1、 why has the global capital market grown so rapidly in recent decades?will this gBU2207Internatinal Business Envirnent Tutrs: Irene Greaves, Linda nyekaStudent Nae: Siha XieDate: 14 JANUARY 2002 IntrdutinDitinary f Business defines the apital arket as a arket in hih lng-ter apital is raised by indus
2、try and ere, the gvernent, and lal authrities. The ney es fr private investrs, insurane panies, pensin funds, and banks and is usually arranged by issuing huses and erhant banks. Stk exhanges are als part f the apital arket in that they prvide a arket fr the shares and lan stks that represent the ap
3、ital ne it has been raised. It is the presene and sphistiatin f their apital arkets that distinguishes the industrial untries fr the develping untries, in that this faility fr raising industrial and erial apital is either absent r rudientary in the latter.The glbal apital arket has grn s rapidly in
4、reent deades. S I uld like t disuss abut it in the essay.This essay is rganized as fll, intrdutin, bdy, nlusin. In the bdy part, Setin 1 shs hy has the glbal apital arket grn s rapidly in reent deades. Setin 2 talks abut the ntinuane f the grth thrughut the 2000s.Bdy1. hy has the glbal apital arket
5、grn s rapidly in reent deadesIn reent deades, the glbal apital arket has grn s rapidly beause f the rise f privatizatins ainly. ith private apital fls rising fr less than 5 perent f rld GDP in 1975 t abut 20 perent tday, privatizatins have signifiantly inreased arket liquidity. And als privatizatin
6、takes a ptential rle glbal apital arket develpent. A. The Rise f apital arket-Based Finane apital arket-based finane has in fat been inreasing in iprtane, bth abslutely and relative t finanial interediary-based finane, in bth develped and develping untries ver the past deade. And als apital arkets a
7、re in fat inning the present and see likely t dinate the future f rprate finane in develped and develping untries alike.a. The Stable Rle f erial Banking in dern Enies rdinary “relatinship banking“ appears t be (at best) hlding its n as a sure f rprate finaning arund the rld, and is re likely in del
8、ine. The bits f banking that are gring rapidly are thse parts that prvide high value-added prduts (espeially risk anageent tls) and prvide large-sale syndiated redits t rprate brrers. During the late-1980s and early-1990s, hen Japan and Gerany appeared t be utperfring ajr apital arket-riented untrie
9、s suh as Britain and the US, the aadei literature ften favred bank-based systes. Exaples f this literature inlude Prse (1992), Kester (1992), and Prter (1992), hile the supprting arguents are suarized in aher and Anderssn (1999) and Tsuru (2000). re reently, hever, the eight f pinin has sung strngly
10、 in favr f the idea that apital arkets have deisive parative advantages ver banks and ther finanial interediaries as ptial nitrs and finaniers f a natins rprate life. This reassessent has been driven in part by the bservatin, disussed at length abve, that apital arkets have been prspering relative t
11、 banks fr any years n. The repetitive nature-and assive sts-f banking rises in develping and develped untries alike has als nvined any bservers that banks are inherently fragile institutins, hse rle in rprate finane shuld be iniized as uh and as quikly as pssible (Enist (1997, 1999).b. The Rapid Grt
12、h in Stk arket apitalizatin and Trading Vlue Sine 1983 Fr 1983 t 2000, this as a perid f very rapid grth in the apitalizatin f arkets in every untry exept Japan. Ttal rld arket apitalizatin inreased ver ten-fld (t $ 35.0 trillin) beteen 1983 and 1999, and the ttal apitalizatin f the US arket inrease
13、d alst nine-fld (fr $ 1.9 trillin t $ 16.6 trillin) ver the sae perid. The Draati Grth in Seurities Issuane Vlue Sine 1990 Anther ay f easuring the rise f apital arkets is t exaine hether their share f annual rprate finaning ativity has grn relative t that f ther sures f funding. Seurity fferings by
14、 US issuers aunted fr t-thirds f the glbal ttal thrughut 1990-1999, that iplies that nn-US seurities issues in reased fr $ 191 billin in 1990 t $ 750 billin in 1998, and then t $ 1.19 trillin in 1999. The surge in nn-US issuane vlue in 1999 as largely due t the ppularity f eur-deninated bnd issues,
15、hih atually exeeded dllar-deninated bnd issues fr uh f 1999.d. The Phenenal Grth in Venture apital Finaning in the United States ne highly speialized, but extreely iprtant type f finaning has als grn very rapidly ver the past deade, and espeially s sine 1997. This is venture apital investent by US v
16、enture apital partnerships. The fund-raising patterns f these private equity investrs are disussed in Gpers and Lerner (1998), and the petitive advantages f US venture apitalists versus thse in ther develped untries are desribed in Blak and Gilsn (1998).e. The Surge in ergers and Aquisitins rldide T
17、he alst inredible inrease in the ttal vlue f erger and aquisitin ativity that has urred sine 1990. hile takevers have alays played an iprtant rle in the United States, the rise in A (erger and Aquisitin) ativity in Eurpe during the 1990s as even re draati. Fr less than $ 50 billin annually in the la
18、te-1980s, the ttal value f A invlving a Eurpean target reahed $ 592 billin in 1998, befre re than dubling t $ 1.22 trillin in 1999-rivaling the US ttal. The glbal value f A ativity in 1999 reahed $ 3.4 trillin, an astunding 10% f rld GDP.Next I ill duent that share issue privatizatins have truly tra
19、nsfred share nership patterns f investrs in any different untries.B. Privatizatins Ipat n Stk and Bnd arket Develpente shuld be areful in inferring ausatin regarding privatizatins ipat n arket grth, sine a shift in idelgy r se ther exgenus plitial r eni hange ight have aused bth the privatizatin and
20、 the verall b.a. Ttal Preeds Raised by Privatizatin Prgras It is lear that natinal gvernents have been ang the biggest inners fr privatizatin prgras, sine these have draatially inreased gvernent revenues, hih is learly ne reasn the pliy has spread s rapidly. As entined abve, Privatisatin Internatina
21、l Gibbn (1998, 2000) reprts that the uulative value f preeds raised by privatizing gvernents exeeded $ 1 trillin setie during the send half f 1999. As an added benefit, this revenue has e t gvernents ithut having t raise taxes r ut ther publi servies.b. Privatizatins Ipat n Internatinal Investent Ba
22、nking All internatinal investent banks pete fierely fr share issue privatizatin andates, fr t prinipal reasns. First, beause the fferings are s large and s visible-and are alst alays designed t help prte the arkets apaity t absrb subsequent stk fferings by private panies-these are very prestigius an
23、dates. T date, the large US and British brkerage huses have had the st suess in inning advisry and underriting andates, thugh all untries that launh large-sale SIP prgras tend t favr lal investent banks as “natinal hapins“ t handle the desti share tranhe. The send reasn banks pete s fierely fr SIP a
24、ndates is beause they an be extreely prfitable. In spite f the fat-duented by Jnes, et al (1999) and Ljungqvist, et al (2000)-that SIPs have signifiantly ler underriting spreads than private setr fferings, their sheer size and lak f dnside prie risk ake the very lurative fr underriters.2. ill this g
25、rth ntinue thrughut the 2000s?As e indiated abve, the glbal apital arket has grn s rapidly in reent deades ause f the privatizatins rise. Privatizatins inreased the arket liquidity. N e have already stepped int the 21st entury. I believe that the grth ill ntinue fr the flling reasns. First, st f the
26、 suth-east Asia untries have revered fr the 1997 finanial risis. Fr these untries, they n have the apital t d businesses. And they get bak n the fast gring trak. Send, by the end f 2001, rlds biggest develping untry, hina, has entered the T (rld Trade rganizatin). This is real great nes. As e all kn
27、, tdays hina takes a serius psitin in rlds eny. Its innvatin and pening pliy ake hina keep ahieving high GDP grth rate. This drives the glbal apital arket keep gring. Suary and nlusinsThis essay exaines the ipat f share issue privatizatins (SIPs) n the grth f rld apital arkets (espeially stk arkets)
28、. I begin by duenting the inreasing iprtane f apital arkets, and the delining rle f erial banks, in rprate finanial systes arund the rld. I then sh that privatizatin prgras- partiularly thse invlving publi share fferings-have had a draati ipat bth n the develpent f nn-US stk arkets and n the partiip
29、atin f individual and institutinal investrs in thse stk arkets.This has tld the reasn f the fast grth f glbal apital arket. And then I suintly indiated the ntinuane f the rapid grth, the great future. The last but nt the least is the reendatin. I an nfidently assert that, if exeuted prperly, a serie
30、s f share issue privatizatins an indeed prte the grth f glbal apital arket, hih ill yield eni and plitial dividends fr any years t e. That eans there is a need t enurage the develpent f SIPs in rder t gain grth f glbal apital arket.ReferenesDitinary f Business, xfrd University Press, ? arket Huse Bk
31、s Ltd 1996The Enist (April 12, 1997), “Fragile, Handle ith are: A Survey f Banking In Eerging arkets.“ The Enist (April 17, 1999), “n A ing and A Prayer: A Survey f Internatinal Banking.“Gibbn, H., 1998, “rldide Eni rthdxy,“ Privatisatin Internatinal 123, 4-5. Gibbn, H., 2000, “Editrs Letter,“ Priva
32、tisatin Yearbk, Lndn, Thsn Finanial, 1. Gpers, P. and J. Lerner, 1998, “hat Drives Venture apital Fundraising?“ Brkings Papers n Eni Ativity-irenis, 149-192.Jnes, S.L., .L. egginsn, R. Nash, and J. Netter, 1999, “Share Issue Privatizatins As Finanial eans T Plitial and Eni Ends,“ Jurnal f Finanial E
33、nis 53(2), 217-253Kester, ., 1992, “Gvernane, ntrating and Investent Hrizns,“ Jurnal f Applied rprate Finane 5(2), 83-98.Ljungqvist, A.P., T. Jenkinsn and .J. ilhel, Jr., 2000, “Has the Intrdutin f Bkbuilding Inreased the Effiieny f Internatinal IPs?“ Ne Yrk University rking Paper.aher, . and T. And
34、erssn, 1999, “rprate Perfrane: Effets n Fir Perfrane and Eni Grth,“ ED rking Paper (Paris).Prse, S., 1992, “The Struture f rprate nership in Japan,“ Jurnal f Finane 47(3), 1121-1140.Prter, .E., 1992, “apital hies: hanging the ay Aeria Invests in Industry,“ Jurnal f Applied rprate Finane 5(2), 4-16.Tsuru, K., 2000, “Finane and Grth, Se Theretial nsideratins and A Revie f the Epirial Literature,“ ED rking Paper Series, N 228.data fr the Statistis setin f the Internatinal Federatin f Stk Exhanges ebsite ().
