Explain how the development and growth of the stock market effects the Essay

Explain how the development and growth of the stock market effects the real economy - Essay Example Stock markets have securities notified on stock exchanges and also provide private trading facilities. According to an estimate, at the close of 2012, world stock market was more than $50 trillion with US having the largest market of about 35% and United Kingdom and Japan with 6% each (Perry 1-2). Impact of stock market growth and development on economies is indeed an important area of research among economists. It provides for steering financial matters and forming future economic strategy to improve business and investment environment of a country. Thus impact of stock market growth has both direct and indirect effects on an economy. Industries, Service providers and Corporations of various types get their stocks available in stock market. Large companies usually put their stock available/ registered in many exchange markets around the world. It is done after weighing potentials of business in a specific stock market. Participant of stock markets are traders, banks, retail investors, insurance companies and corporations etc. which deem to invest, buy, sell, transfer and even evaluate their stocks through the facility of a stock market. Trading in stock market is done through evaluation and bidding process carried out among buyers and sellers who agree over a deal on value o f the product. From hedge funds to stock investors the participants of a market can perform this activity anywhere in the world. A representative of business activity carries out buying, selling, exchange or valuation on behalf of his employer to execute exchange activity. Thus companies are not physically available or do not come with their active products and investment plans but they perform these transactions virtually through their representatives. A rational response to the concept of stock exchange and its activities can be transpired as effectiveness and vibrancy of economic activities in a market.