The first point:

Requirements for equity financing. In terms of financing, there are two types: equity financing and bond financing. The biggest disadvantage of bond financing is repayment, while the biggest feature of equity financing is compensation.

So equity financing has become an important way of financing. With equity financing, we must consider how to ensure its liquidity, so there will be a trading place for equity - the stock market.

Second point:

There are risks in the stock market and there are risks in bank loans.

The key is that the characteristics of the two are still different. The risks caused by bank credit to individuals are still indirect. After problems with commercial bank loans, first there will be a run on the banking system, and then the banking system will collapse, and individuals will be affected. The stock market is a direct investment by individuals, and the risks are direct and visible. ! ! !

So everyone sees the risks of the stock market more clearly and feels they are greater.

The third point:

The needs of enterprises. If an enterprise wants to ensure the continuity of production and operations, it is necessary to ensure a certain amount of capital. This part of the demand must be met by equity financing, and bond financing alone is not enough. This is also the issue of financial leverage mentioned in corporate financial management: the debt of the company must be maintained at a certain level.

The fourth point:

For individual investors, the risk of the stock market is the greatest. First of all, in the stock market, individual investors are directly faced with risks. Bank credit is to lend personal funds to enterprises, and banks serve as a transition between individuals and enterprises.

Secondly, the stock market requires technical analysis and requires high personal abilities. Individuals with bank credit basically do not need relevant knowledge.

Finally, high risk and high return, the reason why the stock market is attractive is that its returns are much higher than bank interest rates