What are Financial Markets?

Financial Markets are places where Financial Securities are traded.

Every economy has entities such as individuals, organizations and governments that have excess cash or may need cash for a variety of purposes. Individuals need cash for personal needs, organizations need cash for expanding their businesses and governments might need it for implementing infrastructure projects.

Financial markets are places that facilitate the exchange of funds between those who have it in surplus (savers / investors / lenders) and those who need them for different purposes (issuers / borrowers).

The corporations and governments come to the financial market to borrow money from investors by providing them paper assets (bonds, mutual funds, stocks, etc.). The Individual Investors go to the financial markets to multiply their money or in other words to make profit on their investment.
Investors could either invest directly or with the help of an intermediary in the financial markets.
Investing directly in IPO (Initial Public Offerings) / Rights Issue could be considered as Direct Investment in the Financial Market while, investing in Mutual Funds, Banks, Pension Funds and Insurance is termed as investment through intermediary.