"A well functioning securities market is conducive to sustained economic growth." Explain.

A well functioning securities market is conducive to sustained economic growth. The securities market fosters economic growth to the extent that it (a) augments the quantities of real savings and capital formation from any given level of national income, (b) increases net capital inflow from aboard, (c) raises productivity of investment by improving allocation of investible funds and (d) reduces the cost of capital. Thus, the savings and capital accumulation and formation respond favourably to developments in securities market. The securities market provide bridge between ultimate savers and ultimate investors and creates the opportunity to put the savings at the disposal of the enterprises, thus promising to raise the total level of investment and hence of growth.