Capital Market is one of the significant aspect of every financial market. Hence it’s important to study its appropriate meaning. Broadly speaking the capital market is a market for financial assets which have an extended or indefinite maturity. 12 months Unlike money market tools the administrative centre market equipment become adult for the time above one. It is an institutional arrangement to borrow and lend money for a longer time of time. It includes financial institutions like IDBI, ICICI, UTI, LIC, etc. The role is played by These institutions of lenders in the capital market. Business units and corporate will be the borrowers in the capital market. Capital market consists of various instruments which may be used for financial transactions.
Capital market provides long-term debt and equity finance for the government and the organization sector. Capital market can be categorized into principal and supplementary markets. The principal market is market for new shares, where as in the secondary market the prevailing securities are traded. Capital market institutions provide rupee loans, forex loans, consultancy underwriting and services.
Like the money market capital market is also very important. It plays a substantial role in the national overall economy. A developed, dynamic and vibrant capital market can contribute for speedy financial growth and development immensely. Let us get acquainted with the important functions and role of the capital market.Mobilization of Savings : Capital market can be an important source for mobilizing idle savings from the economy.
It mobilizes money from people for further investments in the productive channels of an economy. For the reason that sense it switch on the ideal monetary resources and puts them in proper investments. Capital Formation : Capital market helps in capital formation. Capital development is world wide web addition to the existing stock of capital throughout the market.
Through mobilization of ideal resources it generates cost savings; the mobilized cost savings are made available to various sections such as agriculture, industry, etc. This can help in increasing capital formation. Provision of Investment Avenue : Capital market boosts resources for longer intervals. Thus an investment is provided by it avenue for people who wish to invest resources for a long period of time. It provides suitable interest returns also to investors.
Instruments such as bonds, equities, devices of mutual money, insurance policies, etc. definitely provides diverse investment avenue for the public. Speed up Economic Growth and Development : Capital market enhances production and productivity in the national economy. Since it makes funds designed for long period of time, the financial requirements of business houses are met by the administrative centre market.
It helps in research and development. This can help in, increasing creation and efficiency in economy by era of employment and development of infrastructure. Proper Regulation of Funds : Capital markets not only helps in fund mobilization, but it also helps in proper allocation of these resources. It could have regulation over the resources such that it can direct funds in a qualitative manner.
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Service Provision : As an important financial set up capital market provides various types of services. It offers long-term and medium term loans to industry, underwriting services, consultancy services, export fund, etc. These services help the manufacturing sector in a big spectrum. Continuous Availability of Funds : Capital market is place where the investment avenue is consistently available for long term investment.
This is a liquid market as it makes fund available on continues basis. Both buyers and seller can buy and sell securities as they are continuously available easily. Basically capital market transactions are related to the stock exchanges. Marketability in the administrative centre market becomes easy Thus. Having less an advanced and vibrant capital market can lead to underutilization of money. The developed capital market also provides access to the foreign capital for domestic industry. Thus capital market definitely plays a constructive role in the over-all development of an economy.