How Financial Market Helps Economy?

It is a type of market where people are able to trade with low transaction costs for commodities, fungible items and financial securities. The prices are navigated by the supply and demand.  To continue developing the economy, the financial market should continue to be dynamic. It helps through the following:

 

Mobilizing your savings

You might have saved up your money after days of working. What do you do with the money you saved? Do you just save it in the bank and wait for years to gain a few interest? Smart people invest their money in stocks and bonds. Financial market can use the savings from individuals, businesses, public sectors and the government to keep the economy stable with funds coming from them.

 

Encourage investment

The financial market had encouraged even common people to invest. People have seen the potential of investments with the open doors of the financial market. Funds are invested in companies and industries through the financial market. Investments are much needed by companies to continue to grow their business. They make their companies public to earn some investment from various entities. These companies were able to provide more jobs for people with the help of investments that stabilize the nation’s economy.

 

National development

For a national development to happen, the flow of funds should be continuous. Concentrated funds do no good to the economy because only a few industries have the funds to continue. The financial market directs the flow of funds to deficient units. The source of funds is no longer a problem and people will be able to focus their attention on gaining profits. It will allow more funds to be used for productive purposes for the nation.

 

Increase in entrepreneurship

Entrepreneurs usually have great ideas that they want to create. They have good business opportunities that they want to establish. Most entrepreneurs were not able to make it because they lack the funds for their great ideas. The financial market comes into play to provide financial resources for entrepreneurship. There was an increase in entrepreneurship with the help of financial market as they work further to strengthen the economy.Continue reading

 

Higher standards

Higher standards of living are gained through financial market. Since anybody can participate in this market, regular workers were able to become co-owners of companies after buying shares of the company. It had increased the growth of industries because of the continuous flow of financial sources. The higher standards of living help people become more productive in helping the economy. They invest in more companies or industries to continue helping them and in return receive profits after some time.

 

This market helps any economy in so many ways. It had mobilized savings as a financial resource for industries to continue to thrive. It had encouraged investment even from regular workers and different entities. The financial market had also contributed to the national development. It had increased entrepreneurship that also created higher standards of living.