How different financial markets affect economy

Dr Boni Wanjau. [Courtesy]

Financial markets refers to any marketplace where financial securities trading occurs, including the stock market, bond market, forex market, derivatives market, crypto currency and commodities markets. When financial markets fail, economic disruption, including recession and rising unemployment, can result like it happened in the 2008 world financial crisis.

Stock markets are the most known of financial markets. These are investment vehicles where companies list their shares, which are bought and sold. Stock markets, or equities markets, are used by companies to raise funds.