NEPALESE STOCK MARKET IN THE LIGHT OF ITS GROWTH, PROBLEMS AND PROSPECTS

Abstract

The Nepalese stock market serves as a critical pillar in the nation's economic framework, enabling capital mobilization, investment opportunities, and wealth creation. Since its inception, the market has grown substantially, marked by an increase in the number of listed companies, higher market capitalization, and broader investor participation. Despite its progress, the stock market in Nepal faces persistent challenges that impede its development and limit its contribution to economic growth. The study explores these issues in detail, highlighting critical barriers such as insufficient market liquidity, a limited and concentrated investor base, and inefficiencies in regulatory and institutional frameworks. Moreover, the lack of diverse financial instruments, such as derivatives, bonds, and ETFs, reduces the market's attractiveness and limits its ability to accommodate varied investment preferences. Technological shortcomings, such as outdated trading systems and delays in implementing advanced digital platforms, also hinder market efficiency and accessibility. However, amidst these challenges, the Nepalese stock market holds significant growth potential. Recent reforms in regulatory practices, efforts to enhance transparency, the introduction of automated trading systems, and initiatives to promote financial literacy are steps in the right direction. Furthermore, increased interest from foreign investors, the development of emerging sectors, and the possibility of establishing alternative trading platforms present opportunities for expansion. This study underscores the importance of addressing these barriers to unlock the full potential of the Nepalese stock market. Key recommendations include diversifying financial products, fostering an inclusive and robust regulatory environment, promoting investor education, and leveraging technology to improve accessibility and efficiency.