Role of equity: an instrument for economic development

Equity market has progress in the last decade. It has become tool of economic development. Stock market development and long-run economic growth are closely linked together. Equity Markets serve many different roles that are particularly important in emerging markets. For Countries development not only need a well-functioning banking sector but in addition also need a well-developed Equity market, Banks in emerging markets has become supporting factor to equity market development. Improvements in the functioning of a developing equity market results in higher debt-equity ratios, and thus more business for banks. Equity market markets and banks play different but complementary roles. Stock markets exist to help allocate funds to firms and liquidity to investors. Now equity market has become a source of capital and dependence on debt is been reduced. Investors are no longer restricted by national boundaries. Technology has made it easy for investors to invest and trading has become easy, transactions costs has become low, and access to information almost free due to use of internet in equity market This paper discusses the role of equity market in the development of country's economy.