UNISBARUNISBAR

One moment, please...One moment, please...

This study aims to analyze the strategic role of the capital market in promoting Indonesias economic growth through a descriptive qualitative approach based on literature review. The capital market plays a crucial role in the financial system as a mechanism for mobilizing long-term funds, improving capital allocation efficiency, and supporting the financing of productive and sustainable projects. The findings indicate that the development of the capital market positively contributes to the increase of Gross Domestic Product (GDP) through mechanisms such as capital accumulation, market liquidity, and investment efficiency. However, the contribution of Indonesias capital market to economic growth remains constrained by structural challenges, including low financial literacy, dominance of retail investors, and limited market depth. On the other hand, digital transformation and financial innovations such as online trading, green bonds, and global market integration create new opportunities to enhance the strategic role of the capital market in sustainable financing. The study concludes that strengthening regulation, improving transparency, and broadening the investor base are key strategies for positioning Indonesias capital market as a major driver of inclusive and sustainable economic growth.

The study concludes that capital markets are vital for Indonesias economic growth, functioning as an engine for investment, job creation, and infrastructure development.To maximize this potential, appropriate policy measures are necessary, including enhancing market transparency, developing balanced regulations, and improving public financial literacy.Ultimately, a strengthened capital market can serve as a key driver of sustainable and inclusive economic growth in Indonesia.

Further research should investigate the specific impact of digital financial innovations, such as fintech platforms and blockchain technology, on capital market accessibility and efficiency in Indonesia, particularly for small and medium-sized enterprises (SMEs). Additionally, a comparative study analyzing the effectiveness of different regulatory frameworks in promoting sustainable finance within the Indonesian capital market, and benchmarking against international best practices, is warranted. Finally, research could explore the behavioral biases of retail investors in Indonesia and develop targeted financial literacy programs to mitigate these biases and promote more informed investment decisions, ultimately contributing to a more stable and efficient capital market.

  1. Capital Market Efficiency and Economic Growth: Evidence from Bangladesh | European Journal of Development... doi.org/10.24018/ejdevelop.2024.4.2.343Capital Market Efficiency and Economic Growth Evidence from Bangladesh European Journal of Development doi 10 24018 ejdevelop 2024 4 2 343
  2. Financial Development, Growth, and the Distribution of Income | Journal of Political Economy: Vol 98,... journals.uchicago.edu/doi/10.1086/261720Financial Development Growth and the Distribution of Income Journal of Political Economy Vol 98 journals uchicago edu doi 10 1086 261720
  3. The Effect of Capital Market and Public Savings on Indonesia's Economic Growth | MSJ : Majority... jurnalhafasy.com/index.php/msj/article/view/241The Effect of Capital Market and Public Savings on Indonesias Economic Growth MSJ Majority jurnalhafasy index php msj article view 241
  4. Evolution of Financial Development Research: A Bibliometric Analysis. evolution financial development... mdpi.com/1911-8074/18/1/10Evolution of Financial Development Research A Bibliometric Analysis evolution financial development mdpi 1911 8074 18 1 10
  5. Investment attractiveness in BRICS economies: Evaluating business environment reforms, institutional... journals.plos.org/plosone/article?id=10.1371/journal.pone.0334043Investment attractiveness in BRICS economies Evaluating business environment reforms institutional journals plos plosone article id 10 1371 journal pone 0334043
Read online
File size304.53 KB
Pages11
DMCAReport

Related /

ads-block-test