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In a perfect market, the supply of funds will equal demand for funds. However, there are...

In a perfect market, the supply of funds will equal demand for funds. However, there are restrictions that may cause limitation, which may make the capital market imperfect. What kind of restrictions can you think of?

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Answer #1

There are various kinds of restrictions that can cause limitation of capital market in becoming perfect. They are as follows-

1. There are various kinds of government interventions so that the capital markets are always kept monitored and in check.

2. There are various fraudulent practices which are going on into the capital markets which always limits its efficiency.

3.capital markets funding are based on manipulation of books of accounts which will not show the true face of the companies financial position.

4. Capital markets are also rigged by cartels formations and they lose their efficiency.

5. Capital markets are also favoured by regulatory authorities and they can also lead to various kinds of corruption practices along with intermediaries.

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