Question

What are some of the explanations for why minorities and residents in low-income neighborhoods are disadvantaged in capital markets? What are some strategies that communities can use to address these problems?

Answer 1

Answer: Minorities and residents in low-income neighborhoods are disadvantaged in capital markets:

1.Capital market investment considered as risky investment and people in minority and low income neighbourhood due to risk of failure of investment often don't prefer to invest.

2.Capital investment market on perception level considered as playing field of big business and rich persons, involves many complexities of steps and other hurdles so it not INCLUSIVE in nature.

3.There is issue of POOR CORPORATE GOVERNANCE,which hinders the reach of low income people in the market.

4.Capital market is long term investment and that too big amounts and this also restricts reach of minority and low income neighbourhood.

Steps to resolve the issue:

1.Mechanism should be evolved like some kind of SELF HELP GROUPS which pool the money of such low income neighbourhood and invest in the capital market.Like the one if MUTUAL FUNDS but that with some kind of security.

2.Need to educate people about the nitty gritty of capital market and how to effectively use it for growth and development with minimal risk involvement.

3.Need to make capital market inclusive one by deserving few percentage of investment by such stakeholders on the principle of affirmative actions.

4.Improve the intra and inter corporate governance.

Hope it helps!