Financial Market and Individual Decision.pptx

Morality is the differentiation of intents, judgments, and behaviours between those that are distinguished as appropriate and those that are improper. The word morality is derived from the Latin ‘moralities’, which means “manner, character, and proper behaviour.” A set of rules or principles that come from a code of behaviour from a certain philosophy, religion, or culture might be called morality, or it can come from a standard that one feels ought to apply to everyone. It is also possible to explicitly associate “goodness” or “rightness” with morality.
What is Morality?
Morality is a set of values, beliefs, and principles that guide an individual’s behaviour and decisions. It is a code of conduct that is commonly accepted in a particular society or culture. It refers to the distinction between right and wrong and is usually based on an individual’s personal beliefs and values. It is also closely related to ethics, which is a system of moral principles.
Morality Definition
Morality refers to a set of principles or standards of conduct that govern the behaviour of individuals or groups. It encompasses notions of right and wrong, good and bad, and guides ethical decision-making.
Morality is a broad concept, and its meaning can differ depending on the context. It can refer to the actions and choices we make, or to the way we think and feel about those actions and choices. It can also refer to the values and beliefs that determine our behavior.
Evolution of Morality
The evolution of morality can be traced back to ancient times when societies first began to develop a code of conduct to govern the people within them. This early form of morality was mainly concerned with protecting the interests of the ruling class and promoting social order. Over time, this concept developed into a more complex system of beliefs, rules, and principles, which were guided by religious beliefs and philosophy. In modern times, moral values continue to evolve.
Social norms, science, and technology all play a role in shaping our understanding of morality. For example, advances in medicine have led to debates about whether certain treatments should be allowed in certain circumstances or not. The evolution of morality has been a long and complicated process, but it is essential for the advancement of society. It helps us to decide what actions are appropriate in different contexts and ensures that we can coexist peacefully. Ultimately, morality helps us to become better individuals and a better society overall.

1. Financial Markets and Personal Investment 3IDSS1071

2. Financial System in India: Introduction Evolution of Banking Phases of development RBI and the Financial System Committees on Banking Sector Reforms Prudential Banking RBI Guidelines and directions.

3. FINANCIAL SYSTEM System - “A set of complex and closely connected or intermixed institutions, agents, practices, markets, transactions, claims, and liabilities in the economy”. Financial System - is concerned about Money –current medium of exchange Credit –money returned normally with interest Finance –monetary resources comprising debt and ownership funds

4. Financial System Financial Institutions Financial Markets Financial Instruments (Claims, Assets, Securities) Financial Services Regulatory Intermediaries Non- Intermediaries Others Banking Non- Banking Organized Unorganized Primary Secondary Short Term Medium Term Long Term Secondary Capital Markets Primary Money Markets Equity Market Debt Market Derivative Market

5. FINANCIAL INSTITUTIONS REGYLATORY BANKING INTERMEDARIES OTHERS NON- INTERMEDARIES NON BANKING RBI NFBIS, UTI, LIC, GIC COMM. BANKS IDBI, NABARD

6. FINANCIAL INSTITUTIONS Business organizations that act as mobilizes and depositories of savings, and as purveyors of credit or finance Intermediaries intermediate between savers and investors Lend money as well as mobilize savings Liability towards the ultimate savers Assets are from the investors or borrowers Intermediaries– all banking institutions, non-banking Financial intermediaries (NBFIs) –UTI, LIC, GIC Non-intermediary institutions --> do loan business  but resources not directly obtained from the savers Non-intermediaries – IDBI, NABARD, IFC—also called non-banking statutory financial organizations(NBFSO)

7. FINANCIAL MARKETS UNORGANISED ORGANISED SECONDARY PRIMARY CO-OPERATIVE SECTOR MONEY LENDERS CHIT FUNDS MONEY MARKET CAPITAL MARKET TREASURY COMMERCIAL BILLS CALL MONEY

8. FINANCIAL MARKETS Provide facilities for buying and selling of financial claims and services Primary and Secondary Markets Money and Capital Markets Both perform same function of transferring resources to the producers Distinction based on – differences in period of maturity of financial assets issued in these markets Money market – short-term claims (<1 year) – T-bills, call money market, commercial bills Capital market – long-term claims (>1 year) – stock market, govt. bonds market Commercial banks belong to both

9. FINANCIAL INSTRUMENTS (CLAIMS, SECURITIES,ASSETS.) SECONDRY FINANCIAL INSTRUMENTS PRIMARY MARKETFINANCIAL INSTRUMENTS SHORT LONG MEDIUM

10. FINANCIAL INSTRUMENTS AND SERVICES Financial asset – represents a claim to the payment of a sum of money in the future and/or a periodic payment in the form of interest or dividend. Financial securities – primary and secondary

11. Financial services  are the economic  services  provided by the  finance  industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer- finance  companies, stock brokerages,  investment  funds, individual ...

12. FINANCIAL SERVICES Project advisory services. Planning M&A. JVs. Hedging risk. MODERN NON-FUND BASED TRADITIONAL FUND BASED 1.Lease financing. 2.Consumer credit. 3.Bill discounting. 4.Factoring. 5.Forfeiting. Hire purchase. Venture capital. Housing finance. Insurance service

13. FUNCTIONS OF FINANCIAL SECTOR

14. Liability- Asset transformation function Asset transformation  is the process of creating a new  asset  (loan) from  liabilities  (deposits) with different characteristics by converting small denomination, immediately available and relatively risk free bank deposits into loans

15. size transformation function of financial system A type of  transformation  that is performed by banks and other depositary institutions whereby small deposits by different types of depositors are pooled in order to issue large loans to seekers of funds

16. risk transformation function of financial system Risk transformation  is about how to mitigate  risk  and in parallel develop competitive advantages. ...  Risk  may include  financial risk , security/safety-related  risks , uncertainty, and  risk  through action or lack of action.

17. maturity transformation function of financial system Maturity transformation  is the practice by  financial  institutions of borrowing money on shorter timeframes than they lend money out.

18. Equilibrium in Financial Markets Equilibrium in financial markets– usually determined by assuming perfect competition Financial markets are said to be perfect when A large number of savers and investors operate in markets The savers and investors are rational All operators in the market are well-informed and information is freely available to all of them There are no transaction costs The financial assets are infinitely divisible The participants in markets have homogenous expectations There are no taxes Under these ideal conditions, the financial markets attain equilibrium position when supply and demand are equal  the interest rate at which the supply curve and demand curve intersect with each other

19. EQUILIBRIUM CONTD., The equilibrium in financial markets is established when the expected demand for funds (credit) for short-term and long-term investments matches with the planned supply of funds generated out of saving and credit creation. Supply of funds Aggregate savings by household, business and govt. sectors

20. EQUILIBRIUM CONTD., Demand of funds Investment in fixed and circulating (working) capital Demand for consumer durables Investment in housing Current level of capital stock Capacity utilization Desired capital stock Availability of internal funds Cost of funds Technological changes

21. RELATIONSHIP BETWEEN FINANCIAL SYSTEM AND ECONOMIC DEVELOPMENT

22. RELATIONSHIP BETWEEN FINANCIAL SYSTEM AND ECONOMIC DEVELOPMENT

23. Financial System and Economic Development 1.Finance is not important at all Ex: environment- friendly, appropriate technology. 2.Finance is very important. 3. Cautionary View: Economic Growth – growth results predominantly not from the increase in labor and capital but from the technical progress, which is external  money and finance and the policies about them cannot contribute to the growth process.

24. A well developed financial system can contribute significantly to the acceleration of economic development through: Technical progress is endogenous ( Human and Physical Capital are its important sources - Dependent on Financial System) Good financial system - Rate of capital formation (Finance available in time, in adequate quantity and on favorable terms) - economic development Financial system enhances the efficiency of the function of medium of exchange - helps in economic development.