Due In 10 Hours No Plagiarism 400-Word Summary To Present
Due In 10 Hours No Plagiarism400 Word Summary To Present Your Resear
Due in 10 hours. No Plagiarism. 400-word summary to present your research. Choose 4 financial US markets or institutions. Briefly explain what each specializes in (mortgages, stocks, government securities, etc.).
Compare how each financial market you identified influences the US economy and global economy. Cite references to support your assignment. Format your citations according to APA guidelines.
Paper For Above instruction
Financial markets and institutions play a vital role in shaping both the United States and the global economies by facilitating capital flow, investment, and economic stability. This essay explores four prominent US financial markets and institutions: the stock market, the mortgage market, the government securities market, and the Federal Reserve System. It examines their specific functions and analyzes their influence on national and global economic stability.
The stock market, primarily represented by exchanges like the NYSE and Nasdaq, allows companies to raise capital by issuing shares to investors. It also provides individuals and institutions with opportunities for investment and wealth accumulation (Shapiro, 2020). The performance of the stock market significantly contributes to economic growth by influencing consumer confidence and corporate investment decisions. Globally, US stock markets attract international investors, affecting currency exchange rates and cross-border investments (Braun & Veld, 2022).
Next, the mortgage market is crucial for facilitating homeownership and real estate development. It involves financial institutions offering mortgage loans to consumers for property purchase, often securitized into mortgage-backed securities (MBS) (Levitin & Wachter, 2019). This market impacts the US economy by supporting consumption and construction activity. Internationally, fluctuations in the US mortgage market can influence global capital flows and investor sentiment, especially during housing crises, as seen in the 2008 financial meltdown.
The government securities market is where the US Treasury issues debt instruments such as bonds and bills to finance government operations. This market provides a safe investment option for individuals and institutions, including foreign governments (Amadeo, 2021). It plays a critical role in shaping interest rates and monetary policy. Globally, US Treasury securities are among the safest investments, influencing financial markets worldwide due to their role as benchmarks for other interest rates and their status as a global reserve asset (Hakkio & Hare, 2022).
Lastly, the Federal Reserve System is America’s central bank, responsible for monetary policy, regulation, and financial stability (Mishkin, 2019). The Fed influences the US economy through setting interest rates, regulating banks, and employing open market operations, which affect inflation, employment, and economic growth. Its actions also influence global financial conditions, as US monetary policy can lead to capital inflows or outflows worldwide, impacting exchange rates and economic stability in emerging markets (Cohen & Saini, 2020).
In conclusion, US financial markets and institutions are interconnected with and exert profound influence on both the national economy and global financial stability. Their roles in capital allocation, risk management, and monetary policy are essential for fostering economic growth and resilience worldwide.
References
Amadeo, K. (2021). The US Treasury bond market. The Balance. https://www.thebalancing.com/treasury-bond-market
Braun, M., & Veld, C. (2022). The influence of US stock markets on global financial stability. Journal of International Economics, 50(3), 234-251.
Hakkio, C. S., & Hare, B. (2022). The role of US Treasury securities in global finance. Economic Review, 107(2), 46-63.
Levitin, A., & Wachter, S. (2019). The mortgage market and financial stability. Harvard Law Review, 132(7), 1805-1852.
Mishkin, F. S. (2019). The Economics of Money, Banking, and Financial Markets (11th ed.). Pearson.
Shapiro, C. (2020). Stock Market Fundamentals and Economic Growth. Journal of Financial Economics, 138(1), 1-15.
Cohen, B., & Saini, A. (2020). Global implications of US monetary policy. International Finance Journal, 145, 123-139.