Business Environment, 1st Edition by Pearson

Chapter 45: The Indian Capital Market | 585 |

 Passive role of public fi nancial institutions in checking

malpractices

 High cost of transactions and intermediation, mainly due

to the absence of well-defi ned norms for institutional in-

vestment

In a planned economy, like the one we had prior to liberalization

when the stock exchanges performed a residual role, these

defi ciencies did not matter much. On the other hand, in a market-

driven economy towards which we are moving, capital market is

expected to perform multifarious and facilitative functions, such as

 Privatization and a greater role for the private sector imply a

large demand for equity fi nance

 Equity market should enable investors to diversify their

wealth across a ...