Capital Markets Links: Basic Terms Legal Framework How The Stock Exchange Is Organized Main Actors In The Market Trading on the Stock Exchange Advantages And Disadvantages Of Investing In Capital Markets Market Indicators Financial Reports Forecasting Future Trends Historical Market Information On Crashes And Crises Synopsis of the Current Economic Situation in BiH Useful Links A financial market is a place where financial instruments are traded and supply and demand for financial instruments meet. The financial market is part of the financial system. This involves a set of financial institutions and instruments that intermediate between actors with a financial surplus and those in deficit (i.e. who require financing). In any economic system, the former include the public, or savers, who put their surplus financial resources at the disposal of or invest in financial institutions and instruments. The latter or deficit actors sell financial instruments or incur debt with financial institutions in order to acquire the financial resources they need to continue operations or expand production. The financial market comprises capital markets and money markets. Capital markets are where long-term financial instruments, i.e. instruments whose maturity is indefinite or at least a year, are traded. Short-term securities with a maturity of less than a year are traded on money markets. Over time, financial markets have become a major source of financing for developing economic sectors. This is largely because financing through capital markets involves no new fixed costs and a lengthy or no maturity term. In this way, companies can access fresh capital and improve their stability and credit rating. Financial intermediation is mostly done by banks and financial markets. New global trends of deregulation and internationalization have spurred the development of financial markets, institutions, and instruments, and particularly capital markets. Non-bank financial institutions and financial markets are becoming increasingly important, and the global financial system has divided along these lines. Accordingly, the global financial system is presently viewed in terms of two financial system models: the "Anglo-Saxon" and the "Continental." The Anglo-Saxon financial system emphasizes financial markets and non-bank financial institutions, at the expense of banks. Over the past twenty years, there has been significant development of financial markets and instruments within this system, which is considered the most developed in the world. The Continental model gives less prominence to financial markets and financial instruments, with a consequently greater role for banks, which are the crucial financial institutions of the system. In the Continental system, banks are of the universal type - financial supermarkets offering a range of services, including financial market services (issuing and selling securities, financing, and financial management). The BiH financial system generally follows the continental model, with banks taking the lead and financial markets and instruments less developed. The BiH financial market has a capital market, but not a developed money market. The financial market instruments are relatively underdeveloped (with none of the new innovative instruments). The BiH capital market is organized and regulated in two capital markets, viz. one in the FBiH and the other in the RS. Securities are also traded on two stock exchanges, the SASE (Sarajevo Stock Exchange) and the BLSE (Banja Luka Stock Exchange).
