Capital Markets and Financial Politics

This chapter introduces a political-institutional perspective and argues that capital markets can function effectively if political institutions support capitalism, especially capitalism of financial markets. It looks at the shape, support, and extent of capital markets, which are usually questioned in the polity. It explains how these questions are settled, which consequentially affects the extent, form, and effectiveness of capital markets. The chapter also studies the main political economy forms shaping capital markets and the modification or replacement of old institutions.