Role of Capital Market in Small Economies (A case of three nations in Central Asia)

The size of capital markets in a particular country depends, among others, on the size of the country and its stage of development. Most countries in Central Asia are small or very small. Level of income and demand for financial services, Economic framework and growth, Government policy, Composition of financial alternative, the extent of development of money, foreign exchange and derivative market and the extent of integration among the various sectors are factors influencing market size. Capital markets offer a great source offunds to the economy. Generally small economies do not attract the attention ofexperts. In this paper the role of capital markets in three economies, Kazakhstan, Kyrgyz Republic and Uzbekistan is discussed. In the three countries equity markets have some fair level of trading. Bond market is bit developed in Kazakhstan while it is not so in other two countries. Legal and regulatory reforms, deregulation, market infrastructure, globalization, launching new financial products and development institutional investors, facilitate market development, these factors are developed to some extent in Kazakhstan while they are not developed in Kyrgyz Republic and Uzbekistan. Therefore capital market is developed some extent and developing still in Kazakhstan for proper development of there capital markets these countries should attempt at over coming their short comings of the level and regulatory framework, privatization, developing investors base, market infrastructure and integrating the market with the other sectors of the economy.