POLICYMAKERS need to be more innovative if capital markets in Barbados are going to develop.So says Dr Grenville Phillips, chairman of the Barbados Stock Exchange (BSE) and Barbados Central Securities Depository Inc.Speaking last Thursday during a listing ceremony for Royal Fidelity at the BSE’s office in Belleville, St Michael, he said at present there is a disparity in the costs associated with the two main ways of raising capital.Phillips noted that in developing societies like Barbados, the source of capital for a company is either a bank loan or shareholder equity. The chairman said while people have been encouraged to buy securities, nothing has been done to encourage companies to offer them.Cheaper optionHe attributed this to the fact that “it is far cheaper to service loan capital that you borrow from the bank than it is to service equity capital that you get from your shareholders because the cost of one is tax-deductible but the cost of the other is not”.Earlier in his address, Phillips said: “The issue has been, and we continue to hear from those who admonish us from on high and public spaces, that the stock exchange needs to attract more companies to be listed. “It is a fact but attracting more companies . . . needs assistance beyond the capacity of the Barbados Stock Exchange.”He said as regional economies consolidate through amalgamations, mergers and takeover bids, “inevitably the consolidation in large measure is taking place among the companies that are listed on the exchanges and when that occurs invariably down the road, one of the two will be delisted.” (NB)