Capital markets play a critical role in globalised economies. We begin by distinguishing capital markets from other financial markets and describing their structure from multiple perspectives, including participants, purposes, asset classes, and business stages. Using the neoclassical framework, the chapter explains how capital markets can facilitate efficient resource allocation and improve social welfare. However, deviations from ideal conditions, such as principal-agent problems and behavioural biases, are examined to understand economic shocks like the Global Financial Crisis. The chapter highlights the dual impact of financial development on economic growth and inequality, showing how financialisation can amplify wealth disparities. Policy responses, including competition laws, financial regulations, tax measures, and transaction taxes, are discussed to mitigate systemic risks and address the challenges posed by financialisation. Real-world examples illustrate the interconnectedness of capital markets, the importance of regulatory frameworks, and the role of government interventions in fostering stability while promoting equity. This chapter lays the foundation for understanding the critical interplay between financial and economic systems.