laurencoleman.com

The financial markets in western countries have gone through a transformation. A part of the funds involved in financing goes directly to the financial markets and they do not come via banks’ traditional operations. The public is interested either in the investing in the stock markets directly or through mutual funds. The fact is that statistics show that shares have been an important part of the households’ financial assets. A big chunk of the financial wealth of households has gone into shares in the stock markets. The saving has moved away from traditional government investment to more risky of some type.

This brings us to the issue of how the wealth of households reflects on the investment and a wider pattern of the economy. There is clearly a trend towards types of saving with a higher risk. There is a similar trend towards these forms of investment in the industrialized countries like the European Union, the United States, and Japan. The international stock markets reflect this trend truly and are an important parameter of the progress or regress of these nations. The stock prices fluctuate frequently and they do so in distinction to the stability of government deposits or bonds. The individual investor or household is not only affected but also the country’s economy on a wider scale. These factors have been affecting the economy of various developed and developing economies. There are also the factors like the manner in which individual investors have an effect on the international stock markets.