“Stock Exchange” means a formal and organized market of investment in which buying and selling shares of companies or government bonds or private institutions are performed under the terms of certain rules and regulations. The most important characteristic of Stock Exchange is legal protection of the owners’ stagnant savings and capital investment and legal requirements for capital seekers.
Stock Exchange as the pulse of the economy of country is considered by economic analysts, in one hand, it is the center of the collection of savings and on the other hand an official and reliable reference that the owner of stagnant savings, can seek a relatively suitable and safe place to invest, and use their surplus funds to invest in other companies or with the purchase of government bonds and reliable companies receive defined and guaranteed benefit.
In fact, Stock Exchange market is a complementary of the banking sector in providing financial needs of private and public firms. A securities market that act within the framework of market mechanisms can act in allocating financial and more efficient resources. The evidences presents that countries that have more developed capital markets (stock), could have higher economic growth. Also the banking system by using the Exchange mechanism can obtain its required liquidity and improve adequacy of their investment.
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