In fact, the capital market is related to the supply and demand for new capital, and the stock exchange facilitates such transactions. In this way, capital market plays a vital role in transferring the financial resources from surplus and wasteful areas to deficit and productive areas, thus increasing the productivity and prosperity of the country.
Information Technology led to paradigm shift and revolutionized the structure and functioning of Capital Markets by reducing information asymmetry and assisting faster settlements of transactions. They are Short-term or working capital requirements and long-term or fixed capital requirements.
It also encompasses the process by which securities already outstanding are transferred. What are the functions and importance of Capital Market?
What is a Securities Market? They employ financial experts who are able to predict the changes in the market and accordingly undertake suitable portfolio investments.
The most significant development in Capital Markets is the way the technology has erased the geographical boundaries. One of the major economic benefits generated by development of the Capital Markets is improved allocation of capital. After amendment of GAAR and Retrospective taxation amendments in budget last year both FDI and FII inflows dropped and stock market fell down that led to fall in rupee value and credit rating by top rating agencies.
A developed and vibrant Capital Market will immensely contribute towards speedy economic growth and development. Funds flow into the capital market from individuals and financial intermediaries which are absorbed by commerce, industry and government. In fact, the capital market provides a market mechanism for those who have savings and to those who need funds for productive investments.
Through the Press and different media, the public are informed about the prices of different securities. Innovation, credit counselling, financial education and proper segment identification constitute the possible strategies to achieve this. The capital market is a market which deals in long-term loans.
The process of stabilisation is facilitated by providing capital to the borrowers at a lower interest rate and reducing the speculative and unproductive activities. Read this article to learn about capital market: As such, the capital market helps in capital formation and economic growth of the country.
Indeed, India as an emerging economy has seen a spate of innovations in the area of financial engineering. It thus facilitates the movement of stream of capital to be used more productively and profitability to increases the national income.
Various functions and significance of capital market are discussed below: A well-developed capital market creates a sustainable low-cost distribution mechanism for multiple financial products and services across the country.
The capital market prides incentives to savers in the form of interest or dividend and transfers funds to investors. In this way, it facilitates and promotes the process of economic growth in the country. The Indian Capital Market has come a long way from trading under the Banyan tree to internet trading.Buoyed by internal economic factors and foreign capital flows, Indian markets are globally competitive, even in terms of pricing, efficiency and liquidity.
US sub prime crisis: The financial crisis facing the Wall Street is the worst since the Great Depression and will have a major impact on the US and global economy.5/5(1). In nutshell, Capital market is the heart of any economy through which the savings are channelized into effective long-term investments.
A developed and vibrant Capital Market will immensely contribute towards speedy economic growth and development. Role of Venture Capital in Indian Economy 1Mrs.
M Haritha, 2Mr. Ravi V, 3 Hindupur, AP, India. Abstract: The Venture capital is the life blood of new industry in the financial market today.
Venture capital is the money provided by professionals who invest alongside management in young, rapidly growing companies tax and legal. Capital market is the barometer of the economy by which you are able to study the economic conditions of the country and it enables the government to take suitable action.
8. Through the Press and different media, the public are informed about the prices of different securities. The researchers have presented Introduction and investment, Role of investment in economic development of the nation, Developments in the Indian capital markets, SEBI and the regulation of securities markets, Report of the committee under the chairmanship of Justice D.P.
Wadhwa with an aim to know the role of capital market in India. Request PDF on ResearchGate | The Role of the Capital Market in the Economic Development | Taking into account the apart role in the market economy, the capital market occupies an important place, through their specific mechanisms, succeeding to give its contribution to the economic development of the society.Download