Limited liability laws played a pivotal role in shaping the growth and accessibility of stock trading. Before these laws, investors in joint-stock companies faced unlimited liability, meaning they could lose not only their initial investment but also their personal assets if the company failed or incurred large debts. This high level of risk discouraged many individuals from participating in early stock ventures, limiting investment largely to wealthy elites who could afford potential losses.

The introduction of limited liability in the 19th century transformed this landscape. Under these laws, shareholders were only responsible for the amount they invested in the company, shielding their personal wealth from corporate debts or bankruptcy. This reduction of risk encouraged a much broader segment of society to invest in companies. It also made it easier for businesses to raise large amounts of capital by selling shares to a wide base of investors.

As a result, limited liability laws helped expand stock markets and supported the financing of large-scale projects such as railroads, factories, and international trade ventures. They fostered investor confidence, knowing that losses were capped, while still allowing them to benefit from potential profits. Ultimately, these laws democratized stock ownership, fueled industrial growth, and laid the foundation for the modern stock market system we know today.