January 13, 2018 / BY AKD

The role of stock exchange in economic development

Stock markets play a major role in the development of economies, whether it is in Pakistan or any other country of the world. They are not only considered the important aspect, but also one of the major sources of investments for the people.

There are a number of roles of a stock market in the development of economy without a doubt. From raising capital to allowing people to invest, stock markets play a significant role in everything.

Hence, following are some of the ways how stock markets help in economic development of a country:

  1. Stock exchanges help businesses raise their capital:

The first way how a stock market helps the economy is by helping businesses raise capital by selling their shares to the public. Hence, by listing their shares in the stock market, the general public easily purchases them. The money invested by the public to buy shares is then used by the company to expand their business or bring something new to it.

  1. Stock exchanges help the government to fund development projects:

Government works on many projects by raising funds through a type of securities called bonds. The purchase of bonds let the government work on different development and infrastructure projects for the people of the country. Hence, the locals who buy these bonds lend money to the government for this purpose.

  1. Stock exchanges give both small and big investors equal opportunities:

Stock exchange undoubtedly provides equal investment opportunities to both, big and small investors willing to invest in shares. Stock exchange works typically as a trading center that works as a place where stocks and shares are traded between companies and the public. Hence, equal opportunities strike the interest of every investor, making them willing to trade in stocks.

While stock exchanges have covered the entire globe, Pakistan stock exchange is also working significantly in the country and for the economic development of Pakistan.

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