Financial Market — Secretarial Practice STD 12 Commerce / Arts — Question

Role: A financial market is of great use for a country as it helps the economy in the following ways:
(i) Saving Mobilization:
Obtaining funds from surplus units such a households individuals, public sector units, central government, etc and channelizing their funds or productive purposes.

(ii) Investments:
The financial market plays an important role in arranging to invest funds thus, collected in those units which are in need of the funds.

(iii) National Growth:
The financial market contributes to the national growth by ensuring a continuous flow of surplus funds to deficit units.

(iv) Entrepreneurship Growth:
Financial markets contribute to the development of the entrepreneurial class by making available the necessary financial resources.

(v) Industrial Development:
The components of financial markets help towards accelerated growth of industrial and economic development of a country thus, contributing to raising the standard of living and the society’s wellbeing.

(vi) Capital formation:
The capital market brings together borrowers and lenders. It attracts saving from people and directs it towards the institutions where it is needed. It generates capital for the business.