Capital Markets Law Journal for Emerging Markets- myassignmenthelp

Question: Discuss about theCapital Markets Law Journal for Emerging Markets. Answer: Introduction: The economic growth of the present economy hinges an effective and efficient financial sector which accumulates the domestic savings and increases the capital for the projects that are productive. The non presence of the capital markets may result in the certain development productive projects to be unexploited (Ouandlous, 2010). It is the capital market which connects the financial sector among the real sector and hence results in growth not only in the real sector but also results in economic development. A significant role is played by the capital markets in stimulating the economic growth and also as a significant alternative source for providing the finance for the investments that are on long terms (Ouandlous, 2010). Capital markets are responsible for providing the equity capital and the infrastructure capital for raising the socio economic benefits which are the entry, roads, public transport and communications. The well developed capital markets are responsible for many of the economic benefits which include the employment opportunities, increased productive growth, and the enhanced macroeconomic stability (Sissoko, 2016). For focusing on such significant benefits one has to keep a view on the significance of the capital markets while facilitating the advanced economic performance, job creations that are foster by the capital markets and the required preconditions for the growth of the well functioning capital market (Sissoko, 2016). The capital market offers an ample amount of opportunities for the business while trading the monetary securities that increase the benefits of both the society and the markets. The platform is provided by the capital market to the investors while trading the monetary securities (Kolo Walde, 2008). Capital market enhances the developing countries potential growth and innovation. The globalization forces and technology results in new forms of competition that are transformed noticeably from the capital market globally (Kolo Walde, 2008). Dr. Fakhruddin Ahmed asserted that that Only a vibrant and well-regulated capital market can bring sustainable economic development in the country through making the real sector capable of meeting the challenges of the competitive global economic realities (Kolo Walde, 2008) Literature review: In 2015 the overall economic development is restrained with unbalanced scenario across the different countries and regions (Lee, Oh Park, 2013). The prospect of the conventional financial theory mainly focuses on the qualitative research and the modern theory of the capital market focus on the utilization of the mathematical model and other methods of analysis to process the empirical and quantitative analysis (Lee, Oh Park, 2013). In the starting of 1952 Markowitz projected the combination theory of investment. The modern capital market theory is obtained from the capital market analyzation. The additional organized capital breakdown is starting with twentys of 20 century (Setiawan, 2010). The analysis of the capital market during twenty to fortys is mainly guarded by two groups that are elementary analysis characterized by Graham and Dodd and on the other hand, Magee represented the technical analysis (Setiawan, 2010). Many theorists argued that the capital markets expansion may have the positive impact on the growth of the economy. In the case, the financial sectors act as the supply leading who transmit the resources from the low growth and traditional sectors towards the sectors of high growth and promote and stimulate the entrepreneurial response in the modern sectors. Joseph Yam (2004) asserted that the economic intermediation is directing savings into investments (Dumitriu Stefanescu, 2016). Aziz and Duenwald (2002) stated that economic intermediation influence expansion through the certain channels such as; it can augment the marginal efficiency of capital by accumulating information to assess another investment assignments and also through risk sharing; secondly can lift savings proportions channelled to savings through economic growth (Dumitriu Stefanescu, 2016). Conning and Kevane (2002) asserted that intermediation means an intermediary (Gulati, 2017). Among this, it was added by Gorton and Winton (2002) that it is the cause institution in the saving investment process (Gulati, 2017). They stated that those monetary intermediaries are companies which borrow from the one having the money in excess such as the savers that lend the money to the businesses that require assets for the investment (Gulati, 2017). Many researchers investigated the relation and significance of the stock market growth with the economic expansion and conclusion given by them suggested that the capital market expansion is absolutely concurrent with long term economic development and capital market role is significant in the economic growth of the nation (Maddock, 2013). Equity capital market size is having a positive result on the economic development of the country, such as the elevated turnover and market cap having the major optimistic influence on the financial sys tem. Studies revealed that the countries having the capital markets that are well-developed experience the economic growth higher as compared to the countries not having it (Maddock, 2013). Certain evidence from the study indicate that many capital markets of the African countries are comparatively underdeveloped, such countries that introduce the reforms which gears towards the growth of capital markets is competent to develop at moderately sustainable and higher rates (Maddock, 2013). In 2011 study demonstrated that South Africa is the country having the developed and the largest capital market, in terms of the trading volume and market capitalization that is growing in a significant way since2000 (Clayton Johnson, 2008). Countries such as Ghana, Egypt, Botswana, Tanzania, and Mauritius, where the capital markets have been recently developing, realizes the average per capita development rates of 2.8% and more from the last eight years (Clayton Johnson, 2008). Though, various economies not having an effective or formal capital market such as Seychelles, Lesotho and Ethiopia are not able to realize average per capita expansion rates over 2.7 % from the past eight years (Clayton Johnson, 2008). Even countries having the little and not much developed capital market such as Uganda and Swaziland is not able to realize and manage the average per capita development rates above 2.7 % (Clayton Johnson, 2008). Sharia compliant capital markets apparently hinges on the three basic principles that are the interest ban, truthfulness in the business and wealth tax (Effendi, 2018). Sharia compliant capital markets work on reducing the poverty, increasing the growth of the financial sector, growing contact to finance, structuring the stability of the financial sector and flexibility in client nations (Effendi, 2018). The Sharia compliant capital markets benefits in the three areas which are the sustainable expansion of Islamic business benefits the economic growth, tumbling poverty and encouragement mutual prosperity. It significantly contributes to the economic development, with an undeviating link to the real economy and physical assets (Paulina, 2017). This results in the growth of the financial sector with the expansion of the financial inclusion. Sharia compliant capital markets while improving their financial access and fostering the inclusion of the financial deprived services (Paulina, 20 17). It emphasises mainly the financing that is based on the partnership and is useful in improving the finance access for the small and the poor businesses (Paulina, 2017). Sharia in the financial markets helps in improving the agricultural market while contributing towards the enhanced food security. Sharia also results in strengthening the financial stability (Jaballah, Peillex Weill, 2018). The worldwide crisis of 2008 ravaged financial systems around the globe, it was only the Islamic financial institutions that were comparatively untouched, secluded by the elementary operating principles of risk-sharing and prevention of speculative and leverage financial products (Jaballah, Peillex Weill, 2018). Research Methodology The purpose of the Study The purpose of the study is to understand the scenario of the capital market and its prospects and significance in the economic growth. The research is done to understand the role of the role of financial markets and instruments in economic growth along with this how the developed countries imitate, encourage and regulate capital markets. The role of the Sharia compliant capital markets in economic development. The study reveals how the capital market is responsible for the economic base and influences the future development and helps in realising the potential of the capital market development The capital market has a significant role in speeding up the economic development; hence this research will highlight the capital market significance and explore the credible signs of development (Erdal Yenipazarli, 2013). The Scope of the Study The scope of the study is to understand how the financial segments such as the banking and the socio economic tools which ensure the financial inclusion and supporting growth worldwide on the condition of financing and funding by the Shariah-compliant modes (Biancone Radwan, 2018). It is significant that Sharia capital markets not only proposes the substitute source of investment for the growth of the economic but also have intrinsic principles and characteristics which lend themselves fit to promoting and catalyzing the economic development (Biancone Radwan, 2018). Sources of Data: The data is collected from the both the primary and the secondary sources. Data is collected through the interview that is conducted by the concerned and qualified professionals, surveys, questionnaires, articles, reports and the annual reports. The questions related to the topic that is asked in the interview are as follow: What role doses the capital market plays in the growth of the economy? How does the Sharia compliant capital markets in economic development? The setbacks of the stock market in the economic growth? Discuss the present scenario of the capital market? Discuss the prospective signs that are responsible for the economic growth? How is the financial inclusion responsible for the economic growth? To discuss the major Islamic finance principles those are responsible for the economic growth? How is the capital market responsible for the economic growth and results in job creation? What is the connection between the development of the financial systems, economic growth, and the capital markets? Methods and Techniques Adopted in the Study: The methods and the techniques that are to be adopted in the research study is the qualitative research methodology. The approach of the qualitative research methodology is applied for reviewing the present literature from the different resources that are the scholarly journals, academic, documents, magazines, workshops, and other associated literature of finance industry. The data that is collected for the qualitative research depends on the three variables that are the GDP, GFCF (Real gross fixed capital formation and also the trade activities which include the import and export (Biancone Radwan, 2018). Empirical Analysis: The research utilizes an empirical and investigation analysis approach. The study analysed that the indicators for the capital market growth are considered as the ratios of the share traded, gross capital formation, market capitalization, gross domestic products and foreign private investment as the explanatory variables, on the other hand, GDP is considered as a dependent variable (Hanif, 2011). Research deepens the result empirically and explores certain indicators that explain the normal relation between the growth and finance. The three possibilities which are observed are that; financial growth is a factor of economic development that is leading the supply; financial growth is followed by the economic growth following demand; bidirectional casual among the growth and finance (Hanif, 2011). The stochastic representation of the elementary connection between the capital market expansion and economic development is precisely based on the apparent linear practical relationship among capital market development and economic growth. This facilitates to investigate empirically the connection between the capital market development and economic growth. Hence for considering the growth indicators of the capital market, the ratio of the share value that is traded, gross capital formation, market capitalization and foreign personal investment, to GDP, as an instructive variable, on the other hand, the GDP (gross domestic product) growth act as a dependent variable (Hanif, 2011). The research results to understand that the capital market sustainable development results to augment speedy rates of capital accumulation for better gains in productivity and also among the economic growth among the requirement to balance market development among the macroeconomic policy of real sector drive reminiscent of noteworthy decrease in lending rates to encourage manufacturing activities and investment in the real sector and transform capital market gains to output growth (Hanif, 2011) . Conclusions and Recommendations Hence from the research, it is concluded that the capital markets role is important for the comprehensive growth in provisions of wealth distribution and safer capital for the investors. Capital markets can results in to the financial inclusion by commencing the new-fangled services and products customized to suit the investors inclination for return and risk among this the borrowers risk appetite and project requirements. Credit counselling, Innovation, financial education and appropriate section identification comprise the promising strategies to attain this. The positive economic development in a great way is connected with the goal of enhancing the financial inclusion. Hence the Shariah-Compliant Socio-Economic tools of the capital markets resulted in the economic development with an increase in an output and creating jobs. References Biancone, P., Radwan, M. (2018). Sharia-Compliant financing for public utility infrastructure.Utilities Policy, 5(1), 2-10. Clayton Johnson, W. (2008). Recent SEC initiatives that should enhance access to the US capital markets by foreign private issuers.Capital Markets Law Journal,3(4), 389-416. Dumitriu, R., Stefanescu, R. (2016). Impact of the NYSE Shocks on the European Developed Capital Markets.SSRN Electronic Journal 2(1), 5-6. Effendi, J. (2018). The determinant of equity financing in sharia banking and sharia business units.Economic Journal Of Emerging Markets,10(1), 111-120. Erdal, F., Yenipazarli, A. (2013). Which Economic Freedoms Contribute Income per Capita? Are Results Sensitive to the Indicators and the Estimation Methods?.Emerging Markets Finance And Trade,49(s5), 130-147. Gulati, M. (2017). How Much Can the Global Bond Markets Constrain Bad Governments?.Capital Markets Law Journal,12(1), 1-2. Hanif, M. (2011). Re-Action of Market to Sharia Compliant Index (KMI-30): An Opinion Survey of Accounting Finance Executives.SSRN Electronic Journal. Jaballah, J., Peillex, J., Weill, L. (2018). Is Being Sharia compliant worth it?.Economic Modelling. Kolo, A., Walde, T. (2008). Economic crises, capital transfer restrictions and investor protection under modern investment treaties.Capital Markets Law Journal,3(2), 154-185. Lee, H., Oh, S., Park, K. (2013). How Do Capital Structure Policies of Emerging Markets Differ from Those of Developed Economies? Survey Evidence from Korea.SSRN Electronic Journal 4(2), 6-8.. Maddock, R. (2013). Banks, Capital Markets and Australian Economic Development.SSRN Electronic Journal 10(2), 124-125. Ouandlous, A. (2010). Capital Markets And Economic Development: A Framework For Newly Liberalized Economies.Journal Of Business Economics Research (JBER),8(6), 178. Paulina, P. (2017). Sharia Finance Industry: Role and Contribution in Indonesia's Economic Development Currently.Journal Of Islamic Banking And Finance,5(2), 8-15. Setiawan, K. (2010). Do Emerging Capital Markets Move Toward the World Integrated Market? A Study on Comovement of Returns between Emerging Capital Markets in Asia and Developed Capital Markets.SSRN Electronic Journal, 2(4), 9-10. Sissoko, C. (2016). The Plight of Modern Markets: How Universal Banking Undermines Capital Markets.Economic Notes,46(1), 53-104.