The Global Securities Market: A History

The Global Securities Market: A History

The Global Securities Market: A History

The Global Securities Market: A History

Excerpt

The study of the development of securities markets was long neglected, beyond histories of individual stock exchanges or studies of particular events that caught the public's attention. The state of financial history as a whole was very similar until the 1960s, when it began to attract attention in academic circles, with the pioneering work of Rondo Cameron and his associates. However, that was almost exclusively focused on banking. As banks were regarded as the central elements in a financial system it was perfectly acceptable to confine the study of such systems to that of banking alone. Hence the focus on comparisons between Germany's universal banks, Britain's branch banks, and US unitary banks, and these formed the basis of the conclusions drawn about the superiority or inferiority of entire financial systems. To many observers, whether from the left or the right of the political spectrum, securities markets were considered little more than centres of gambling, where speculators bet on the rise and fall of prices, and were exposed to the fraudulent practices of unscrupulous intermediaries. As Raines recently noted '[i]n popular imagery, stock markets represent the most exciting aspect of capitalism … where soaring bull markets bring sudden wealth only to subsequently wipe it out during spectacular crashes with the bursting of speculative bubbles'. Even to most economists securities markets were not worthy of serious study, being more symbols of popular capitalism than the substance of complex and sophisticated financial systems. What mattered was the process of capital formation, which involved consideration of the collection, mobilization, and use of savings for productive purposes rather than financial market activity that produced no obvious or measurable gain for society. As the function of the securities market was only to provide a forum for trading securities once they had been issued, it was the issue of those securities that attracted what interest there was, rather than what happened afterwards. At best securities markets were seen as rather marginal to the whole process.

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