Capital market liberalization is a result of globalization and trade liberalization, refers to the relaxation of government restrictions in the market. Not only government entities, but also private entities participate its functioning, and investors around the world are able to invest in the shares and bonds of other countries.
Worldwide economies, particularly in the developing countries, are opening their doors to foreign investments and capital, enhancing global competitiveness.Unbound circulation of goods and services within and between countries results in an increase in the circulation of money, causing a positive effect on the capital market.
Non-tariff and tariff trade barriers are eliminated, and avoidable legislation and taxes are not imposed as a result. Not only do parties involved in a trade stand to benefit from the effects of liberalization, but gains in productivity and the maximization of the economy’s general efficiency are also a result.
As well as free access that can be had to the market’s information, there is a complete absence of policies that hamper trade and labor, and capital is allowed free flow under the liberalized market.
For a long period of time, the development of open capital markets has been a prerogative worldwide and several economies have made huge developments by opening up their markets. The whole capital market has now become a global common market, with globalization ensuring hassle free imports and exports. Corporations and companies are able to receive external investments and, along with individuals, can gain access to foreign goods and services.
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Last Updated on : 21st July 2016