term trading instruments.

The term of medium and long-term bonds is greater than 1 year; Stocks have no maturity date and belong to permanent securities; The duration of closed-end funds is generally 15~30 years.

2. The purpose of financing is to meet the demand for investment funds.

What is raised in the capital market is long-term capital, which is mainly used to supplement fixed capital and expand production capacity, such as starting new enterprises, updating or expanding plant equipment, investing in long-term national construction projects, etc., and has strong investment.

3. The financing transaction is large in scale.

In the capital market, the scale of initial issuance or capital increase of enterprises is generally relatively large. Because the funds are used for medium and long-term investment, the scale of raising liquidity through bank lending is obviously larger.

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