The capital market is an intermediation through which the surplus money of the society can be mobilized and then channeled into productive investments with the eventual aim of fostering development of the country's economy. Capital market is also beneficial for the entrepreneurial classes not merely because it provides access to surplus savings of investors, including many small ones, but also because they do not incur fixed repayment obligations, as is the case of bank financing. Besides an orderly and transparent capital market enables the small savers to participate in the fruits of economics development. Capital market is yet to play its potential role in Bangladesh.

In olden times, merchant banks were also known as "accepting and issuing houses" in the U.K. and "investment banks" (IB) in the USA. Except of this distinction in nomenclature, there is no essential functional difference between them.