Capital Market is one of the significant aspects of every
financial market. Hence it is necessary to study its correct meaning. Broadly
speaking the capital market is a market for financial assets which have a long
or indefinite maturity. Unlike money market instruments the capital market instruments
become mature for the period above one year. It is an institutional arrangement
to borrow and lend money for a longer period of time. It consists of financial
institutions like IDBI, ICICI, UTI, LIC, etc. These institutions play the role
of lenders in the capital market. Business units and corporate are the
borrowers in the capital market. Capital market involves various instruments
which can be used for financial transactions. Capital market provides long term
debt and equity finance for the government and the corporate sector. Capital
market can be classified into primary and secondary markets.
The primary market is a market for new shares, where as in
the secondary market the existing securities are traded. Capital market
institutions provide rupee loans, foreign exchange loans, consultancy services
and underwriting.
Final Glance and Conclusion on Capital Market
The lack of an advanced and vibrant capital market can lead
to underutilization of financial resources. The developed capital market also
provides access to the foreign capital for domestic industry. Thus capital
market definitely plays a constructive role in the overall development of an
economy.
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