TRADING HISTORY
OF THE STOCK IMPORTANCE OF THE STOCK
BEHAVIOR OF THE STOCK STOCK EXCHANGE ROLE OF STOCK EXCHANGE
AMERICAN STOCK EXCHANGE AUSTRALIA ST EXCHANGE
LONDON STOCK EXCHANGE BOMBAY STOCK EXCHANGE
KUWAIT STOCK EXCHANGE NYSE HONG KONG STOCK EXCHANGE
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Relation of the stock market to the modern financial
system
The financial system in most western countries has undergone a remarkable
transformation. One feature of this development is disintermediation. A
portion of the funds involved in saving and financing flows directly to the
financial markets instead of being routed via banks' traditional lending and
deposit operations. The general public's heightened interest in investing in
the stock market, either directly or through mutual funds, has been an
important component of this process. Statistics show that in recent decades
shares have made up an increasingly large proportion of households'
financial assets in many countries. In the 1970s, in Sweden, deposit
accounts and other very liquid assets with little risk made up almost 60 per
cent of households' financial wealth, compared to less than 20 per cent in
the 2000s. The major part of this adjustment in financial portfolios has
gone directly to shares but a good deal now takes the form of various kinds
of institutional investment for groups of individuals, e.g.,
pension funds, mutual funds, hedge funds, insurance investment of premiums,
etc. The trend towards forms of saving with a higher risk has been
accentuated by new rules for most funds and insurance, permitting a higher
proportion of shares to bonds. Similar tendencies are to be found in other
industrialized countries. In all developed economic systems, such as the
European Union, the United States, Japan and other developed nations, the
trend has been the same: saving has moved away from traditional (government
insured) bank deposits to more risky securities of one sort or another.
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