A borrower who takes out a loan usually has better information about the potential returns and risk of the investment projects he plans to undertake than does the lender. This inequality of information is called

The structure of the financial market broadly divides into the Money Market and Capital Market. The money market caters to short-term fund requirements, while the capital market takes care of long-term funding needs. The structure of the financial market is based solely on bonds and equities. The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less. It enables governments, banks, and other large institutions to sell short-term securities to fund their short-term cash flow... Show more

The structure of the financial market broadly divides into the Money Market and Capital Market. The money market caters to short-term fund requirements, while the capital market takes care of long-term funding needs. The structure of the financial market is based solely on bonds and equities.
The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less. It enables governments, banks, and other large institutions to sell short-term securities to fund their short-term cash flow needs.

A Bank's capital structure basically represents the bank's choice of how to finance its balance sheet, that is, what mix of equity, subordinated debt, and deposits to use. It is an issue of central importance in any discussion of bank stability, and thus of great interest to regulators.

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