Before Playing with Stocks, Let's Get to Know the Definition of the Capital Market!

Which country does not want a developed economy? All countries certainly want it. However, how? Various methods have been carried out by the government, one of which is the creation of a capital market. What is the capital market? Definition of capital market in general means an institution in which there are securities trading and offering activities. These institutions are called financial institutions, but they are different from banks.

The capital market can also be interpreted as a container or place for buying and selling stocks, bonds and various other financial instruments. So, the capital market is a meeting place for owners or sellers of shares with potential buyers of shares.

These shares or securities can be issued by private company owners, public authorities, or the government. Well, the stock is called a long-term financial instrument, which is more than one year.

The definition of capital market has also been recorded in RI Law no. 8 of 1995. According to the law, the capital market is an activity related to the trading and offering of securities, professions and institutions concerned with securities, as well as public companies concerned with securities.

In addition, KBBI has also defined the capital market, which is all activities where supply and demand for funds are brought together. The capital market will trade stocks or securities that have a long term, which is more than 1 year.

According to Wikipedia, the notion of the capital market is also an activity concerned with the trading and offering of securities, companies, professions, or institutions concerned with these securities.

Besides that, experts also have thoughts or ideas about the capital market.

The following are the ideas of experts regarding the definition of capital markets:

  1. According to Suad Husnan
    The capital market is the market, where long-term securities or financial instruments are traded. Included in the long-term securities themselves are equity or debt issued by private companies or the public government.
  2. Sunariyah said
    Sunariyah put forward the notion of the capital market as a meeting place for demand and supply of securities.
  3. According to Hendy M. Fakhruddin and Tciptono Darmaji
    The capital market according to Hendy M. Fakhruddin and Tciptono Darmaji is a place where long-term financial instruments are traded, automatically there are also sellers and buyers of these financial instruments. Equity or stocks, debt, and derivative instruments are examples of financial instruments.
  4. According to Tandaelin
    Tandaellin divides the capital market into 3 meanings, namely in a broad sense, in an intermediate sense, and in a narrow sense. Well, in a broad sense, the meaning of the capital market according to Tandaellin is a structured or organized financial system.
    While the capital market in the middle sense means all markets or institutions that are organized and sell credit papers. In a narrow sense, the capital market means a market that is structured in trading stocks and bonds. The trading uses the services of commissioners, brokers, and guarantors.
  5. According to Irham
    Irham has defined the capital market more briefly, namely a market where equity, debt and other capital funds are traded.
  6. According to Martalena and Malinda
    While the notion of the capital market according to Martalena and Malinda is a place where demand and supply of capital are brought together, both capital in the form of equity, or long-term debt.
  7. According to Fahmi and Hadi
    The capital market is a place where stocks and bonds are traded for various parties. Proceeds from the sale of stocks and bonds will be used as additional company funds.

So, those are various explanations from the capital market according to RI Law, KBBI, Wikipedia, and experts. So, it can be concluded that the function of the capital market is a place to facilitate the buying and selling of stocks, bonds or other financial instruments for the benefit of various parties.