This project seeks to examine the impact of the Nigerian capital
market on economic growth from the period of 2002-2010. this study investigate
the techniques of bench marking of Nigeria capital market toward economic
development of the nation and discuss the importance of bench marking to over
come perceived weaknesses within the process. This study intended to find out
the operations of the Nigerian capital market and evaluate the performance of
the capital market in relation to the economic growth in Nigeria. The
literature review describes the various instrument of capital market and the
role it has played to towards economic development. All aspect of this work is
very relevant in one way or the other to Nigeria as a whole and for those who
may be interested in carrying out further study in this topic. Also, data were
collected through primary and secondary source. The primary of source consist
distributed questionnaire while the secondary source are mainly textbooks,
internet articles and journals. The methods of statistic analysis include the
use of tables, percentage analysis while hypotheses formulated were tested
using chi-square mathematical techniques. The study observed that the problems
that drags the Nigerian capital market is clued lack of interest in securities,
Nigerians prefer to in vest in real assets against investment in financial
assets should be curbed by deregulation of security pricing. The evidence from
this study also reveals that the activities in the capital market tend to
impact positively on the economy. It is recommended therefore that the
regulatory authority should initiate policies that would encourage more
companies to access the market and also be more proactive in their surveillance
role in order to check sharp practices which undermine market integrity and
erode investors’ confidence. The study further recommended that, to promote the
capital market and stimulate economic growth and development great emphasis
should be made on those things that will help in booting the market.
TABLE OF CONTENTS
1.1Background of the study
1.2Statement of the
1.3Objective of the
1.6Significance of the
1.7Scope and limitation of the
1.8Definition of terms
2.0 Review of related
2.1Overview of capital
2.4Roles of the capital
2.5Contribution of the capital market to
socio-economic development of
2.6Analysis of the Nigerian capital market
2.7Problems of the Nigerian capital
3.0 Research design and
3.3Population of the
3.4Sample and sampling procedure
3.5Validity and reliability of measuring
3.6Instrument/tools of data
3.7Methods of data
4.0 Data presentation and
4.1 Data presentation, analysis and
4.2 Test of
5.0 Summary of findings, recommendation
5.1 Summary of
1.1BACKGROUND OF THE STUDY:
The Nigerian capital market which commenced operation formally in
1962 was established in 1960 when the Lagos stock exchange were incorporated
up-to-date, the capital market exerts tremendous effect on Nigeria economic
growth and development. The Nigerian capital market instruments are: debt
instruments, preference shares, ordinary shares and derivatives etc. So in
absence of capital market, industrial or economic growth would be hampered.
The Nigerian capital market is the market for sourcing medium term
and long term funds which is used for economic development and growth. It is
also the financial market which trades in medium and long term financial
instruments (stocks and bonds) with maturity in excess of one year. It is a
network of participants, instruments and facilities which functions basically
to facilitate efficiently the flow of savings into long term investment for
socio economic development.
The Nigerian capital market is also a network of institutions that
perform functions that are described as a capital market activities, it
facilitates the issuance and secondary trading of long term financial
instruments, unlike the money market which functions basically to provides
funds to the governments and industries to meet their long term capital
requirement. Oyiuke (2008) therefore, the capital market plays a vital role in
stimulating industrial as well as economic growth and development.
The Nigerian capital market provides the necessary lubricant that
keeps turning the wheel of the economy, it not only provides the funds required
for investment but also efficiently allocates there funds to projects of best
returns to fund owners. This allocative function is critical in determining the
overall growth of the economy. A developed capital market like the one we have
encourages economic growth. It does the various institutions which operate in
the market by giving quantitative and qualitative direction to flow of funds
and bringing about rational allocation of resources Shingad (2004). And by
converting financial assets into productive physical asserts and thus lead to
development of commerce and industry through the private and public sector, thereby
inducing economic growth.
The Nigerian capital market has opened the flood gate of
relatively inexpensive fund thereby eliminating the possibility of self
financing by indigenous entrepreneur. Such funds may usually be required for
expansion or to cushion of effects of inflation so that business may stay
alive, for research and development of a new product, Nwude (2008). It provides
the government with more effective means of financing its projects in area of
infrastructural development. It has continued to play an important role on
production process and economic performance of Nigeria nation. Nigerian capital
market is to ensure the steady development of the economy, at the apex of the
capital market is the security and exchange commission (SEC) so the capital
market functions through the stock market. A stock market is a market which
facilitates the buying and selling of share stocks, bonds, securities and
debentures Shingan (2004). Perhaps the easiest way to think of capital market
activities is to think in terms of those financial claims that will remain in
existence for about five(5) years or indefinite time, Onyiuke (2008). This work
will cover all the important roles of capital market for a period of 2002 to
2011 on economic growth of Nigeria nation.
1.2STATEMENT OF THE PROBLEM:
There is abundant evidence that most Nigerian business lack long
term capital. The business sector has depended mainly on short term financing
such as overdrafts to finance even long term capital. Based on the maturity
matching concept such financing is risky, all such firms need to raise an
appropriate mix of short and long term capital Demirguc-Kunt and Levine (1996).
Most recent literatures on the Nigeria capital market have
recognized tremendous performance the market has recorded in recent times.
However the vital role of the capital market in economic growth and development
has not been empirically investigated thereby creating a research gap in this
area. This study is undertaken to examine the contribution of the capital
market in the Nigerian economic growth and development. Aside the social and
institutional factors inhibiting the process of economic development in
Nigeria, the bottleneck created by the dearth of finance to the economy constitutes
setback to its development as a result, it is necessary to evaluate the
Nigerian capital market.
Then an efficient and effective capital market tends to mobilize
savings and allocates a greater proportion to those private sector of the
economy like companies giving due allowance for risk. The allocative function
of Nigeria capital market is critical in determining the overall growth of the
economy. For instance if capital resources are not provided to those economic
units especially industries where demand is growing and which are capable of
increasing production and productivity, the rate of expansion of the economy
will suffer, Onyiuke (2008).
1.3OBJECTIVE OF THE STUDY:
The general objective of this work is to examine the impact made
by Nigeria capital market on the economic growth of Nigerian nation
(2002-2011). This study will attempt to specifically:
i.Find out how much money had been mobilized from
the Nigerian capital market (NCM) into different sectors of the Nigeria economy.
ii.To find out the proportion of the mobilized fund
to the gross domestic product (GDP).
iii.To find out the sectors that benefited most from
In this study, the following research questions will be used to
determine whether Nigeria capital market has really made some impact on the
economic growth of the nation since (2002-2011).
i.Do you think that Nigerian capital market had be
mobilized from 2002-2011?
ii.What is the proportion of the total financing
from the Nigeria capital market (NCM) to the gross domestic product?
iii.Have other sectors of the economy benefited from
the Nigerian capital market (2002-2011)?
For the purposes of getting a useful response for this study, the
following hypotheses are drawn. A hypothesis is a tentative statement about
phenomena whose validity is usually unknown. It’s a statement, but so far is
not supported by relevant information or data. It is often stated to highlight
the perceived relationship between a dependent and an independent variable,
The followings are thereby formulated;
Ho: That the amount mobilized from the Nigeria
capital market is not significant.
Hi: That the amount mobilized from the
Nigeria capital market is significant.
Ho: The proportion of the mobilized fund to
gross domestic product is not significant.
Hi: The proportion of the mobilized fund
to gross domestic product is significant.
Ho: Nigeria capital market has not made a
significant impact on economic growth of the nation.
Hi: Nigeria capital market has made a
significant impact on economic growth of the nation.
1.6SIGNIFICANCE OF THE STUDY:
This study would try to identify the need for an efficient capital
market in the economy, knowing its immense importance and contribution to the
growth and development of the economy.
The outcome of the study will help:
a.The government in planning and execution of
b.Capital market operators in relating their
efforts towards guiding the market.
c.Regulators of the market in adhering strictly to
all its regulator roles.
d.The students of finance and the larger public
will be making use of any aspect of information thereof.
This research work will serve as a stepping stone to other works
to be carried out in this aspect.
1.8DEFINITION OF TERMS:
This refers to all man-made productive assets i.e. all man-made
wealth or goods used to produce other goods and services. They are goods,
which assist in the production of consumer goods, services and other capital
goods examples raw materials, machines, factory buildings.
This is a financial market for long term capital. It is a
complex institution and also the mechanism through which intermediate and long
term funds are pooled and made available to business, government and
individuals. The capital market can be grouped into two namely the
primary and the secondary market. The primary market is that for new
issues of share and stocks for the purpose of pooling funds from the investing
public excess unto. While the secondary market are mainly for existing stock
that is stocks whose bearers went to re-coup the funds invested in acquiring
such stock or securities found in the capital market are the stock brokers,
Jobbers, dealing clerk, merchant banks.
According to Sudden, economic development is the process, which
foster the transformation of a subsistence economy to one, which is modernized
and integrated, with high degree of specialization and exchange. It is also the
process of increasing real per capital income and engineering substantial
positive transformation at the various levels of the economy.
The positive signals which take place improve the general will
being of the people and ensure sustained or raise the standard of living of the
capital of a company which includes all funds contributed by the owners as
evidence of this ownership consist of stock certificate that, among other
things, show the names, type of shares and type of stock.
Participants in the stock exchange who execute the clients orders
to buy and sell shares and other instruments on their behalf usually on
These are participants in the stock exchange who buy and sell
second hand securities in secondary markets and make their gains from such
transaction. They do not operate on commission basis but they buy up the
securities of companies that were first issued for sales at a later data.
TERMS AND CONDITIONS APPLY
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