The function of capital markets is to facilitate an exchange of funds among all participants, andyet in practice we find that certain participants are not on a par with others. Members of societyhave varying degrees of market strength in terms of information they bring to a transaction, aswell as of purchasing power and creditworthiness, as defined by lenders. For example, within minority communities, capital markets do not properly fulfill their functions;they do not provide access to the aggregate flow of funds in the United States. The financialsystem does not generate the credit or investment vehicles needed for underwriting economicdevelopment in minority areas. The problem underlying this dysfunction is found in a rationingmechanism affecting both the available alternatives for investment and the amount of financialresources. This creates a distributive mechanism penalizing members of minority groups becauseof their socioeconomic differences from others. The existing system expresses definite sociallybased investment preferences that result from the previous allocation of income and that influencethe allocation of resources for the present and future. The system tends to increase the inequalityof income distribution. And, in the United States economy, a greater inequality of incomedistribution leads to a greater concentration of capital in certain types of investment. Most traditional financial-market analysis studies ignore financial markets’ deficiencies inallocation because of analysts’ inherent preferences for the simple model of perfect competition.Conventional financial analysis pays limited attention to issues of market structure and dynamics,relative costs of information, and problems of income distribution. Market participants are viewedas acting as entirely independent and homogeneous individuals with perfect foresight aboutcapital-market behavior. Also, it is assumed that each individual in the community at large has thesame access to the market and the same opportunity to transact and to express the preferenceappropriate to his or her individual interest. Moreover, it is assumed that transaction costs forvarious types of financial instruments (stocks, bonds, etc.) are equally known and equally dividedamong all community members. The main point made by the passage is that______