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6. What important functions do capital markets perform for national and global economies? Why should a...

6. What important functions do capital markets perform for national and global economies?
Why should a country be concerned about the relative strength and performance of its capital markets?

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Answer #1

The role of the capital markets for the nation or economy are:

  1. It mobilizes the domestic savings by pooling them towards the productive projects.
  2. The capital market increases the wealth distribution in the nation.
  3. It increases the productivity of the economy to encourage improvement in employment.
  4. The capital market provides equity capital and infrastructure development capital.
  5. It promotes public-private sector partnership.

Thus, every country and its government has to take care of its capital markets and apprehend the relative strength and performance of its capital markets because of its various benefits provided to the nation.

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