Financial market theory of development
So imagine you have a piggy bank where you save your allowance money. You put your money in your piggy bank and it stays there until you need it or until it gets full. Now imagine if there were lots of piggy banks, and lots of people were saving their money in them, but sometimes they needed to borrow or lend money to each other.
Financial market theory is all about how those piggy banks work together in a bigger system to help people save, borrow, and lend money. It's like a big web of piggy banks where people can trade their savings or borrowings with each other.
But how does this system grow and develop? Well, it all starts with people feeling comfortable and confident enough to save their money in the piggy banks in the first place. If they don’t trust the system, they might keep their money under their mattress instead. So, the government or other organizations try to create and maintain conditions that make people feel secure about saving their money.
Next, the piggy banks need to be connected, so people can trade with each other. This means creating things like banks, brokers, and stock markets where people can buy and sell financial assets like stocks, bonds or currencies. As more people join the system, it gets bigger and more complex, creating more opportunities for people to save and invest their money.
Finally, the market needs to be regulated so that fraud and other bad behavior is prevented. Otherwise, people might lose trust in the entire system and stop using it. This is why governments and other organizations create rules and regulations to ensure fair play so that everyone can save and trade their money with confidence.
So there you have it, financial market theory is like a big web of piggy banks that helps people save, borrow, and lend money. It grows and develops when people feel secure, when there are ways to connect them, and when there are rules to keep everyone honest.
Financial market theory is all about how those piggy banks work together in a bigger system to help people save, borrow, and lend money. It's like a big web of piggy banks where people can trade their savings or borrowings with each other.
But how does this system grow and develop? Well, it all starts with people feeling comfortable and confident enough to save their money in the piggy banks in the first place. If they don’t trust the system, they might keep their money under their mattress instead. So, the government or other organizations try to create and maintain conditions that make people feel secure about saving their money.
Next, the piggy banks need to be connected, so people can trade with each other. This means creating things like banks, brokers, and stock markets where people can buy and sell financial assets like stocks, bonds or currencies. As more people join the system, it gets bigger and more complex, creating more opportunities for people to save and invest their money.
Finally, the market needs to be regulated so that fraud and other bad behavior is prevented. Otherwise, people might lose trust in the entire system and stop using it. This is why governments and other organizations create rules and regulations to ensure fair play so that everyone can save and trade their money with confidence.
So there you have it, financial market theory is like a big web of piggy banks that helps people save, borrow, and lend money. It grows and develops when people feel secure, when there are ways to connect them, and when there are rules to keep everyone honest.