The stock market is one of the most important way for the company to raise money, along with debt market which are generally more imposing but do not trade publicly. This allow business to be publicly traded, and raise additionalfinancial capital for expansion by sell shares of ownership of the company in a public market. this is an attractive features of investing in stock, compared to other less liquid investment such as property and other Immovable assets.
An economy where the stock market is on the rise is considered to be an up and coming economy. The stock market is often considered the primary indicator of a country economics strength and development.
Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of household and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system function.
In this way the financial system is assumed to contribute to increased prosperity, although some controversy exists as to whether the optimal financial system is bank based or market based.