11

Capital Market in the Post-Liberalization Period: Reforms and Emerging Trends

V. K. Vijayakumar

11.1 Introduction: The Central Issue of Resource Allocation

The central problem of every economy is that of resource allocation. To reap the gains of economic efficiency, the resources have to be mobilized and made available for the most productive uses. In every market economy, the major part of the savings comes from the households. However, the investment is made by business firms. Mobilizing the idle resources of the households and making it available to the firms, for productive uses, is the function of the financial system. The economic efficiency and growth are crucially related to the efficiency with which the financial system performs this ...

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