to individuals or businesses that wanted to borrow money. Some was invested in private companies or loaned

to government agencies that wanted to borrow money to raise funds for purposes like building roads or mass

transit. Some firms reinvested their savings in their own businesses.

In this section, we will determine how the demand and supply model links those who wish to supply financial

capital (i.e., savings) with those who demand financial capital (i.e., borrowing). Those who save money (or

make financial investments, which is the same thing), whether individuals or businesses, are on the supply

side of the financial market. Those who borrow money are on the demand side of the financial market. For a

more detailed treatment of the different kinds of financial investments like bank accounts, stocks and bonds,

see the Financial Markets chapter.

Who Demands and Who Supplies in Financial Markets?
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