How Stock Markets Support Business Growth and Capital Formation

Introduction

On July 20, 2026, Jersey Mike’s — the sandwich chain with over 2,500 locations — set the terms for its initial public offering (IPO), aiming to raise up to $1.09 billion at a potential valuation near $8 billion. The offering highlights a fundamental mechanism of modern finance: companies that need growth capital can turn to public stock markets to raise it from a broad pool of investors.

But how exactly do stock markets help businesses grow? How do they differ across countries? And what does stock market capitalization really measure? This guide answers those questions.

What stock market capitalization actually measures

Stock market capitalization (or “market cap”) is the total dollar value of all shares outstanding for companies listed on a country’s stock exchanges. It’s calculated simply as:

Market cap = Share price × Number of shares outstanding (for every listed company)

This figure tells you the size of the public equity market in a given country. As of 2025, the world’s stock markets were worth roughly $140 trillion combined, with the United States accounting for about half of that.

But market cap is a snapshot, not a measure of capital raised. A company’s market cap reflects what investors think it’s worth right now — not how much money it has raised from investors over time. For a deeper look at how businesses obtain financing, see our analysis of how firms fund day-to-day operations.

How IPOs fit into capital formation

An initial public offering (IPO) is when a private company sells shares to the public for the first time. This is the primary way stock markets facilitate capital formation:

Primary issuance — The company sells new shares to investors, raising cash it can use for expansion, R&D, debt repayment, or acquisitions. In Jersey Mike’s case, the proceeds would fund further restaurant growth.
Secondary offering — Existing shareholders (founders, venture capitalists, employees) sell some of their shares, which doesn’t raise money for the company but provides liquidity.

The Jersey Mike’s IPO combines both: a portion of the ~$1.09 billion goes to the company for growth, while the rest goes to selling shareholders (including private equity backers).

For context on how different types of financial services support economic activity, see our guide on who exports financial services.

How stock markets differ across countries

Not all stock markets are created equal. The differences go far beyond size:

Market depth — A deep market has many listed companies, high trading volume, and narrow bid-ask spreads. The United States (market cap: $68.9 trillion) and China ($15.5 trillion) have deep markets. Smaller exchanges may have only a handful of listed stocks and low liquidity.

Sector composition — Some exchanges are dominated by financial stocks, others by technology or natural resources. Saudi Arabia and Canada have heavy energy and mining representation, while the United States is dominated by technology companies.

Regulatory environment — Strong investor protection, transparent accounting standards, and efficient settlement systems encourage listings. Countries with weaker institutions tend to have smaller markets relative to their GDP. For a look at how digital infrastructure supports financial markets, see our report on global secure server rankings 2026.

Access to international investors — Markets like Hong Kong and Singapore attract international capital through open capital accounts and English-language disclosure. Others are more domestically focused.

Why it matters for the broader economy

Deep stock markets provide several benefits:

Capital allocation — Public markets direct savings toward productive investments
Price discovery — Continuous trading reveals what companies are worth
Liquidity — Investors can buy and sell easily, reducing the cost of capital
Corporate governance — Public reporting requirements improve transparency
Wealth creation — Broad public participation allows households to share in economic growth

For a deeper look at how these dynamics play out in different economies, see our analysis of deposit-to-borrower ratios 2026 and our ranking of bank liquidity reserves 2026.

What the index cannot tell you

1. Market cap ≠ economic importance. A country might have a large market cap driven by a few giant companies but limited capital formation for smaller businesses. Jersey Mike’s IPO is one company; a healthy market needs many.

2. Market cap in U.S. dollars hides local reality. Exchange rate fluctuations can dramatically change a market’s dollar-denominated size. Japan and the United Kingdom have seen their reported market caps shrink in dollar terms during periods of yen or pound weakness, even though domestic prices were stable.

3. Market cap doesn’t equal trading activity. A market with $10 trillion in listed companies but very low trading volume is less useful for capital formation than a smaller but more active market. For a complementary perspective, see our ranking of stock trading activity statistics.

What 2026 looks like

The most recent comprehensive data on stock market capitalization is for 2025. Several trends are worth watching:

IPO activity is strong in 2026, with deals like Jersey Mike’s following a wave of high-profile listings
India overtook Japan as the world’s third-largest market in 2024–2025, reflecting its vibrant IPO market
Emerging-market listings are increasingly choosing domestic exchanges over New York or London

For a complete ranking of where stock markets are largest, see our report: Where Stock Markets Run Deepest 2026.

Sources & method

Data comes from the World Bank World Development Indicators, specifically the market capitalization of listed domestic companies (CM.MKT.LCAP.CD). This indicator measures the total market value of all domestically listed companies’ outstanding shares.

Primary source: World Bank WDI
Data year: Primarily 2025; some countries use 2022–2024
Countries covered: 79 economies
Methodology: Methodology page
Note: Market capitalization is reported in current U.S. dollars and fluctuates with both share prices and exchange rates

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