By money market, we mean financial institution which deals with short term funds in the economy. Money market arranges funds for working capital. Funds can be borrowed under money market for a short period varying from a day, a week, a month or 3 to 6 months against the different types of instruments, such as trade bill, bank acceptances, bonds, treasury bills, etc. In money market commercial banks and Indigenous bankers play an important role in the money market.

The money market is different from the capital market. Funds from the money market can be borrowed for a short period, whereas in capital market money can be borrowed for the long term. The rate of interest under money market is high compared to the institutions of the capital market. The rate of the capital market is low. Commercial banks and indigenous bankers play an important role in money market whereas in the capital market, the financial institutions, finance corporations, investment trust, mutual fund, etc. play an important role in the capital market.