Capital Market - Difference Between Money Markets and Capital Markets

Difference Between Money Markets and Capital Markets

Finance
Financial markets
  • Bond market
  • Commodity market
  • Derivatives market
  • Foreign exchange market
  • Money market
  • Over the counter
  • Private equity
  • Real estate
  • Spot market
  • Stock market
  • Financial market participants:
  • Investor and speculator
  • Institutional and retail
Financial instruments
  • Cash:
  • Deposit
  • Derivative
  • Exotic option
  • Futures contract
  • Loan
  • Option (call or put)
  • Security
  • Stock
  • Time deposit or certificate of deposit
Corporate finance
  • Accountancy
  • Audit
  • Capital budgeting
  • Credit rating agency
  • Financial risk management
  • Financial statement
  • Leveraged buyout
  • Mergers and acquisitions
  • Structured finance
  • Venture capital
Personal finance
  • Credit and debt
  • Employment contract
  • Financial planning
  • Retirement
  • Student financial aid in the United States
Public finance
  • Government spending:
  • Government final consumption expenditure
  • Government operations
  • Redistribution of wealth
  • Transfer payment
  • Government revenue:
  • Taxation
  • Deficit spending
  • Government budget
  • Government budget deficit
  • Government debt
  • Non-tax revenue
  • Warrant of payment
Banks and banking
  • Central bank
  • Deposit account
  • Fractional reserve banking
  • Lists of banks
  • Loan
  • Money supply
Financial regulation
  • Professional certification in financial services
  • Accounting scandals
Standards
  • ISO 31000
  • International Financial Reporting Standards
Economic history
  • History of private equity and venture capital
  • Recession
  • Stock market bubble
  • Stock market crash

The Money markets are used for the raising of short term finance, sometimes for loans that are expected to be paid back as early as overnight. Whereas the Capital markets are used for the raising of long term finance, such as the purchase of shares, or for loans that are not expected to be fully paid back for at least a year.

Funds borrowed from the money markets are typically used for general operating expenses, to cover brief periods of illiquidity. For example a company may have inbound payments from customers that have not yet cleared, but may wish to immediately pay out cash for its payroll. When a company borrows from the primary capital markets, often the purpose is to invest in additional physical capital goods, which will be used to help increase its income. It can take many months or years before the investment generates sufficient return to pay back its cost, and hence the finance is long term.

Together, money markets and capital markets form the financial markets as the term is narrowly understood.

Read more about this topic:  Capital Market

Famous quotes containing the words difference between, difference, money, markets and/or capital:

    What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.
    Mark Twain [Samuel Langhorne Clemens] (1835–1910)

    There’s a difference between a Nazi and a German.
    Samuel Fuller, U.S. screenwriter. Samuel Fuller. Helga (Susan Cummings)

    Those things for which the most money is demanded are never the things which the student most wants. Tuition, for instance, is an important item in the term bill, while for the far more valuable education which he gets by associating with the most cultivated of his contemporaries no charge is made.
    Henry David Thoreau (1817–1862)

    When the great markets by the sea shut fast
    All that calm Sunday that goes on and on:
    When even lovers find their peace at last,
    And Earth is but a star, that once had shone.
    James Elroy Flecker (1884–1919)

    Self-esteem evolves in kids primarily through the quality of our relationships with them. Because they can’t see themselves directly, children know themselves by reflection. For the first several years of their lives, you are their major influence. Later on, teachers and friends come into the picture. But especially at the beginning, you’re it with a capital I.
    Stephanie Martson (20th century)