QS Study

Importance of Stock Exchange

The stock exchange is the mirror of the economy of any country. It helps to the industries and commerce to develop of a country. In this regard the importance of stock exchange is massive. To make a country economically strong and dynamic there is no alternative to the stock exchange. The importance of stock exchange are given below:

Formation of capital: To form the capital for industries, it plays the key role. Though banks and other financial institutions help to form capital but among them stock exchange is vital for collecting long-term huge capital.

Inspiring savings: Stock exchanges inspire individuals for reducing current consumption and inspire to increases savings. By this means individuals can be benefited and thus the industries as well.

The mobility of resources: It makes economy dynamic by helping in a proper mobilization of resources from households to companies. Mobilization of resources is highly required for any country’s economic development.

Helping in industrialization: It helps in industrialization. Stock exchange provides the required capital for the industries. The companies can easily collect the necessary amount of capital by issuing shares or selling debentures in the stock market.

Improving living standard: It creates attractive investment sectors for the mass people. One can gain easily by investing his savings in the market. Thus stock market helps in improvement of living standard of general people.

Strong economic base: It helps industrialization through mobilization of resources. Thus it makes the economy strong. For a strong economy, the industrial development is essential and the stock exchange act here effectively.

Safety of investment: It secures the investment. Stock exchange maintains rules and regulation to guard the market against fraudulence.

Proper valuation of share and security: It has specific rules for valuation for the stocks and securities. It publishes the daily transaction from that the investors can be aware of the price of shares and securities.

Ready market: Stock exchange is ready and a secondary market. Like product and service market, one can buy and sell financial products from and to the stock market. The stock market is almost a financial product-oriented market.

Proper utilization of savings: Stock exchange helps the proper utilization of savings of general people. It brings the savings and form capital for the companies, thus utilizes properly the savings.

After all, the stock exchange is an important economic institution. It helps both the investors and the companies for the mutual benefits. It deals with great importance to the development of the economy of a country.