Stock exchange indicates about the good or bad health of an economy. For the smooth and orderly functioning of corporate sector in a free market economy, stock exchanges are indispensable,
Because of the different roles played by them for different groups.
1. Stock exchange indicates about the good or bad health of an economy. It is an investment intermediary which facilitates economic and industrial development of a country.
2. All the stock markets influence economic activities through the creation of liquidity.
3. It increases the business and earnings of people and gives a positive impact to the growth of an economy.
4. Stock exchanges formulate rules and regulations and build a trust between the members and investors so that members may net exploit the investors, with this belief more number of investors are added into it, which is really helpful for the economic growth.
5. Through easy funds mobilizing, the boosted production fetches more capital, enhancing economic development.
6. It operates through the medium of stock exchanges which regulates the trading activities in this market and ensures a measure of safety and fair dealings to the investors.
7. Stock exchanges play a key role in allocating capital to the corporate sector, which has significant effects on the economy as a whole.
8. Stock exchanges maintain an official list of securities that could be purchased and sold on its floor. In entrepreneurial- oriented countries, the growth of listed companies contributes a wide portion of a nation’s increase in GDP.
9. Stock exchange provides a central market for purchase and sale of securities. It provides ready and continuous outlet for buying and selling of securities. Buyers and sellers strongly believe that they would be able to buy and sell securities as and when they want.
