Review of the Role of Securities Market in Equipping Capital Market and Financing of Productive Economic Activities

Security market plays a decisive role in strengthening the capital market and financing of productive economic activities. This market is highly vulnerable and can be affected by political factors, economic decision-making processes as well as social crises and unrest which may make investors sustain heavy losses. In developing nations, like Iran, the capital market still does not enjoy necessary dynamism and efficiency which, economic shocks may compromise the investment direction in this market. On the other hand, it is highly critical for managers to adopt policies such as changing appropriate liquidity amounts, etc. in firms because these policies will cause major fluctuations in the variables and affect corporate credit ratings. Trade credit has a major role in the business activities of each company and indicates the extent of customers and creditors’ trust in the company. It also serves as a short-term means of financing. Companies with good trade rating receive their needed goods and services without paying in cash, as banks and other creditors first investigate the trade credit of companies to provide them with loans and credit lines. Moreover, reducing operating costs creates a motive for companies to develop their trade credit. On the one hand, the amount and combination of liabilities forms the capital structure of the company and leaves a considerable impact on the corporate expenses, especially financial expenses. Also, the corporate capital structure affects the behaviors and motives of economic agents, including shareholders, managers and creditors to play a pivotal role in the setting profitability and economic goals of the company. For this, this has a been a subject of various researches.

Keywords:

securities market , strengthening capital market , financing , productive economic activities