Capital Formation Efficiency

Definition ∞ This refers to the ease and cost-effectiveness with which entities can acquire financial resources for investment and operational expansion. It measures how effectively capital markets channel funds from savers to borrowers or enterprises. High capital formation efficiency indicates minimal friction, lower transaction costs, and rapid allocation of funds.
Context ∞ Digital assets and blockchain technology are frequently discussed in relation to improving capital formation efficiency. Decentralized financing mechanisms and tokenization of assets aim to democratize access to capital, reduce intermediary fees, and accelerate fundraising processes for startups and established businesses alike.