The Capital Markets Authority (CMA) is an independent government regulating agency responsible for overseeing or supervising, licensing and monitoring the activities of market intermediaries, including the stock exchange market and the central depository and settlement system and all the other persons licensed under the Capital Markets Act of Kenya. The capital market is part of the financial market that provides funds for long-term development. This is a market that brings together investors of capital and borrowers (companies that sell securities to the public) of capital.
Formation of the Capital Markets Authority of Kenya
In the 1980s the Government of Kenya realized the need to design and implement policy reforms to foster sustainable economic development for an efficient and stable financial system. In particular, it set out to enhance the role of the private sector in the economy to reduce the demands of public enterprises on the exchequer, rationalize the operations of the public enterprise sector to broaden the base of ownership and enhance capital market development. It had become apparent that the commercial banks could not support and sustain a desirable economic development because they could not offer the necessary long-term credit. In 1984, a study on the Development of Money and Capital Markets in Kenya was jointly undertaken by the Central Bank of Kenya and the International Finance Corporation with the objectives of making recommendations on measures that would ensure active development and strengthening of the financial sector. This became a blu...
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...e growth in the country’s economy.
10. Also the capital markets allow ownership of assets and productive projects by small earners and upcoming investors to enable them to also benefit from the country’s growing economy and this will lead to distribution of the wealth in Kenya.
The lack of a progressive and vibrant capital market can cause underutilization of financial resources. The developed capital market also offers access to the foreign capital for domestic industry. Thus capital market definitely plays a productive role in the over all development of an economy.
2. Capital Markets and Securities FAQs by Nilene R. Evans, David M. Lynn, Anna T. Pinedo and James R. Tanenbaum (Kindle Edition - Nov. 19, 2013) - Kindle eBook
3. Fin 3010 course text.
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