30 Available online on www.abhinavjournal.com Published by: Abhinav Publication Abhinav National Monthly Refereed Journal of Research in Commerce & Management ROLE OF CAPITAL MARKET IN DEVELOPING ECONOMY

Capital Markets are defined as markets in which money is provided for period longer than a year. Capital markets have numerous participants including individual investors, institutional investors such as pension funds and mutual funds, municipalities and governments, companies and organizations and banks and financial institutions. Capital markets typically involve issuing instruments such as stocks and bonds for the medium-term and long-term. In this respect, capital markets are distinct from money markets, which refer to markets for financial instruments with maturities not exceeding one year. Capital market helps in capital formation. Through mobilization of ideal resources it generates savings; the mobilized savings are made available to various segments such as agriculture, industry, etc. This helps in increasing capital formation. It facilitates and promotes the economic growth by mobilizing resources and diverting them in productive channels. Various functions and significance of Capital Market are Link between savers and investors, encouragement to saving, encouragement to investment, and stability in security prices. There are various instruments which are operating in the market for mobilizing fund, They are debt instruments, shares, derivatives products, debentures, preference shares etc. Capital market plays an important role in formation and working of economy. It helps in increasing capital formation, regulation over the resources in a qualitative manner, raises resources for longer period of time, enhances production and productivity, provides an alternative source of long term finance for long term investment and forms an important source in mobilizing idle savings from the economy