We all might be surprised about the number of stock exchanges functioning across the globe, but have you ever thought about the importance of stock exchanges in building a country’s economic growth? Stock exchanges help businesses to raise capital and provide investors opportunities to back new and established enterprises. Hence, the functionality and utility of the stock market is universal.
In this blog, we’ll be discussing about the key factors that highlights the importance of stock exchange for the economy growth.
IMPORTANCE OF STOCK EXCHANGE FOR ECONOMY GROWTH:
Stock markets are the first financial institutions established to help businesses and entrepreneurs to buy, sell and trade shares for rising enterprise capital. By listing the company in the stock market, the company could bring out new licensed and regulated financial products and services to the consumers.
Stock markets act as an intermediary for small and large investors who are seeking to make money outside the realm of standard banking institutions. The role of a stock exchange is to maximize returns on savings than gained through static bank account with low returns. The stock market promises to deliver higher profits, flexibility and diverse investment opportunities.
Hence, the stock exchange serves as a barometer of a nation’s fiscal health by broadcasting the ups, downs and shifts in the domestic economy.
The modern financial market system requires credibility and accountability to function on behalf of businesses and investors who are interested in ethics and profits. A stock exchange benefits from a formal structure upheld by rules and regulations, thereby giving the stockholders, investors and businesses checks and balances necessary to gain the investors confidence.
EFFECTS IN ECONOMY:
The direct effect of stock exchanges can affect the nation’s economy in multiple ways. The nation’s mood can rise and fall based on the stock market activity or performance. When the stocks fall, the customers lose their confidence in spending their funds and thereby faltering the nation’s economy. Similarly, when the stock price rises, the customers gain the confidence to spend their funds which in turn boosts the nation’s economy.
The stock market investment offers a diversified investment portfolio to investors. It provides an opportunity to investors to invest in minority businesses listed on the stock exchanges as it could boost the capital of the new enterprise as well as the nation’s economic growth. By diversifying the investment in the stock market, an investor can reduce the risk exposure associated with a single investment portfolio.
INVEST YOUR FUNDS IN THE STOCK MARKET:
Investing in the share market will boost your nation’s economy and also add additional income for your plans. You can’t invest in the stocks blindly as the stocks can fluctuate based on the shifts in the market. Hence, you need to analyze the market trends and later choose the best stocks wisely.
If you’re interested to invest in the stock market then seek the assistance from Goodwill. Goodwill is one of the most trusted brokerage firms in India that is trusted by more than a lakh of investors. Goodwill helps investors with live training sessions and demo trading platforms to improve their trading skills in the stock market.
For more info, visit the official website of Goodwill or make a call on +91 80122 78000 to trade your stocks smartly and efficiently. Stay connected with Goodwill’s Facebook Page and get instant live updates on your stocks.