Difference between Money Market and Capital Market
Basis | Money market | Capital market |
Meaning | The money market is the market in which short term securities such as treasury bill, certificate of deposits and commercial bills are traded | Capital market is the market in which long term financial instruments such as equities and bond are raised and traded. |
Maturity period | The maturity period is less than one year is accounted for. | The maturity period is more than one year. |
Credit instruments | The credit instruments are short term in nature such as treasury bills, commercial paper, certificate of deposit, etc | Its a credit instrument is debenture, shares, and government securities, etc. |
Institution | The institution involved in the money market are central bank commercial banks, bill brokers, etc | The institution involved in it are stock exchange development banks, finance companies |
Purpose of loan | Its the purpose of the short term in nature. | Its the purpose for the long term in nature. |
risk | The degree of risk is small in it | The degree of risk is higher in it. |
Relation with the central bank. | It is directly linked with the central bank | It has no close relationship with the central bank |
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