What is the role of stock markets in an economy?
Ans. Finance is the life blood of an economy. Capital is a basic factor of production. Stock markets are indispensible part of capital markets. We cannot imagine that an economy can sustain or develop without a well developed stock market:
(a) It mobilizes the savings of the small investors.
(b) It provides liquidity to the assets of investors.
(c) It provides funds to the companies to undertake productive activities.
(d) It increases inflow of foreign capital.
(e) It increases entrepreneurial ability in an economy by providing funds for investment.
(f) There are indirect benefits also in form of increased employment opportunities, share in GDP and increase in reputation of a country worldwide.
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