Business world needs to capital, all the time tend to show a growing amount. The occurrence of accretion of capital requests is shown by the increasing demand for production activities. Therefore, to facilitate the public and the producers to get government capital will jointly organize economic institutions of capital market activities.Capital markets (capital market) is a market for long-term financial instruments that can be traded, either for debt securities (bonds), equities (stocks), mutual funds, derivative instruments and other instruments. Capital market is a means of financing for companies and other institutions (eg government), and as a means for the activities of investing. Thus, capital market infrastructure to facilitate various trading activities and other related activities.
The difference between the capital markets with financial markets are in period. In the money market, trading short-term securities, while in the capital markets, securities traded long term.
- Differences with Money Market
The capital markets have an important role in the economy of a State because the capital markets have two functions, namely:a. The economic function.Capital markets provide facilities or vehicles that bring together two of the investors' interests and parties that require funding.b. The financial function.Capital markets provide the possibility and the chance to gain reward (return) to the owner of the funds, according to the characteristics of the selected investment.So hopefully with the existence of capital market activity increased as the economy becomes an alternative capital market funding for companies to increase corporate revenue which in turn provide prosperity for the wider community.While the function of capital markets in Indonesia include:1. as medium businesses to obtain additional capital;2. as a means of distribution of income;3. enlarge production with capital obtained thus increasing productivity;4. accommodate workers; and5. increase tax revenue for the government.
- Capital Markets Function
In general, benefits from the capital market are:a.Menyediakan sources of financing (long term) for the business world at the same time allowing optimal allocation of funds.b.Memberikan diverse investment vehicles for investors to allow for diversification.c. Provides a leading indicator for the economic development of a State. Mean when the stock market develops it is expected that the economy will also grow.d. The spread of ownership of the company until the middle layers of societye. The spread of ownership, openness and professionalism to create a healthy business climate and encourage the use of professional management.5. The purpose of the Capital Market FormationIn 1977, the government re-enable the operation of capital markets in order to trigger the growth of national economy. Reactivation is grounded by the need for increased development funds.Through capital markets, businesses will be able to obtain some or all of the necessary long-term financing. In addition, this activation is also meant to pave the results of development through ownership of company stock as well as providing jobs and equal opportunity business.6. Strategic Role of Capital MarketsThe capital markets have an important role in economic activity. In many countries, especially in countries that embraced market economic system, capital markets has become one of the sources of economic progress, because capital markets can become an alternative source of funding for companies. These companies is one of the national production of agents will form the Gross Domestic Product (GDP). The development of capital markets will support activities to increase GDP. In other words, the development of capital market will also push a country's economic kemjuan.
- Benefits of Capital Market