What is Capital Market ?
Definition of Capital Market
The capital market is a marketplace where investors can buy and sell debt and equity instruments. It provides a channel for investment and saving between suppliers of capital such as institutional or retail investor, and user of capital like individual, business and government.
The capital market is consisting of the primary market, where new bonds and shares are traded, and secondary market, where existing securities traded.
Explanation of Capital Market
Capital markets play a vital role in order to contribute to the economy. It is the financial market, which maintains the demand and supply of equity and debt capital. It is not a compact unit, it is a highly decentralized system made up of major parts: money market, stock market, and bond market.
Capital markets are a broad category for the facilitation of buying and selling of financial instruments. Capital markets operate in accordance with the guidelines provided by the Securities and Exchange Commission in the United States or other financial regulators in other countries.
The size of the capital market of a country is directly proportional to the size of the economy. Most of the trades are executed through computerized electronic system; some of them are accessed by the general public, while others are more tightly regulated. There are numerous participants in the capital market, including individual investor, municipalities, governments, companies, banks, and financial institutions.