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Difference Between Capital Market And Money Market | Banking Awareness | SBI Clerk 2018

BasisCapital MarketMoney Market
MeaningIt provides finance/money for long term investment.It provides finance/money for short term investment.
FunctionMobilisation of resources and effective utilization of resources through lending are its main function.Lending and borrowing are its principal functions to facilitate adjustment of liquidity position.
Components
  • Security Regulator
  • Stock Exchanges
  • Brokers
  • Foreign Institutional Investor (FIIs)
  • Treasury Bills
  • Call Money Market
  • Certificate of Deposit
  • Commercial Bills
  • Commercial Papers
It includesIt includes stockbrokers, mutual funds, underwriters etc.It includes Financial institutions, financial companies, chit funds etc.
Maturity PeriodThe instruments traded on capital market have a longer time frame.The instruments traded on money market have a maximum time frame of 1 year or less.
Risk FactorThe risk factor in trading with capital market instruments is high because of longer time duration.The risk factor in trading with money market instruments is low because of shorter time duration.
ReturnsThe returns expected are very highThe returns expected are less.
It provides funds to
  • Central Governments
  • State Governments
  • Public and local bodies
  • Government
RegulatorSecurities Exchange Board of India (SEBI)Reserve Bank of India (RBI)

      

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