Difference between Capital and Money Market

Capital and money market both are used by companies to raise capital from public, however there are many differences between two of them in the way how they operate. Let’s look at some of the differences between the two –

  1. While money market deals in short term securities ranging from 1 day to 1 year in tenure while capital market deals in securities which are long term nature so for example if a company has raised an IPO it won’t be winding up it in 1 or 2 year rather it’s a long term source of capital.
  2. While capital Market is classified as primary and secondary market there is no classification of that sort in case of money market.
  3. Examples of money market instruments are interbank call money, certificate of deposits, treasury bills, commercial paper and so on. While capital market instruments include equity shares, preference shares, exchange traded funds, debentures and so on.
  4. The participants in money market are few like Banks, central bank, government whereas the numbers of participants in capital market are many like retail investors, mutual funds, HNI, companies and so on.
  5. As far as liquidity is concerned money market are more liquid because of presence of big players and also there is less risk while capital market are inherently risky and that is the reason why not many people participate in in which leads to lack of liquidity.
  6. While capital market is dependent on many factors like liquidity, global economic environment, interest rates, government policies and so on whereas money market are mainly dependent on interest rates and general liquidity which is floating in the environment.

Though there are many differences between the two these both are required for a country in order to grow because they both are the backbones for financial market which in turn is necessary for growth of the country

0 comments… add one

Leave a Comment


Related pages


vertical merger advantages and disadvantagesexamples of private goodstypes of factoring in financesupplementary goods and complementary goodsunsystematic definitioninfosys kpofifo method inventorydefinition of drawer and draweeinferior goods in economicslifo benefitsprivatization in india wikifdi and fii meaningdrawer & draweebhel company profilertgs full meaningcomplementary goodsadvantages and disadvantages of specializationadvantage and disadvantage of globalizationintroduction of demat accountwhat are some characteristics of a traditional economybenefits of managerial accountingskim pricing strategyprivatisation in economicsdiversifiable riskscost based pricing advantages and disadvantagessystematic risk vs unsystematic riskbarter system advantages and disadvantagesdifference between a creditor and a debtorcost pull inflation definitionvertical analysis of balance sheetbanking advantages and disadvantagesdefine shareholdingunearned rent revenuewhat is conservatism conceptskimming policyinferior goods definitioninferior good vs normal goodskim the cream pricingwhat is the difference between crr and slrdifference between autonomous investment and induced investmentexplicit cost implicit costhorizontal m&adisadvantages of the gold standardadvantages of a capitalist economymerits and demerits of companycarriage inwardhow do we complete a horizontal and vertical analysischaracteristics of fmcgdistinguish between costs and expensesdefine derivatives in financeadvantages of planned economyfeatures of perfect competition and monopolydisadvantages mixed economyventure capital disadvantageshow to calculate national income by expenditure methoddemand loan interest ratedisadvantages of mergercash flow statement easy explanationjit disadvantageswhat is meant by ecs in bankingbenefits of jit manufacturingwhat is a debenture loanforfeiting trade financeadvantage of hire purchasedefine floating currencydisadvantage of factoringsocial media merits and demeritsimportance of capital budgeting pptdisadvantage of payback periodadvantages of cashless policyaccounting concepts consistencybenifits of ppfmarginal cost in cost accountingadvantages and disadvantages of bank loancapitalism weaknesses