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The Dodd-Frank bill also didn't eliminate what Schlosstein describes as "a whole bunch of activities that fell into the category of speculation rather than effectively functioning capital markets".
If a functioning capital market had existed, remarked Mr Greenspan, the East Asian crisis might have been less severe.Developing deep and liquid corporate-bond markets, in particular, could make emerging economies less vulnerable.
This outcome supports suggestions in literature (e.g. Chavas et al., [2005]; Hazell and Hojjati, [1995]) that in the presence of poorly functioning capital markets, cash from off-farm earnings (including asset income and off-farm employment income) can help stimulate farm investments and improve agricultural productivity.
For a brief interlude in the mid-seventies, Delhi had seemed like a functioning capital.
"AVB can also self-fund development, which means it doesn't have to rely on a functioning capital market for construction loans," McCulloch adds.
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Economists largely favor adherence to an organized sequence of encouraging foreign direct investment, liberalizing domestic equity capital, and embracing capital outflows and short-term capital mobility only once the country has achieved functioning domestic capital markets and established a sound regulatory framework.
In functioning markets, capital flows to its highest and best use.
These long-run projections are derived from Foure et al. (2010), from the projections for 128 countries to 2050, based on a three-factor production function (capital, labour and energy), accounting for the energy constraint through dynamic modelling of energy productivity, and applying a Feldstein Horioka-type relationship between savings and investment rates.
Banks are invaluable institutions that, when functioning properly, move capital to its best use and raise living standards.
IF YOU want a big, smoothly functioning market for capital, you have to protect investors from mischief.
And with well-functioning capital markets, it should be able to find investors without government help.
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