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..



4 comments for “Role of stock exchanges in an economy”

  • adewale badmus

    my opionion is that are just want be a business man how to buy and how to sell.

  • wendimagegn

    AM srongly belive that stock exchange become enhance once country economy however how can appliy and develop in developing country most people have no ideai about these concept.

  • Eberechi okwuwolu

    you guys mostly talk about stock exchange you guys should talk on things related to it for example the roles of agriculture in stock exchange and how others things help in stock exchange and how they are related to stock exchange and how stock exchange can develop countries

  • Stephen

    We are teaching our students about stock market. Our country, the Democratic Republic of Congo has lots pontentialities. How can you help us setting a “Congo Stock Market Projet”. Or If you are an expert and you are willing to work with us

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