Financial markets: Gatekeepers of money

Industry's appetite for loans had waned, but banks left even those wanting to invest credit-starved

According to the Bank of England, financial markets exist to bring people together so money flows where it is needed the most. Businesses in need of capital should be able to raise it from these markets and repay when no longer in need. In theory, financial markets act as gatekeepers of people’s money. But as Yogi Berra famously said: “In theory, there is no difference between theory and practice. In practice, there is.”

Of late, the situation in India has been the opposite. Businesses find it difficult to raise capital as debt is funding personal consumption and equity funds invest in