Serves as the institutional framework through primary market and secondary markets. It provides an avenue for the buying and selling of shares , which gives people part ownership of companies. The share market facilitates investment.
Share Market Effect on Economy
Share market values often indicate a country's economic condition because share market prices rise in accordance with new and better economic prospects for companies. Share market offers new investment opportunities for the economy and thereby affects the total pattern of investment.
Investment - Share Market Effect
Facilitates more efficient investment in the economy. A healthy share market encourages consumers to purchase shares with their additional income as shares offer potential for higher return
Debt - Share Market Effect
Often companies need a large supply of funds which can be financed in two ways, debt financing or equity financing
Asset price - Share Market Effect
When the share market suffers a fall in share price or a stock market crash, consumers shift investment into non-share assets as demand increases
Business Cycle - Share Market Effect
When share market suffers a downturn it is likely that shareholders will be less confident about economic prospects, causing them to save which reduces economic activity
