Alin Marius Andrieş
"Alexandru Ioan Cuza” University of Iaşi
Abstract: All participants in capital markets are asking how to finance investments or to invest money available. The answer to these questions depends on the situation you have: deficit or surplus capital. This article addresses issues concerning the place and role of capital market within the financial markets and in financing investments, trying to highlight the growing importance of this subsystem, shown both to economic agents and to all categories of investors.
Keywords: capital market, stock exchange, investment, economic development JEL Classification: O42, E44, G11, G14, E22
It is very difficult today to imagine ourselves the times when there were no banks, stock markets, money markets, public debts, times when the fortune of a person was only measured by the surface of land owned, by the number of animals one possessed as well as by the number of work hands one could use in the working the field. Economies presented themselves in the form of gold or silver goblets or jewels, and usury – the practice consisting of the charging o f interest on money – was prohibited both by law and by the Church.
The capital market today is a reality met in any modern economy. It is a market the necessity of which is unchallengeable, an extremely dynamic and innovative structure, permanently adapting to the economic environment and at the same time an influential factor of it, generating opportunities and to the same extent risk for all categories of participants to the economic activity, being a replica of a national economy to a small scale, but nevertheless especially representative. Tributary to the conditions in which it was formed and developed, the capital market brings together under this syntagma different conceptions. The continental-European conception attributes to this market a more comprising structure, containing the monetary market, the mortgage market and the financial market. In the Anglo -Saxon conception, which the economic practice has also adopted in our country, the capital market is a component of the financial market togethe r with the monetary market and the insurance market.
CES Working Papers, I, (2), 2009
2. CAPITAL MARKETS COMPONENTS AND FUNCTION
The specificity of this market derives from numerous aspects, but defining and at the same time delimitative in relation to other components of the financial ma rket are the following traits:
It is a market specialized in transactions with medium and long term financial assets, unlike the monetary market which offers solutions for refinancing through short and medium term capitals;
It is a public, open and transparent market, in the sense that anyone can be a participant on this market, without there being notable entry or exit barriers, the transactions having a public character;
The dissemination of information on this market, through its volume or, quickness an d with the possibility of equal reception by all participants, is probably the best one from the ones existing in the structures of a market economy;
The capital circulation vehicle is represented by securities, characterized through negotiability of the price and immediate transferability with very low transaction costs; The transaction is made through intermediaries, who have an essential role in connecting the owners or issuers of securities with the owners of capitals; It entails risks both for the issuer and for the investor, specific for each financial instrument in question, but at the same time it also offers complex solutions for minimizing and dispersing it, both the financial and the operational one; It is an organized market, in the sense that t he transactions are performed according to certain principles, norms and rules known and accepted by participants. This does not mean the administration of the market, but its...