Allocation of Risk: The other major economic benefit generated by development of the Capital Markets is improved allocation of Risk. Among these other financial institutions, two groups need to be distinguished. Market Types The Capital Market system has four types of market. The story of Capital Markets in India dates back to the 18 th century when trading shares of East India commenced. It comprises of the statement of the problem, objectives of the study, research questions and hypotheses, significance of the study, scope and delimitation of the study and organization of the study.
The upward movement in the share actually is greater during the war period though the share stood at about 42 per cent in 1939, which represents a considerable increase over 1929 and 1958. Usually the traded prices are made known to the public. The relative importance of various stock exchanges in the market has undergone dramatic change during this decade. The objective of this service is to facilitate cross-country knowledge sharing on development challenges and opportunities among counties in select peer groups. These funds are obtained from the surplus economic units or savers.
Monitoring via business groups in some countries, such as Japan and Korea, corporate actions are coordinated within a family of interrelated firms, with a main bank at the center. Capital market involves various instruments which can be used for financial transactions. Unlike equity securities, debt securities issued at previous dates are redeemed by companies every year. The savings departments of commercial banks and savings and loan associations gained between 1900 and 1929; the latter also gained in the postwar period. The evidence from this study also reveals that the activities in the capital market tend to impact positively on the economy. They also enjoy priority over the equity shareholders in payment of surplus.
The most significant development in Capital Markets is the way the technology has erased the geographical boundaries. Depository: Depository functions like a securities bank, where the dematerialized physical securities are traded and held in custody. To make recommendations as to how the operations of the market could be improve to boost economic development and development of Nigeria. On the other hand, security markets help the entrepreneurs in setting up their projects which are beyond their financial capacity. The primary market issuance is done either through public issues or private placement.
In a perfect market where participants act rationally and take the long view, the risk component in interest rate differentials would be equal to the expected average loss on a specific type of commitment. This made a huge difference in geographically vast country like India. For meeting the growing financial needs of a developing economy, financial ark should also grow at a faster rate. Attractive deals were put together establishing their feasibility in terms of adequacy of cash flows to meet interest payments. It is an institutional arrangement to borrow and lend money for a longer period of time. The system of allocation of funds works through incentives and penalties. A summary picture of the main types of financial institutions operating in the United States in 1958 is, therefore, given in Table 3.
The health of the economy is reflected by the growth of the stock market. Lines 11-16 and 11-17 of col. Financial institutions are those whose assets are predominantly financial i. The performance of capital market has registered a significant upward in recent times right from the beginning capital market attract every person as it has become common to see car on road every day and being a student of Finance I learned a lot from this project and it would help me a lot in making my career. It plays an important role in mobilising the savings and diverting them in productive investment.
In a modern economy, there is a gap between the investment and consumption needs as compared to the income. They take the responsibility of selling the stocks to the public. In doing so, they can threaten to withhold financing should management act in a manner contrary to the banks' interests. Conclusion on Capital Market The lack of an advanced and vibrant capital market can lead to underutilization of financial resources. A type of preference shares on which dividendaccumul ates if remains unpaid. The history of Nigeria Capital Market could be traced to 1946 when the British colonial administration floated a N600, 000 local loan stock bearing interest at 3¼% for the financing of developmental projects under the Ten-Years Plan Local Ordinance. It is believed in some circles that private placement has crowded out public issues.
Several combinations of the above are allowed thereby providing enormous flexibility to the users. These intermediaries act as working organs of capital market and are very important elements of capital market. Others invest more than they save. This allocative function is critical in determining the overall growth of the economy. In financial markets, there are different financial instruments which are bought and sold daily. There is a preference for raising resources in the primary market through private placement of debt instruments.