Meaning and Definition of Capital Market

Meaning and Definition

Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, and stocks. The buying/selling is undertaken by participants such as individuals and institutions. Capital market forms an important core of a country’s financial system.

Capital market can be defined as “a market for borrowing and lending of long-term capital funds required by business enterprises”. Capital market offers an ideal source of external finance. It refers to all the facilities and the institutional arrangements for borrowing and lending medium-term and long-term funds. Like any market, the capital market is also composed of those who demand funds (borrowers) and those who supply funds (lenders).

Stock Exchange

According to Arun K. Datta, capital market may be defined as “a complex of insti-tutions investment and practices with estab-lished links between the demand for and sup-ply of different types of capital gains”.