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Functions of the Securities Market

FUNCTIONS OF THE SECURITIES MARKETS

The securities markets perform very important functions that benefit the economy, the corporations and the individual investors.

Gains Of The Securities Markets To The Economy

  • It improves utilization of existing domestic savings and encouraging new savings. The existing of the securities market for example the Stock Exchange makes it possible for people to invest their savings.
  • It helps to channel these savings to where they are needed most. The stock market makes it possible for firms performing well to attract more investors. The prices of stock of such firms go up. Investors sell the stock of firms that are not doing well and buy the shares of companies doing well. By so doing, funds are transferred to where they are most needed, that is to firms that need the funds to make good use of these funds.
  • It also attracts foreign investors through portfolio investment. The Ghana Stock Exchange is open to foreign investors. Therefore, foreigner with surplus funds can invest in Ghana through the exchange. Without it such investment would not be possible.
  • It assists in the privatization process. The Ghana Stock Exchange made the divestiture process that the government of Ghana embarked upon in the 1990’s possible. The government was able to sell its stocks in the divested companies through the exchange. This made the divestiture process easy and made shares more accessible to the public.

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