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Role Of The Us Financial System

Role of the US Financial System
"Financial markets are the meeting place for people, corporations, and institutions that either need money or have money to lend or invest. In a broad context, the financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide. Participants in the financial markets also include national, state, and local governments that are primarily borrowers of funds for highways, education, welfare, and other public activities; their markets are referred to as public financial markets." (Block & Hirt, 2005)
A financial market is a mechanism which allows people to trade money for securities or commodities such as gold or other precious metals. In general, any commodity market might be considered to be a financial market, if the usual purpose of traders is not the immediate consumption of the commodity, but rather as a means of delaying or accelerating consumption over time. (Wikipedia Encyclopedia)
Financial markets are affected by forces of supply and demand, and allocate resources over time through a price mechanism such as the interest rate. Typically financial markets use a market making or a bid and ask process.
Financial markets facilitate:
• The raising of capital (in the capital markets);
• The transfer of risk (in the derivatives markets); and
• International trade (in the currency markets).
The first article that I would like to review is written by Linda Himelstein, "Time to End Friends-and-Family Shares". The article declares that " IPO shares earmarked for a favored few hurt their issuers and other stockholders". The article discusses the scenario when a particular corporation went public and declined to offer any friends-and-family shares, simply because they thought it was not worth the trouble of considering who and who not to offer these stocks. However, this is not how most companies think, "which is why federal...