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CAPITAL MARKET : INDISPENSABLE FOR A COUNTRY’S ECONOMY

Capital Market is one of the significant aspect of every Financial Market. Therefore it is necessary to study its correct meaning. Broadly speaking the capital market is the market for financial assets which have a indefinite maturity. Unlike money market instruments, the capital instruments become mature for the period above one year. It consists of finanacial institutions like IDBI, LIC, UTI, etc. These institutions play the role of the lender in the capital market. Business units and Corporate are the borrowers in the capital Market. Capital Instruments consists of various instruments which can be used for Financial transactions. Capital Markets can be classified into Primary and Secondary Markets. Primary Market : It is a market for new shares.

Secondary Market : It is a market in which exsisting securities are traded. ROLE OR FUNCTIONS OF CAPITAL MARKET :
A developed, dynamic and vibrant capital market can immensely contribute for speedy economic growth and development. Let us get acquainted with important functions and role of capital market. * MOBILIZATION OF SAVINGS : Capital market plays an extremely important role in promoting and sustaining the growth of an economy. It is an important and efficient conduit to channel and mobilize funds to enterprises, and provide an effective source of investment in the economy. It plays a critical role in mobilizing savings for investment in productive assets, with a view to enhancing a country's long-term growth prospects, and thus acts as a major catalyst in transforming the economy into a more efficient, innovative and competitive marketplace within the global arena. 

* RISK MANAGEMENT :  Capital markets also provide a medium for risk management by allowing the diversification of risk in the economy. A well-functioning capital market tends to improve information quality as it plays a major role in encouraging the adoption of stronger...
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