Capital market reform enables the capital markets to embrace new ideas and techniques affecting it. Capital market liberalization is one such capital market reform that is adopted by various countries to strengthen their economy.
A capital market is a place that handles the buying and selling of securities. This is the ideal place where both the governments and companies can raise their funds. The capital markets of all the countries have undergone a number of reforms in the past.
Economic theories are made and implemented to reform the functionalities of the capital market. The prime objective behind all the policies and reforms is to strengthen the capital market of a particular country as much as possible.It has always been a big question to the economists – Whether to allow the foreign investments in the country or not?
Packaged with both advantages and disadvantages, the liberalization of the capital markets has always been controversial. In the 1980s and 1990s, when the US Treasury and International Monetary Fund (IMF) tried to push world-wide capital-market liberalization, there was enormous opposition. Economists were not in the support of free and unfettered markets.
Now, when the capitalist countries, developing capitalist countries, under-developed countries and a large number of socialist countries have nodded their support to the capital market reform and capital market globalization, the global capital market has evolved in a new identity. The concept of capital market is not restricted to the share and bond trading in the developed capitalist countries only but is equally influenced by the capital markets of developing and under-developed countries as well.
Now, the economic or financial change in one country can affect the capital market of other country in real time. Almost all the countries are now exposed to the inter-country trades and inter-country investments. The use of internet and electronic media has added some more feasibility to the practice. Exchange of information is fast and accurate with internet. Another advantage of this system is that it brings the entire world in a single place. The capital market is one of the industries that enjoys the maximum facility of the internet service.
Last Updated on : 22 July 2016