Question

Discuss the importance of the financial market to government, business and householders. Try to imagine a world without a financial market; what do you think life would be like?

Answer 1

Financial market is very important for development of a country and its economy, because it helps in providing with organised platform for money supply and money flow into the whole economy so it will help the economy to grow faster.

Importance of financial market to government households and business are as follows-

A.it will provide with an organised platform for exchange of financial instrument.

B.for household, it will provide an opportunity to get funds and make a high rate of return from Investments.

C. From the perspective of government, it can be a platform to generate revenue and control the securities market.

D. For businesses it can help to secure funds at lower rate of interest

E.it will help in growing the overall economy and generate employment in the economy.

F.it will also provide a safe haven for various investors for investment because investment in these markets are protected.

A world without a financial market, would be an organised and very narrow because there will not be incorporation of money management and money flow into the society and economy , and business will have limited growth, and government will have limited control on the money flow and investor will have limited options to invest their funds, because there won't be any hybrid instruments to enhance the rate of return.