2025-2026
Introduction to financial markets
Unit 1: The financial system
Section 1: The Actors
Haves or have-nots?
Viewed from a macroeconomic perspective!
The economy consists out of haves and have-nots.
- Haves possess capital and can lend it out (Lenders/savers).
- Have-nots have more needs than money and they will have to raise capital
(borrowers/spenders).
The role of the financial system is to move money from the haves to the
have-nots, so that savings can be used productively in the economy. This
supports business investment, government spending, economic growth…
Have
- Households : UBO (ultimate beneficial owner), they save part of their
income
o how do we get the money from the household to finance the government
and the corporates? through bank deposits, bonds, shares, investment
funds
Have nots
- Corporates: they need money to invest, grow and operate.
o To start a company, founders first use their own money : equity capital
o Later, firms may raisee more money from shareholders, banks, bond
investors (but debt must be repaid, equity gives ownership rights to
shareholders)
- The government : Governments often spend more than they receive in taxes. To
cover the difference, they borrow money.
o In Belgium, the government is a net borrower because public debt is high
o People and institutions lend money to the government mainly by buying
government bonds
- The rest of the world → peoples that are investing abroad.. have nots bcs
Belgium is wealthier. We are investing abrirad
Have + have nots
- The financial industry : stands in between savers and borrowers.
o Banks and other financial institutions collect money from depositors and
investors + lend or invest that money elsewhere
o Ex. Households deposit money in a bank. The bank lends that money to
firms or governments.
1
, 2025-2026
o Wealth often originates with families
- The rest of the world : depending on the country’s external position
o If Belgium invests more abroad than foreigners invest in Belgium, then
Belgium is a have, and the rest of the world is a have not → Belgium is
wealthier
Direct financing
- = financing through financial markets
- = direct transaction/ relationship between a have and have-not.
- Example
o between a mother company and daughter company
o group → borrowing from the bank → CSOB, UBB
Semi-direct financing:
- “With the help of some friends, some other institution”
The money you have and put on a bank account is a liability for the bank because they
will have to give it back, if you ask for it. On the liability side, there’s deposits.
- Deposits are all short-term funding for the bank (client can always ask it back)
- Banks finance our economies.
o They grant loans, credits (assets for the bank, they have a claim)
▪ Long term credits that are funded with short-term deposits
- Indirect financing= financing through financial institutions.
The main actor: households
How do we look at their wealth?
When a single household owns a house of 100 but at the same time has a remaining
mortgage debt of 80, its net wealth is 20.
- Net wealth = assets – liabilities (what you own – what you owe)
The household balance sheet gives an overview of the assets and the liabilities of a
single household.
2
, 2025-2026
kinds of assets
An asset = a possession that has value in an exchange transaction.
- Tangible assets or real assets (buildings machines) – materiele vaste activa
o gain value from their physical character and the utility they generate
o The most important asset that people have
o In Belgium there is more wealth in real estate than in something else, than
Financial Assets (in some other countries this is different)
- Intangible assets (patents, trademark) – immateriele vaste active
o gain value from a legal claim to some future benefit.
- Financial assets (stocks, bonds) – vlottende activa
o are intangible assets that represent a claim to future cash.
Real versus Financial Assets : Look at the world
- US
o In general adults generally hold more financial assets than real assets
▪ Strong stock market culture
▪ Retirement saving through pension funds
- India
o financial assets are relatively small compared to real assets
o many households prefer : land, gold, houses, physical wealth
- China
o somewhere between
- Belgium
o financial assets are usually smaller than real assets, but the gap is less
extreme than in India.
Depending on where you are from → different
3
, 2025-2026
Asset classes
Traditional Assets
- Common stock (aandelen)
- Bonds (obligaties)
o “Govie” : Government bonds
- Cash (and cash equivalents, savings account for ex.)
Alternative Assets
- Real estate (vast goed)
- Commodities (goederen, grondstoffen)
- Private equity (privaat vermogen)
- Hedge funds (risicodekkings fonden = pooled investment fund)
- Venture capital (durfkapitaal)
- Currencies (forex, valuta’s)
Liabilities = obligations or debts someone/organizations owes to others
- Mortgage loans:
o money borrowed to purchase real estate, such as a house
o protection meganism : is a secured loan, banks gets a legal claim on the
property, the property = collateral. This lowers the risk for the bank
o if you don’t pay the mortgage you lose the house → high personal risk
- Consumer loans
o Loans that are used for personal expenses (car, tv) can be secured or
unsecured
o Pay an spread of the six months for ex
- tax debts
o money owed to the government for unpaid taxes.
Growth drivers In Net wealth
What are the drivers of the chances in wealth? WEALTH IS DYNAMIC
→ (ook de waarde is belangrijk op de balance sheet)
- Value changes in assets and liabilities
o Market value can go up and down
o Appreciating assets increase net wealth
o Rising liabilities decrease net wealth
o For ex. Car : car loses value → net wealth decreases
- Net-income
o from labor, capital or transfers (i.e. pensions, social security-based
income) will increase wealth.
- Inheritances, gifts
o The value of these can change which has an impact on your net wealth
4
Introduction to financial markets
Unit 1: The financial system
Section 1: The Actors
Haves or have-nots?
Viewed from a macroeconomic perspective!
The economy consists out of haves and have-nots.
- Haves possess capital and can lend it out (Lenders/savers).
- Have-nots have more needs than money and they will have to raise capital
(borrowers/spenders).
The role of the financial system is to move money from the haves to the
have-nots, so that savings can be used productively in the economy. This
supports business investment, government spending, economic growth…
Have
- Households : UBO (ultimate beneficial owner), they save part of their
income
o how do we get the money from the household to finance the government
and the corporates? through bank deposits, bonds, shares, investment
funds
Have nots
- Corporates: they need money to invest, grow and operate.
o To start a company, founders first use their own money : equity capital
o Later, firms may raisee more money from shareholders, banks, bond
investors (but debt must be repaid, equity gives ownership rights to
shareholders)
- The government : Governments often spend more than they receive in taxes. To
cover the difference, they borrow money.
o In Belgium, the government is a net borrower because public debt is high
o People and institutions lend money to the government mainly by buying
government bonds
- The rest of the world → peoples that are investing abroad.. have nots bcs
Belgium is wealthier. We are investing abrirad
Have + have nots
- The financial industry : stands in between savers and borrowers.
o Banks and other financial institutions collect money from depositors and
investors + lend or invest that money elsewhere
o Ex. Households deposit money in a bank. The bank lends that money to
firms or governments.
1
, 2025-2026
o Wealth often originates with families
- The rest of the world : depending on the country’s external position
o If Belgium invests more abroad than foreigners invest in Belgium, then
Belgium is a have, and the rest of the world is a have not → Belgium is
wealthier
Direct financing
- = financing through financial markets
- = direct transaction/ relationship between a have and have-not.
- Example
o between a mother company and daughter company
o group → borrowing from the bank → CSOB, UBB
Semi-direct financing:
- “With the help of some friends, some other institution”
The money you have and put on a bank account is a liability for the bank because they
will have to give it back, if you ask for it. On the liability side, there’s deposits.
- Deposits are all short-term funding for the bank (client can always ask it back)
- Banks finance our economies.
o They grant loans, credits (assets for the bank, they have a claim)
▪ Long term credits that are funded with short-term deposits
- Indirect financing= financing through financial institutions.
The main actor: households
How do we look at their wealth?
When a single household owns a house of 100 but at the same time has a remaining
mortgage debt of 80, its net wealth is 20.
- Net wealth = assets – liabilities (what you own – what you owe)
The household balance sheet gives an overview of the assets and the liabilities of a
single household.
2
, 2025-2026
kinds of assets
An asset = a possession that has value in an exchange transaction.
- Tangible assets or real assets (buildings machines) – materiele vaste activa
o gain value from their physical character and the utility they generate
o The most important asset that people have
o In Belgium there is more wealth in real estate than in something else, than
Financial Assets (in some other countries this is different)
- Intangible assets (patents, trademark) – immateriele vaste active
o gain value from a legal claim to some future benefit.
- Financial assets (stocks, bonds) – vlottende activa
o are intangible assets that represent a claim to future cash.
Real versus Financial Assets : Look at the world
- US
o In general adults generally hold more financial assets than real assets
▪ Strong stock market culture
▪ Retirement saving through pension funds
- India
o financial assets are relatively small compared to real assets
o many households prefer : land, gold, houses, physical wealth
- China
o somewhere between
- Belgium
o financial assets are usually smaller than real assets, but the gap is less
extreme than in India.
Depending on where you are from → different
3
, 2025-2026
Asset classes
Traditional Assets
- Common stock (aandelen)
- Bonds (obligaties)
o “Govie” : Government bonds
- Cash (and cash equivalents, savings account for ex.)
Alternative Assets
- Real estate (vast goed)
- Commodities (goederen, grondstoffen)
- Private equity (privaat vermogen)
- Hedge funds (risicodekkings fonden = pooled investment fund)
- Venture capital (durfkapitaal)
- Currencies (forex, valuta’s)
Liabilities = obligations or debts someone/organizations owes to others
- Mortgage loans:
o money borrowed to purchase real estate, such as a house
o protection meganism : is a secured loan, banks gets a legal claim on the
property, the property = collateral. This lowers the risk for the bank
o if you don’t pay the mortgage you lose the house → high personal risk
- Consumer loans
o Loans that are used for personal expenses (car, tv) can be secured or
unsecured
o Pay an spread of the six months for ex
- tax debts
o money owed to the government for unpaid taxes.
Growth drivers In Net wealth
What are the drivers of the chances in wealth? WEALTH IS DYNAMIC
→ (ook de waarde is belangrijk op de balance sheet)
- Value changes in assets and liabilities
o Market value can go up and down
o Appreciating assets increase net wealth
o Rising liabilities decrease net wealth
o For ex. Car : car loses value → net wealth decreases
- Net-income
o from labor, capital or transfers (i.e. pensions, social security-based
income) will increase wealth.
- Inheritances, gifts
o The value of these can change which has an impact on your net wealth
4
