Capital Market

The industrial development of a country

depends on an organised, well developed and
efficient capital market
Though national income determines the
savings, incentives enhance the tendency of
savings
Capital market provides such incentives by
creating a variety of financial assets and by
ensuring their liquidity and marketability
The capital market satisfies the taste of the
savers and needs of the investors and the
needs of the investors through its financial
instruments and institutions
The needs of the entrepreneurs who actually
use the savings for productive purposes are
varied
Functions of a Capital Market
Mobilise the financial resources on a nation
wide scale
Secure the much required foreign capital and
knowhow to promote economic growth at a
faster rate.
Ensures the most effective allocation of the
mobilized financial resources by directing the
same either to such projects which are
capable of the highest yield or to the
undeveloped priority areas where there is an
urgent need to promote balanced and
diversified industrialisation.