Factors of Capital Market
The term capital market refers to facilities and institutional arrangements through which long-term funds, both debt, and equity are raised and invested. It consists of a series of channels through which savings of the community are made available for industrial and commercial enterprises and for the public in general.
Factors of capital market are those financial, investments, regulatory organization which a capital market is formed and operated. The factors of this market are as follows:
Stock exchange: Stock exchange is the main factor of the capital market. Share, bond, debenture, securities, and other financial instruments are traded on stock exchange.
Investment Corporation: Investment corporations help industries for providing a long-term loan. These corporations buy a share, debentures, etc. and finance in the corporations to raise funds.
Investment trust: Investment trust collets individual savings from households and lends it to the capital market. It is a good way for small individual savings to be invested in this market.
Commercial banks: Commercial banks usually deal with short-term loans. But nowadays it disburses long-term loan also. So, commercial banks also participate in this market.
Industrial banks: Industrial banks are providing long-term loan for the different industries. It plays a vital role in establishing new farms.
Issue house: Issue house it another important factor of the capital market. Issue house helps corporation an issuing share and debenture and their efficient trading. Issue house sometimes takes the charge to issue and sell the shares, bonds, debentures etc, on behalf of the corporations.
Government: Government is the key factor in the capital market. Govt. regulates the capital market. Govt. is not only regulates but also provides money for industrialization. Sometimes it collects money from capital market as well.
Promoters: Promoters are themselves who established Joint Stock Company by taking the duty of supplying initial capital. Promoters have great importance for industrialization for any country.
Managing agents: Managing agent is another factor of the capital market. Managing agents are taking responsibilities to do contract for providing a long-term loan to the company. Managing agents take charge of selling shares or taking risk of a company which minimizes the risk of a company.
Specialized financial institutions: Some specialized financial institutions are also played important roles in the capital market, these institutes play spec ilk roles in the capital market and development of a country.
Foreign organization: Some foreign organization also takes part in the capital market and contributes a lot to the development of the country.
Broker houses: Broker house helps in trading financial instruments among the investors and corporate organization. Broker house acts on behalf of both parties.
Clearing Houses: Clearinghouse is another factor of this market. It resolves the dues among various financial institutions.
These are some factor the of capital market that help to operate the market effectively and efficiently and help to the development of capital market and country also.