Role of stock exchanges in an economy

The Stock Exchange help companies to raise capital for expansion through selling shares to the investing public.

They help in mobilizing savings for investment which in turn benefits for several economic sectors such as agriculture, commerce and industry, resulting in a stronger economic growth and higher productivity levels.

Stock exchanges have multiple roles in the economy, this may include the following:

Companies can expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets.

They help in Redistribution of wealth through stock price increases and dividends get a chance to share in the wealth of profitable businesses.

They help to Create investment opportunities for small investors by enabling them to own shares of the companies as large investors, and to enjoy similar rates of return

Its helpful for Government to raise capital for development projects, infrastructure projects such as sewage and water treatment works or housing estates

Its serves as an economic Barometer , An economic recession, depression, or financial crisis could eventually lead to a stock market crash. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy..

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