2024年3月22日发(作者：)

Why has the global capital market grown so rapidly in recent decade

s?Will this growth continue through?

Dictionary of Business defines the capital market as a market in which long-term

capital is raised by industry and commerce, the government, and local authorities. Th

e money comes from private investors, insurance companies, pension funds, and bank

s and is usually arranged by issuing houses and merchant banks. Stock exchanges are

also part of the capital market in that they provide a market for the shares and loan sto

cks that represent the capital once it has been raised. It is the presence and sophisticati

on of their capital markets that distinguishes the industria l countries from the develop

ing countries, in that this facility for raising industrial and commercial capital is either

absent or rudimentary in the latter.

The global capital market has grown so rapidly in recent decades. So I would lik

e to discuss about it in the essay.

This essay is organized as follow, introduction, body, conclusion. In the body par

t, Section 1 shows why has the global capital market grown so rapidly in recent decad

es. Section 2 talks about the continuance of the growth throughout the 2000s.

Body

1. Why has the global capital market grown so rapidly in recent decades

In recent decades, the global capital market has grown so rapidly because of the rise o

f privatizations mainly. With private capital flows rising from less than 5 percent of w

orld GDP in 1975 to about 20 percent today, privatizations have significantly increase

d market liquidity. And also privatization takes a potential role global capital market d

evelopment.

A. The Rise of Capital Market-Based Finance

Capital market-based finance has in fact been increasing in importance, both abs

olutely and relative to financial intermediary-based finance, in both developed and de

veloping countries over the past decade. And also capital markets are in fact winning t

he present and seem likely to dominate the future of corporate finance in developed an

d developing countries alike.

a. The Stable Role of Commercial Banking in Modern Economies Ordinary "rela

tionship banking" appears to be (at best) holding its own as a source of corporate fina

ncing around the world, and is more likely in decline. The bits of banking that are gro

wing rapidly are those parts that provide high value-added products (especially risk m

anagement tools) and provide large-scale syndicated credits to corporate borrowers. D

uring the late-1980s and early-1990s, when Japan and Germany appeared to be outper

forming major capital market-oriented countries such as Britain and the US, the acade

mic literature often favored bank-based systems. Examples of& nbsp;this literature in

clude Prowse (1992), Kester (1992), and Porter (1992), while the supporting argument

s are summarized in Maher and Andersson (1999) and Tsuru (2000). More recently, h

owever, the weight of opinion has swung strongly in favor of the idea that capital mar

kets have decisive comparative advantages over banks and other financial intermediar

ies as optimal monitors and financiers of a nation's corporate life. This reassessment h

as been driven in part by the observation, discussed at length above, that capital marke

ts have been prospering relative to banks for many ;years now. The repetitive nature--

and massive costs--of banking crises in developing and developed countries alike has

also convinced many observers that banks are inherently fragile institutions, whose rol

e in corporate finance should be minimized as much and as quickly as possible (Econ

omist (1997, 1999)).

b. The Rapid Growth in Stock Market Capitalization and Trading Volume Since 1983

From 1983 to 2000, this was a period of very rapid growth in the capitalization of mar

kets in every country except Japan. Total world market capitalization increased over te

n-fold (to $ 35.0 trillion) between 1983 and 1999, and the total capitalization of the U

S market increased almost nine-fold (from $ 1.9 trillion to $ 16.6 trillion) over the sa

me period.

c. The Dramatic Growth in Securities Issuance Volume Since 1990

Another way of measuring the rise of capital markets is to examine whether their

share of annual corporate financing activity has grown relative to that of other source

s of funding. Security offerings by US issuers accounted for two-thirds of the global t

otal throughout 1990-1999, that implies that non-US securities issues in creased from

$ 191 billion in 1990 to $ 750 billion in 1998, and then to $ 1.19 trillion in 1999. The

surge in non-US issuance volume in 1999 was largely due to the popularity of euro-de

nominated bond issues, which actually exceeded&n bsp;dollar-denominated bond issu

es for much of 1999.

d. The Phenomenal Growth in Venture Capital Financing in the United States

One highly specialized, but extremely important type of financing has also grown ver

y rapidly over the past decade, and especially so since 1997. This is venture capital in

vestment by US venture capital partnerships. The fund-raising patterns of these privat

e equity investors are discussed in Gompers and Lerner (1998), and the competitive a

dvantages of US venture capitalists versus those in other developed countries are desc

ribed in Black and Gilson (1998).

e. The Surge in Mergers and Acquisitions Worldwide

The almost incredible increase in the total volume of merger and acquisition acti

vity that has occurred since 1990. While takeovers have always played an important r

ole in the United States, the rise in M&A (Merger and Acquisition) activity in Europe

during the 1990s was even more dramatic. From less than $ 50 billion annually in the

late-1980s, the total value of M&A involving a European target reached $ 592 billion

in 1998, before more than doubling to $ 1.22 trillion in 1999--rivaling the US total. Th

e global value of M&A activity in 1999 reached&n bsp;$ 3.4 trillion, an astounding 1

0% of world GDP.

Next I will document that share issue privatizations have truly transformed share

ownership patterns of investors in many different countries.

B. Privatization's Impact on Stock and Bond Market Development

We should be careful in inferring causation regarding privatization's impact on m

arket growth, since a shift in ideology or some other exogenous political or economic

change might have caused both the privatization and the overall boom.

a. Total Proceeds Raised by Privatization Programs

It is clear that national governments have been among the biggest winners from p

rivatization programs, since these have dramatically increased government revenues,

which is clearly one reason the policy has spread so rapidly. As mentioned above, Priv

atisation International [Gibbon (1998, 2000)] reports that the cumulative value of proc

eeds raised by privatizing governments exceeded $ 1 trillion sometime during the seco

nd half of 1999. As an added benefit, this revenue has come to governments without h

aving to raise taxes or cut other public services.

b. Privatization's Impact on International Investment Banking All international invest

ment banks compete fiercely for share issue privatization mandates, for two principal

reasons. First, because the offerings are so large and so visible--and are almost always

designed to help promote the market's capacity to absorb subsequent stock offerings

by private companies--these are very prestigious mandates. To date, the large US and

British brokerage houses have had the most success in winning advisory and underwri

ting mandates, though all countries that launch large-scale SIP programs tend to favor

local investment banks as "national champions" to& nbsp;handle the domestic share tr

anche. The second reason banks compete so fiercely for SIP mandates is because they

can be extremely profitable. In spite of the fact--documented by Jones, et al (1999) an

d Ljungqvist, et al (2000)--that SIPs have significantly lower underwriting spreads tha

n private sector offerings, their sheer size and lack of downside price risk make them

very lucrative for underwriters.

2. Will this growth continue throughout the 2000s?

As we indicated above, the global capital market has grown so rapidly in recent decad

es cause of the privatizations rise. Privatizations increased the market liquidity. Now

we have already stepped into the 21st century. I believe that the growth will continue f

or the following reasons. First, most of the south-east Asia countries have recovered fr

om the 1997 financial crisis. For these countries, they now have the capital to do busi

nesses. And they get back on the fast growing track. Second, by the end of 2001, worl

d's biggest developing country, China, has ;entered the WTO (World Trade Organizati

on). This is real great news. As we all know, today's China takes a serious position in

world's economy. Its innovation and opening policy make china keep achieving high

GDP growth rate. This drives the global capital market keep growing.

Summary and Conclusions

This essay examines the impact of share issue privatizations (SIPs) on the growth

of world capital markets (especially stock markets). I begin by documenting the incre

asing importance of capital markets, and the declining role of commercial banks, in co

rporate financial systems around the world. I then show that privatization programs--

particularly those involving public share offerings--have had a dramatic impact both o

n the development of non-US stock markets and on the participation of individual and

institutional investors in those stock markets.

This has told the reason of the fast growth of global capital market. And then I su

ccinctly indicated the continuance of the rapid growth, the great future.

The last but not the least is the recommendation. I can confidently assert that, if e

xecuted properly, a series of share issue privatizations can indeed promote the growth

of global capital market, which will yield economic and political dividends for many

years to come. That means there is a need to encourage the development of SIPs in or

der to gain growth of global capital market.

References

Dictionary of Business, Oxford University Press, ? Market House Books Ltd 1996

The Economist (April 12, 1997), "Fragile, Handle With Care: A Survey of Banking In

Emerging Markets."

The Economist (April 17, 1999), "On A Wing and A Prayer: A Survey of International

Banking."

Gibbon, H., 1998, "Worldwide Economic Orthodoxy," Privatisation International 123,

4-5.

Gibbon, H., 2000, "Editor's Letter," Privatisation Yearbook, London, Thomson Financ

ial, 1.

Gompers, P. and J. Lerner, 1998, "What Drives Venture Capital Fundraising?" Brooki

ngs Papers On Economic Activity--Microeconomics, 149-192.

Jones, S.L., W.L. Megginson, R.C. Nash, and J.M. Netter, 1999, "Share Issue Privatiz

ations As Financial Means To Political and Economic Ends," Journal of Financial Eco

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Kester, W.C., 1992, "Governance, Contracting and Investment Horizons," Journal of

Applied Corporate Finance 5(2), 83-98.

Ljungqvist, A.P., T. Jenkinson and W.J. Wilhelm, Jr., 2000, "Has the Introduction of B

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Maher, M. and T. Andersson, 1999, "Corporate Performance: Effects On Firm Perfor

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Prowse, S., 1992, "The Structure of Corporate Ownership in Japan," Journal of Financ

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Porter, M.E., 1992, "Capital Choices: Changing the Way America Invests in Industry,"

Journal of Applied Corporate Finance 5(2), 4-16.