What is financial market?
The financial market is an intermediary between savers and borrowers.
Thus, without this intermediation, each agent who has money to lend would have a lot of work to find those who need that money.
Therefore, through the role of the financial market, surpluses manage to multiply their capital and deficits obtain the necessary resources to finance their activities.
How the financial market works
Basically, financial institutions raise funds from those who have savings and lend to those in need.
Agents take out loans, like companies that want to make investments in their business to expand their operations.
In this process, the profit of the financial institution is given by the difference in the amount it pays to the saver and charges the borrower.