Introduction: What's It All About?

Abstract

In spite of Shakespeare’s warnings, lending and borrowing belong to the oldest pursuits of the human race, almost as if it were some sort of sport. To the extent that this sport is not exercised exclusively on a man-to-man basis but through competing, professional intermediaries observing a few gentlemanly “rules of the game” – increasingly, and sometimes excessively, laid down in legislation – it can be said to represent capital market activities. The net effect of this “sport” has been real economic growth at a rate which could never have been achieved if all investments would have had to be financed only out of the savings of the investor, or if all lending and borrowing had had to be done exclusively on a direct man-to-man bilateral basis. Realizing the potential benefits of a multilateral collection of savings and an allocation of those savings to their “best” uses (however defined) is the task of the capital market.