Development of the Capital Market in Thailand : Supply of and Demand for Loanable Funds Approach

Abstract

Capital market is an important center for financial mobilizing from savers to investors, thus, the developed capital market is an essential condition for economic growth. Supply of and demand for loanable funds, in another word, securities bying and selling, are most important factors affecting the development of the market. On this account, the objective of the study aimed to look for some policy guidelines to develop the capital market through analyzing factors affecting the amount of securities bought and sold. Descriptive analysis mainly depending on primary data was the method of this study. The gathering of primary data was carried out by interviewing, 244 representing the expected supply of fund and 109 samples representing the demand for fund in the capital market. The result showed that both the expected capital supplier an demander group had a potential to serve as a sources and uses of capital fund in the marlet, respectively. However, there some barriers against the expansion of supply of and demand for fund in the market. On the supply side, for example, people believing on buying stocks is subject to high risk and low liquidity : hardly understanding the stock buying procedure of the people; the existing regulation did not allow some institutions to enter securities buying ; the inefficiency of the market; were the problems of the market. Complication of stock issuing; prohibiting of fund mobilization through stock selling for some enterprises; getting fund from other sources was more convenient than fund from stock issuing, were obstracles on the demand side. Based on the above problems, to develop the capital market through the expansion of supply of capital fund, some strategies should be persued. This included enhancing buyer’s knowledge about the procedure and principle for stock buying, provision of news and information about stock, and a collective investment through the mutual funds in order to avoid risk should be promoted. An office of consulting firms on stock buying should be established. The revision of some regulations of some institutions to set access to stock market is also proposed. And some policy quidelines are also recommended that to encourage the growth of demand of fund in the capital market, some enterprise regulations concerning stock issuing needed to be revised; and institution serving as a representative for issuing and selling the stocks needed to be established; and the most important thing is that the securities market needs to improve its efficiency in managing as a stock market.