Financial Institutions generate financial Instruments and these instruments are traded in corresponding markets. The most important financial institutions are investment and commercial banks.

The institutions which primarily deal with deposits and lending of financial bills are commercial banks but if you help companies to issue shares you were dealt by a commercial bank. These classifications have been meaningless for the modern economic and financial scenarios and there has been a huge difference for commercial banks based on accepting deposits, lending money, processing payments, issuing bank drafts and offering safety depository boxes for items and documents. Investment banks offer to investors the services like brokering insurance contracts and investment advice. Investment banks secure a large amount of money as seed capital and then this capital is used to bring together a management team suitable for the venture. The area of investment is chosen, planned, analyzed and then the grant is chartered with feedback and suggestions by the board and management.

Financial Markets: Within the economy, companies tend to invest in case of surpluses or in case of deficits. Thus, the financial markets allow the ones who require finance to get in touch with those that are able to supply it. These could either be capital market or money market depending upon the nature of product to be traded.

Primary markets issue new shares while the trade of stock securities occur in secondary markets.

In Bond markets, investors loan money at certain interest rates. These bonds are issued by companies, federations, states or municipalities. This money is referred as debt or credit. Securities as notes and bills issued by company or state are sold in return.


Lahore, December 19.