√ Definition of Capital Market, History, Objectives, Functions, Types, Benefits, Roles, Structures and Examples
Definition of Capital Market, History, Objectives, Functions, Types, Benefits, Roles, Structures and Examples – In this discussion we will explain about the capital market. Which includes the definition of capital market, history of capital market, purpose of capital market, function of capital market, types capital market, capital market benefits, role, structure and examples of capital markets which are discussed in full and light.
Definition of Capital Market, History, Objectives, Functions, Types, Benefits, Roles, Structures and Examples
For more details, please see the review below carefully.
Definition of Capital Market
In general, the capital market is a market that brings together parties who have excess funds and those who need funds.
Another understanding of the capital market or capital market is a market for trading long-term funds in the form of bonds or stocks. Funds offered in the capital market are funds in the form of securities or securities with maturities of more than one year. For this reason, the capital market is often referred to as the stock exchange. The stock exchange is a market where sellers and buyers of securities/securities meet.
Capital Market Objectives
The objectives of establishing the capital market are as follows:
- Gather opportunities in the community to promote economic growth.
- To provide an opportunity for the community to co-own the company and share in the results (profit)
Capital Market Function
In general, the functions of the capital market are as follows:
-
To Increase Business Capital
Companies can get funds by selling shares to the capital market. These shares will be purchased by the general public, other companies, institutions or the government. -
For Equal Income
Within a certain period of time, the shares that have been purchased will provide dividends or a share of the company's profits to the buyers. For this reason, selling shares with the capital market can be considered as a means of equalizing income. -
For Facilities to Increase Production Capacity
With additional capital obtained from the capital market, the company's productivity will be high or increase. -
For Means of Creating Workforce
The existence of a capital market can be a driving force to emerge and develop other industries whose impact can be to create new jobs. -
For Means of Increasing State Income
Any dividends given to shareholders will be taxed by the government. The additional income with this tax will increase revenue for the state. -
For State Economic Indicators
Increased (dense) activity and volume of sales or purchases in the capital market can provide an indication that the company's business activities are running well. Vice versa.
Types of Capital Markets
The types of capital markets include:
-
Primary market (primary market/initial public offering)
The primary market is one type of capital market, a place to carry out securities offerings by indications of underwriters and selling agents to public investors. -
Secondary Market
The secondary market is where securities that have been listed on the stock exchange are traded. The secondary market offers an opportunity for investors to buy or sell securities that have been listed on the stock exchange, after an initial offering has taken place. In this market, securities are traded from one investor to another.
Capital Market Benefits
The benefits of the capital market in general are as follows:
- Being a provider of sources of financing (in the long term) for the business world and also allows optimal allocation of funds
- Providing many investment vehicles for investors so that it is very possible to carry out diversification. Alternative investment to provide potential income with a calculated level of risk
- To become a provider of leading indicators for a country's economic development. The spread of company ownership to the middle layer of society.
The Role of the Capital Market in the National Economy
In the Indonesian economy, the role of the capital market is as follows:
- Has a role as a financial intermediary (intermediary institution) other than a bank
- Enabling investors to participate in profitable business activities (investment)
- Enabling business activities to obtain funds from other parties in order to expand business or expansion
- Allows business activities to separate business and economic operations from financial activities
- Enabling securities holders to obtain liquidity by selling their securities to other parties.
Capital Market Structure
The highest structure of the capital market in Indonesia lies with the Minister of Finance who appoints the OJK (Financial Services Authority) as a government agency that has the duty to carry out fostering, regulating and supervising the day-to-day capital market with the aim of realizing the creation of capital market activities that are orderly, reasonable, efficient and also protect the interests of society financier.
Capital Market Example
Examples of capital markets in Indonesia are Indonesia stock exchange or Indonesia Stock Exchange (IDX or IDX). IDX is a merger of the Jakarta Stock Exchange (BEJ) and the Surabaya Stock Exchange (BES). While examples of capital markets in the world are:
- NASDAQ
- New York Stock Exchange (NYSE)
- Euronext
- Toronto Stock Exchange (TSX)
- London Stock Exchange
- Japan Stock Exchange Group
- Shanghai Stock Exchange
- Hong Kong Stock Exchange
Thus has been explained about Definition of Capital Market, History, Objectives, Functions, Types, Benefits, Roles, Structures and Examples, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read our other articles.
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