Capital markets


Capital markets are venues where savings and investments are channeled between the 
suppliers who have capital and those who are in need of capital.

Entities who have capital include retail and institutional investors while those who seek capital are businesses, governments, and people

Capital markets are composed of primary and secondary markets.
Primary market - stocks issued by a company to investor through initial public offering
Secondary market - stocks are traded day by day through country regulated stock market

The most common capital markets are stock and bond market.

Suppliers of capital market
Households
Institutions serving - like pension funds, life insurance companies, non finance companies
charitable foundations

Users of funds
motor vehicle purchasers
non finance companies
government financing infra companies

Capital market sells- financials product
Equities
Debt securities

Funds invested in stocks are for productive use
  • Companies can use it for innovation, research or development
  • Companies can build inventory based on demand
  • It boosts economic growth


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