The confidence that investors have in the fairness of the securities markets has a significant impact on the amount of capital available for businesses to use. If the general public believes that investing is for a privileged few who can profit from insider connections, there is limited investment and limited economic growth as well. In contrast, one of the explanations economists have for the abundant capital available in the U.S. markets is the public’s perception that the financial markets are basically fair.
That perception is based, in large part, on the continually evolving regulatory systems — federal, state, and industry — that oversee all aspects of the U.S. markets. Those systems, often described as the strictest in the world, set the standard for other market economies.
That doesn’t mean there are no problems with the way the markets operate or the way the public perceives them. But there is also a commitment, at both government and industry levels, to deal with breakdowns as they arise and to anticipate — and prevent — potential future problems.
