Money market and Capital Market.
|Money Market||Captial Market|
A Market where short term funds are borrowed and lend.
A market for borrowing and lending long term capital required by business enterprise.
Term of Finance
It provides short term funds, in short term instruments where the maturity is measured in days, weeks, or months
|It is a market for long tern instruments which is measured in years.|
The instruments dealt in the market are bills of exchange, treasury bills, banker's acceptance, etc
|The instruments dealt in this market are bonds, debentures, equity shares and stock.|
Money market exists as a mechanism of liquidity adjustments i.e. a link between the depositors and borrowers.
|Capital market functions as a link between the investors and entrepreneurs.|
The prices of these instruments do not fluctuate and they carry very low market risk
|The instruments are long term and subject to market fluctuations and so they carry very high financial and market ris|
The commercial banks are the important institutions in the money market
|The stock exchange is an important institution in the Capital Market.|