International and romanian financial markets

1. Financial Market

1.1 Structure, content and the functions of the Financial Markets

The roles of financial markets are economic and social.

In economic terms they develop the investment process and from a social point of view they ensure protection of the income saved.

The financial market has two components whose functions are different and complementary; primary financial market that is specialized in collecting revenue savings and the secondary financial market which provides the mobility and liquidity of placed economies.

Primary financial market

Primary financial market ensures collection of revenues saved from the owners of financial capital available domestically and internationally. This market is linking subjects which have a surplus financial capital and seeking to place their surplus with the business subjects that have a shortage of financial resources. Therefore, it is financing, allocating financial capital.

Funding can be made directly or indirectly. For example, when the savings from the population are greater than the investments of the subjects, holders of savings can finance directly financial deficits of economic subjects through financial markets. This is done by each person buying the securities issued by them. The same can happen when certain companies from the production sector or other financial institutions invest more than saving, which means buying securities from those who need resources.

The largest request of funding resources in this system is expressed by the state and its local governments. This happens in periods in which these entities register budget deficits and because most of the times the budget systems are deficitary, the need for resources is permanent.

The path to cover these deficits represents a non-inflationary manner and issue specific securities to cover resource gaps.

Funding needs financial resources can achieve economic subjects requested and indirectly through organizations that issue financial securities brokerage financial market. These bodies draw on the resources saved one hand and places them in an effective way for those who need resources.

A significant source of money to calling these expert bodies signify a certain financial funds established with specific purposes and used temporarily for the purpose of financing investment. Such funds are funds of social insurance institutions, pension funding funds, funds of salary houses, houses for holiday’s etc. funds.

Financial market intermediation by financial institutions ensures the collection of financial capital so obtaining financial resources as the issue of securities which they then public enterprises and private lenders by buying securities issued by them.

Secondary financial market

Secondary financial market provides liquidity to holders of securities and income mobility saved, providing an organized framework that is called stock market, exchanging already issued securities.

Change to holders of securities can be carried for the following reasons:

- Either because of their desire to recover the funds before the securities to reach maturity;

- As a result of liquid financial resources needs at that time;

- Hedge transactions

Secondary financial market securities can be valuated even before they bring their owners a financial benefit, that is before you receive interest or dividends. One can therefore say that the existence of secondary financial market provides the holders of securities the opportunity to leave the primary financial market when they want.