Question

1. Why are financial markets important for a healthy economy and for economic growth? .

Answer 1

Financial markets are important and healthy for economy and economic growth because of following reasons-

A. Financial markets will be helping in raising of the capital for various entities in the economy and it will be helpful for generation of capital and growth opportunities for the organisation.

B. Financial markets are also helpful in credit availability for a larger section of companies and liquidity infusion so that there is not any kind of liquidity problem in the economy.

C. financial markets are also helpful in foreign portfolio investment attraction and they will be attracting a large number of foreign investors in order to invest into the domestic economy

D. Financial market will also be helping in transparency in determination of price of various securities and it will offer a chance for their interaction between various buyers and sellers.

E. Financial market will also offer a chance for maximization of Corpus for various investors as they are investing into ownership stake of various companies through financial markets

F. Financial markets will also help in better adaptation of monetary policy of the central banks as it will be pricing in various policy changes very quickly.