How can the capital market help to create brighter future for all
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Answer:
Capital market is defined as the market where medium and long terms finance can be raised (Akingbohungbe, 1996). Capital market offers a variety of financial instruments that enable economic agents to pool, price and exchange risk. Through assets with attractive yields, liquidity and risk characteristics, it encourages saving in financial form. This is very essential for government and other institutions in need of long term funds (Nw**kwo, 1999). According to Al-Faki (2006), the capital market is a network of specialized financial institutions, series of mechanism, processes and infrastructure that, in various ways facilitate the bringing together of suppliers and users of medium to long term capital for investment in economic developmental project”.
Taking into account the role in the market economy, the capital market occupies an important place, through their specific mechanisms, succeeding to give its contribution to the economic development of the society. In consequence, the public authorities must notice the importance of the capital market in the national economy and, on the other hand, to make the efforts for insuring the necessary framework for the normal functioning of its specific mechanisms. The valences of the capital could be even more interesting in the case of emerging markets being well-known its contribution in reorienting financial resources to efficient activities, contributing to the economic reform, but also being interesting in the privatization process.
Again the capital market was instrumental to the initial twenty five Banks that were able to meet the minimum capital requirement of N25 billion during the banking sector consolidation in 2005. The stock market has helped government and corporate entities to raise long term capital for financing new projects, and expanding and modernizing industrial/commercial concerns (Nw**kwo, 1991).