The increasing competitiveness in the financial market?

I think that the increase in competition in the financial market does not happen in the market of banks or institutions and firms, it happens in the market where banks and institutions seek for money and funding. The current low interest rate and risk averse environment limits the supply of money and funding in the market, that a good amount has become inactive in the market.

The financial market is trying its best to attract investors to participate in the market; however, the cashes are not distributed widely and equally that some sectors have absorbed more money than other sectors do. This creates a competition between different sectors within the financial market; but the decision for investment largely depends on two factors, the expected returns and the investors' risk preference.The expected returns are determined by the nature of the market and the risk preference depends on investors' personality and the future use of the money. The institutions and fund managers have no control of these two factors; therefore, they passively accept the demand of their investors.

The stock market is a great example that more and more good firms reject to issue IPOs as they are expected to experience high growth and have no worry about seeking for investors and the companies which issue IPOs are expected to already finish their most rapid growth trends and now face a constant operation. Therefore, though the risk in the stock market is relatively higher, the expected returns in the stock market are not high enough to compensate its risk and many large investors pull their money out of the market and seek for other opportunities as when they have large enough cashes, more investment opportunities are open to them.

Overall, the financial market is a very strange market, although the demand side can observe the supply side preferences, they do not have direct tools to attract investors, as the factors determining the investors' actions are mainly based on investors' own preferences and the market nature, which the institutions and fund managers cannot control of.