The Integrity of Capital Markets

Introduction

Capital market is constituted of both primary and secondary markets all of which provide long-term investment opportunities. They are markets for long term funds with maturity period of more than one year. Examples of Financial instruments which are used in capital markets are debentures, terms, loans, bonds, warrants, preference shares and ordinary shares among others. These markets constitute of bond market and stock market in which debts and equity securities are traded respectively. Subsequently, capital market serves as a way of allocating the available capital to the most efficient users. Being an investment arena, capital markets usually are in constant control of immense amount of money which is usually contributed by investors. On the side of investors, they offer their capital contributions to these markets with an overall aim of obtaining the maximum benefits or rewards for their financial contribution within the minimum period possible (Brown, 2005).

In the last five decades, capital markets have attracted a significant number of interested investors. This has been associated with recommendable rewards or compensations which have been exhibited by already in investors. Nevertheless, the existing loopholes in the governing and supervisory rules have exposed investors to a number of risks associated with these investments. According to research surveys which have been carried out in the United States of America, approximately forty percent of American citizens have been shying away from investing in capital market due to previous cases of inappropriate exploitation of investors (Tichy, & McGill, 2003).

Capital market should adhere to equal and even distribution of market information to all market ...

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...r manipulations. For instance, release of biased sensitive market information and manipulation of financial information to lure in new investors. Such factors have adversely affected the integrity expected from capital market centers. Nevertheless, various strategic measures such as formation of supervisory bodies have been embraced to increase integrity and confidence to the investor.

Works Cited

Branson, W H. 1979. Macroeconomic theory and policy, Routledge Publisher, New York.

Brown, M. T. 2005. Corporate integrity: rethinking organizational ethics, and leadership, Cambridge University Press, Cambridge.

O'Brien, J. 2007. Private equity, corporate governance and the dynamics of capital market ..., Imperial College Press

Tichy, N. M., & McGill, A.R. 2003. The ethical challenge: how to lead with unyielding integrity, John Wiley and Son Publishers, London.