Explain the role of securities market in economic growth.

The Securities Market refers to the markets for those financial instruments/claims/obligations that are commonly and readily transferable by sale. It has two inter-dependent segments: the new issues (primary) market and the stock (secondary) market. A well-functioning securities market is conducive to sustained economic growth. Studies by institutions like the World Bank and IMF have established a robust relationship between the development of the securities market and economic growth. The securities market fosters economic growth by: Augmenting the quantities of real savings and capital formation from any given level of national income. Increasing net capital inflow from abroad. Raising the productivity of investment by improving the allocation of investible funds. Reducing the cost of capital.