Proceedings of The 2nd International Academic Conference on Management and Economics
Role of The Securities Market in The Financial Systems of Developing Countries (On The Example of Georgia)
Shota Gulbani, Vakhtang Svanadze
The following thesis aims to reveal the importance of securities market for the financial system and for economic growth as well. In highly developed financial systems, the securities markets play a crucial role for the sustainability and stability of the entire financial system and therefore of the economy. In developing economies, securities markets face many obstacles, such as small economy, a small number of issuers, political instability, low credit ratings of the country and main financial institutions, accordingly lack of capital, low level of financial awareness and also competition issue with commercial banks. Those two sectors of financial system are competitors. This means that the regulatory authority must strictly separate their activities.In Georgia, which is the main discussing subject of the following thesis, the development of the securities market starts from this very period and continues to rise till 2007, when deregulation policy of Georgian government practically caused the regress of Georgian stock exchange.It’s pointed out in the research, that underdeveloped securities market of Georgia, and the dominance of commercial banks in financial system, doesn’t provide economic growth properly.
Keywords: securities; stock markets, financial system.