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What is Capital Market definition/concept

The term capital market refers to a class of the economic sector through which financing channels with different maturities are traded . This market serves as a means of channeling savings from various people and entities so that others can finance their projects. This type of market usually serves as a means of transmission of resources from the least productive to the most productive sectors.

Currently, capital markets are operated through electronic platforms that can be accessed through different entities, being in some cases available to the general public. There are several examples of this type of system that are maintained by entities such as investment banks, government departments, etc. From a physical point of view, these systems are hosted all over the world, although they are concentrated in financial centers like London, New York and Hong Kong. Capital Market

There is a division within the capital markets: these can be divided into primary and secondary markets. In primary markets, new stocks or bonds issued through a contract between the financing party and the financed party are sold, both the state and companies in need of financing can participate . On the other hand, in secondary markets, assets can permanently change their holder according to prices determined by negotiation and demand. Thus, the primary market consists of trading the debt of a public or private institution.

Furthermore, within assets traded on a stock market, a distinction can be made between fixed and variable income elements . The former correspond to all assets that pay fixed interest after a certain period of time; and the second, for assets whose income can vary over time, such as stocks. Capital Market

The government usually tries to regulate this type of market through certain measures, such as setting taxes or limits on turnover. In general, this is done in order to regulate a nation ‘s capital inflows and outflows . This can include exchange controls that prevent the freedom to buy and sell with respect to the exchange rate set in the market. However, these measures are often harmful in the long run, creating more problems than solutions. Capital Market

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