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Why the investors prefer to raise finance from capital markets than to financial institutions?

Why the investors prefer to raise finance from capital markets than to financial institutions?

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Investors prefer to raise finance from capital markets than to financial institutions because of the fact that capital markets are geared towards long term financing. Capital market consists of stocks and bonds and investors can tap capital markets by issuing stocks (equity financing) or issuing bonds (debt financing). Both equity financing and debt financing in capital markets are for long term and so this gives a sense of financial stability for the investors. On the other hand raising finance from financial institutions is usually for short term to medium term period. As such when investors need funds and money for long term purposes like business expansion it is the capital markets that meet their objectives.

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