Emerging Trends in Asian Financial Markets: Evidences from Malaysia
A well-diversified and competitive financial market system is vital for long-term economic growth and development to ensure that risks in the economy are well distributed among the various subsectors. In the new millennium, the future of the financial market lies in its ability to create dynamic financial players who are able to support the domestic economy and, more important, are increasingly more efficient, competitive, sound, stable, and capable of facilitating the economic transformation process.
Needless to emphasize, well-functioning financial markets result in more and better projects getting financed, managers who are compelled to run companies in accordance with the interests of investors, higher rates of innovation, and individuals who are able to select their preferred time pattern of consumption and their preferred risk-return trade off. The main functions of financial markets are to mobilize savings and to allocate those funds among potential users on the basis of expected risk-adjusted returns. Facilitating both the transfer of risk and the reduction of risk, financial markets help to monitor managers and exert corporate control. More important to point out, they also supply liquidity to investors by enabling them to sell their investments before maturity. As the wealth of a country increases, the financial markets lead to a successful transition from a nation of savers to a nation of investors (Kadir, 2001).
|Journal||Globalization and East Asia: Opportunities and Challenges|