Efficient Capital Markets, plays a huge role in any countries economic growth and development, they allow availability of funds for investors to undertake long term projects at a competitive cost of capital. Long term projects results into jobs creation and employment security. The current banking industry and system (The Debt Market) only lends money into an economy including South Africa on a short term basis, there are very few specialized banking institution that lends on a long term basis which makes it difficult for other investors to pursue certain projects.
There are a number of contributing factors to this which includes, Less human and Capital resources, Risk, Profitability of projects, Share holders accountability. Creditors pressure, and Directors liability.
This therefore this creates a need for a system that will run parallel and compliment the banking system to meet the need on investors in pursuing long term projects, the Equities market, Capital Markets becomes the answer.
Capital Markets have demonstrated shown to offer tremendous potential to economic growth of a particular Economy. Capital markets tap not only into domestic financial resources, but also into international financial markets. The efficiency of these markets as they are shown in most of the advanced industrialized countries- they provide liquidity to investors and make funds available for the undertaking of long-term projects hence economic growth and Development.
South Africa and other African countries need efficient and stable Capital and financial Markets which also allows more public participation and that benefits all its citizens equally despite one economic back ground.
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