Does our economy gain from stock market?
Photo: Amdadul Huq / driknews
One of the most burning questions today is what's the use of the capital market and why the govt. should get involved to stabilise the market. Why should we care about the prospect of the market, if it does not contribute to our economy? Apparently, it seems that stock market does not keep any connection with the economy. But this market offers a great opportunity for the whole economy if we can grab it properly: Firstly, the companies can arrange their long term capital for business expansion from market with a minimum cost. The banks are suitable only for short term and mid term financing. Secondly, the companies listed in the stock market come under regulation of Securities and Exchange Commission, which ensures the corporate governance of the companies. The financial statement of listed companies is quite informative and valuable than unlisted companies. Thirdly, the most important factor is that stock market can attract investment. People reduce their consumption and invest here to earn better in future. Fourthly, stock market can finance huge fund for large projects easily. Finally, stock market is considered as the barometer of economy. An efficient stock market is the leading indicator of the economy.
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