Money market helps the central bank in two ways: Developed money market helps the commercial banks to become self-sufficient.
The investors cannot commit their funds for a permanent period but companies require funds permanently.
One of the major economic benefits generated by development of the Capital Markets is improved allocation of capital. The existence of such an institution encourages people to invest in productive channels. The long-term funds or fixed capital are raised by companies by the issue of shares, debentures and bonds in the capital market.
Money market contributes to the growth of industries in two ways: As a result, public issues of most of the good companies are now over-subscribed many times. The borrowers issue primary securities which are purchased by lenders either directly or indirectly through financial institutions.
Stability in Security Prices: The capital market functions as a link between savers and investors. It is to be noted with happiness that Government of India has successfully introduced the derivative trading in the stock exchanges.
There are very many issues, which require immediate and urgent attention of the planners concerned. The credit market helps the investors, i. Internet Trading Trading on stock exchanges is allowed through internet, investors can place orders with registered stock brokers through internet.
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. Various financial assets, e. A stock exchange is a market which facilitates buying and selling of shares, stocks, bonds, securities and debentures.
The other major economic benefit generated by development of the Capital Markets is improved allocation of Risk.
This is because when policy makers embark on bad policies the equity and bond prices tend to fall. It is only with the help of capital market, long-term funds are raised by the business community.
It also encompasses the process by which securities already outstanding are transferred. K, Japan and Vol.
The prices of Equity and Debt respond immediately to change in market conditions and quickly embodied in current asset prices. It plays an important role in mobilising the savings and diverting them in productive investment.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. Chapter 1: An Overview Of Indian Capital Market Introduction The capital market aids economic growth by A PhD THESIS ON "ROLE OF FOREIGN INSTITUTIONAL INVESTORS IN INDIAN STOCK MARKET" 2 | P a g e financial market crisis with great strength and stability.
The household sector is coming to. The Capital Markets play a significant role in any economy from allocation of Capital and Risk to Policy Making. If there is any single factor that makes a huge impact in improving the GDP of a country, it is the effective allocation of capital to the Industry and Government.
Capital Market plays a crucial and effective role in the economic development of a nation. It provides the financial resources needed for the long term and sustainable development of the different sectors of the economy.
Role of Capital Market in an Economy Financial market deals about the raising of finance by various institutions through the issue of various securities. Every business concern requires two types of finance.
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).Download