Securities market as one of the main sources of financing a market economy

The most common sources of financing are loans, profit of business entities, the state budget, subsidies, etc.

The possibilities of budget financing of the economy are very limited in the current market situation, since the directions of using budget funds are very extensive. Along with this, due to the instability of the financial credit mechanism, loans also have limited applicability. It is also very rare for enterprises to receive subsidies, since subsidies require well-developed investment projects and an excellent business reputation of an enterpise. It should be noted that profit is not always available to enterprises as a permanent source of financing. In the case of profit, it is mainly directed to the calculations of wages, the creation of reserves, the repayment of debt, etc.

Based on all the above listed conditions of a market economy, the securities market becomes very important as one of the sources of financing the economy. The securities market allows the state and enterprises not to be limited to bank loans and self-financing, but to expand the range of potential sources of financing. Thus, the securities market enables investors to invest their savings in a wide range of financial instruments.

The securities market is a set of economic relations about the issue and circulation of securities between its participants. [1]

The population and enterprises in process of the production and consumption of goods and services have temporarily free cash. At the same time, another part of the population or an enterprise, and very often the state needs additional funds. There is a financial market where monetary relations between capital providers and capital consumers occur. Thus, savings of the population and enterprises through the channels of the financial market are transformed into investments. The transfer of funds from capital providers to capital consumers is carried out in the securities market, which is the second component of the financial market.

The majority of joint-stock enterprises with the help of the securities market can finance by issuing shares and thereby have a decisive influence on the development of the modern economy.

In modern economic conditions, debt securitization, the so-called increase in the share of securities in the structure of financial market instruments, has become widespread throughout the world, which suggests that the securities market is the most important channel for financing the economy.

The securities market performs a number of functions: [2]

• -    the transformation of savings into investments for the expansion and improvement of production;

• -    flow of capital from old, not attractive industries to new high-tech industries;

• -    redistribution of property between shareholders and ensuring liquidity of debt through the purchase and sale of shares;

• -    covering the deficit of state and municipal budgets by issuing securities;

• -    insurance of price and financial risks. With the help of securities market instruments, owners protect their assets from unfavorable price changes for them, the profitability of these assets.

Thus, we found out that the securities market is a part of the financial market and serves as one of the main sources of financing and the development of a market economy.