I feel very much pleased to offer this book as a third revised edition. It has been written based on the syllabus of Bachelor of Business Administration (BBA) of Tribhuvan University. However, it is also useful to the courses of other programs of Tribhuvan University and courses offered by other universities. Attempt has been made to focus on conceptual background and the practical problems relevant to the concerned subject, relatively a simple and most understandable form.
Understanding the flow of funds within financial system is vital to both managers and individual participants in order to make their intelligent decisions regarding investment and financing. Financial market is the mechanism that allows the flow of funds between savers, mainly the household sectors, and users, mainly the government and business units. The financial firms serve the most important intermediary roles while transferring funds between these two units.
Coming up to this edition, there has been many changes both in the structure and size of Nepalese financial institutions and markets. Changing regulations have demanded the innovative services through developed infrastructure as well as encouraging the financial firms to improve in their capital base to strengthen their risk absorbing capacities. In an effect, Nepalese financial sectors have been characterized with voluminous market capitalization, improvement of competitive power of financial firms by merging each other, offering dematerialized services, establishment of rating agency and measuring the creditworthiness of firms, etc. Managing risk and then securing the profit of the firms is primary concern of both the regulators and managers of the financial firms. With the realized fact and to provide the fundamental issues in financial markets and institutions, both in global and local context, university has been offered the courses at bachelor and master level.
Entire course has been divided into ten units. The first unit covers the introduction and overview of financial markets and institutions and followed by determinants of interest rates in second unit. The other units consist the money market, capital market, commercial banks and other lending institutions, insurance companies, securities firms and investment bankers, mutual funds, and pension funds respectively.