MONEY MARKET DEFINITION AND MEANING
Money market is the market for dealing in monetary assets of short-term nature. Short term funds up to one year and financial assets that are close substitutes for money are dealt in the money market. In other words, it refers to the institutional arrangements facilitating borrowing and lending of short-term funds. The money market brings together the lenders who have surplus short term investible funds and the borrowers who are in need of short-term funds.
The money market is a wholesale debt market for low-risk, highly liquid, short-term instruments. The money market is not a place but an activity, the transactions are carried out by telephone, mail etc. among people who may have never met one another. Thus, the money market represents the country’s pool of short-term investible funds to meet the short-term requirements of the economy.
MONEY MARKET DEFINITION
According to Nadler and Shipman, “A money market is a mechanical device through which short term funds are loaned and borrowed through which a large part of the financial transactions of a particular country or world are degraded. A money market is distinct from but supplementary to the commercial banking system.”
According to the McGraw Hill Dictionary of Modern Economics, “money market is the term designed to include the financial institutions which handle the purchase, sale, and transfers of short-term credit instruments. The money market includes the entire machinery for the channelizing of short-term funds. Concerned primarily with small business needs for working capital, individual’s borrowings, and government short term obligations, it differs from the long term or capital market which devotes its attention to dealings in bonds, corporate stock and mortgage credit.”
According to the Reserve Bank of India, “money market is the centre for dealing. mainly of short-term character, in money assets; it meets the short-term requirements of borrowings and provides liquidity or cash to the lenders. It is the place where short term surplus investible funds at the disposal of financial and other institutions and individuals are bid by borrowers’ agents comprising institutions and individuals and also the government itself.”
According to the Geoffrey, “money market is the collective name given to the various firms and institutions that deal in the various grades of the near money.”
According to the J.M. Culbertson, “money market is a network of markets that are grouped together because they deal in financial instruments that have a similar function in the economy and are to some degree substitutes from the point view of holders. The instruments of the money market are liquid assets, interest bearing debts that mature within a short period of time or callable on demand.”
S.N. Sen, in his book ‘Central Banking in Underdeveloped Money Market’, has aptly stated that the short-term money market is “the place where the strain on the banking system is first felt in periods of pressure, and it is the place where ease in the banking system is first felt in periods of monetary superfluity.”
The money market is thus a reservoir of short-term funds. It is a region where short term funds are bought and sold through telephone or mail. Funds are borrowed in the market for a short period ranging from a day to six months or less than one year. The assets which are used as credit instruments are known as “near money assets.”
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