ABSTRACT
A case study of Nigeria,
the contribution of stock exchange
in the banking sector and in
economic well being of the general
public.
In a nutshell, the stock exchange aims to provide an
atmosphere where buyer and sellers of securities meet to buy
and sells shares (securities)
The importance of stock exchange cannot
be over emphasized in the
banking sector and even it performs
prominent roles in Nigeria economy at large. In developing our
economy in Nigeria in Banking sector,
with stock exchange had came into being so as to perform this
active part in banking and Nigeria
as well, in view of the above, the stock exchange market aimed at motivating and encourage the
Investor, Brokers as well as the general
public to have improvement in their aims
of buying and selling securities, through
proper usage of the instrument
used in the stock exchange market.
TABLE OF CONTENTS
Title page
Certification
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER
ONE
1.0 Introduction 1-2
1.1
Background of the Study 2-5
1.2
Objective of the Study 5-6
1.3
Scope of the Study 6-7
1.4
Statement of the Problem 7-8
1.5
Research
Hypothesis 8-9
1.6
Limitation of the Study 9
1.7
Delimitation of the Study 9
1.8
Significant of the Study 10
1.9
Definition of Terms 10-14
CHAPTER
TWO:
2.0 Literature Review
2.1
The Capital Market 15-16
2.2
Reasons for Establishment of the Nigeria Capital
Market 16-17
2.3
Function of the Nigeria capital market 17-18
2.4
Composition of capital market 18-27
2.5
Nigeria
stock exchange 27-28
2.6
Development of stock exchange in Nigeria 28-27
2.7
Function of the Nigeria stock exchange 27-34
2.8
Instrument Used in Stock Exchange 34-36
CHAPTER
THREE
3.1 Introduction 37
3.2 Research Design 37-39
3.3 Method of Data Collection 39-34
3.4 Sampling Population 40-42
3.5 Research instrument 42-43
3.6 Questionnaire Design 43
CHAPTER
FOUR
4.1
Introduction 44
4.2
Data Analysis and Presentation 44-45
4.3
Interpretation of Data and Analysis 45-58
4.4
General Comments 58-
CHAPTER
FIVE
5.0
Summary Conclusion and Recommendation
5.1
Summary
5.2
Conclusion
5.3
Recommendation
Appendix
References
INTRODUCTION
The
capital market is a market which deals
in long – term loans. It supplies industry with fixed and working capital and finances medium- term and long term
borrowing of the federal, state
and local governments.
The capital market
deals in ordinary stocks and shares and
debentures of corporations and bond and securities of government and it should be noted that the fund which flow into the
capital market come from individuals who
have savings to invest.
In another sense the
stock exchange plays an important role
in the economy, it determine the economics health of the country and has a pivotal role
in mobilizing resources for
the development of capital market. It
is patient to know that the capital
market functions through stock exchange market under the stock exchange of every country.
A case study of Nigeria stock exchange, the
contribution of stock exchange in the
banking sector and in the economic will
being of the public
In a nut shell, the tock exchange aims to provide an
atmosphere when buyer and seller of securities must to buy and sell shoves (securities)
the study on the role of stock exchange in the development of capital market
will focus on:
(a)
the role
of stock exchange in Nigeria and the capital market
(b) history of Nigeria stock exchange and it past
operations
(c)
Effect and important of stock exchange as a
unit of capital market on the industrial development.
(d) Impact
on the investor and issues of the
securities
(e)
Nature of the capital market and exchange in
the capital market operations.
(f)
Participant in the capital market
(g) Problem of Nigeria stock exchange in the capital market operations
Statement of the problem
The focus of the study will
be to identify the role of stock.
Stock exchange in the development
of capital market, and Nigeria
stock exchange will be the case- study. In the course of the study answer will provided
to the following.
a.
What are the role of stock exchange in Nigeria in the
capital market
b.
What is the historical background of stock
exchange and review of their operation in the past.
c.
What are the effect and importance of stock
exchange as a unit of capital market on industrial development.
d.
What are the
participant in the capital market and exchange in the capital market
operation
e.
Who are participant in the capital market and
exchange in the capital market
operation.
f.
What is
the nature and who are the participant of the capital market
g.
What are the limitation of problems
of Nigeria
stock exchange in the capital market operation
Aims
and objective of the study
It is important to know that
every country how their own stock exchange which contribute and determine the
economy of respective country. This research work will only cover Nigeria
stock exchange and it role in the development of the Nigerian capital market.
By so doing, the main reason for embarking on these studies is to derived
answer to the statement of the problems, which will fill the existing knowledge
gap.
The aims and objective of
this study include:
a.
to focus on the examination of the role of stock exchange in Nigeria, and the capital
market.
b.
To
show the history of stock exchange and review of their operation in the past.
c.
To bring into time light the effect and
important of stock exchange as a unit of capital market on the industrial
development.
d.
To show the significant impact of the
investor and issue of securities
e.
To know the nature of participant of the
capital market and exchange in the capital market operation.
f.
To know the nature and participant of the capital market.
g.
To
bring out limitation of problems of Nigeria stock exchange in the
capital market operation.
Statement
of hypothesis
The general hypothesis that will be tested in the study of
the research is as follow
Ho: the role of stock
exchange has not develop the capital
market
Hi: the role of stock
exchange has developed the capital
market
Ho: the stock exchange performs no function to the country
Hi: the stock exchange
perform functions to the country.
Research methodology
Base on the topic, the study will use primary and
secondary sources of information as well
as other psychological devices;
The primary sources will
include:
v Response from questionnaire
v Materials from the case study materials,
v Materials from the internet.
The secondary source will include
v Text
books
and the psychological devices will be to studying their behavior scenically and much emphasis will be places on the questionnaire
as it will cover a wider
population than when other
instrument (s) are being for the same purpose
question:
list
of question will be drawn for respondent
to answer. The study will avoid difficult and ambiguous question, the question
will be simple and straight forward and rooms for the expression of views
/ findings of respondents (s) regarding the study will be created
a complete presentation of population from which it is
drawn a sample, well be precisely be
part of the population, as it is a subject of the entire population of any
kind.
Definition
of terms/ concepts
In the stud emphasis
may be placed on some wards and may be used repeatedly which it meaning
they differ from English dictionary meanings, such wards and short meaning needed to be know to started below for these proposed/ study:
1-
the
capital market which is the market that deal with long- term fund
2-
stock
market operators: these are
those that are included in the
operation of the stock market such as
jobber, stock brokers, investment
advisers, and issuing houses etc
3-
prim market which is regarded as the
original or the main market
4-
second tier
securities market which is segment of capital market where small companies operate.
5-
Ordinary
and reference shares: ordinary shows are common shares and generally carry no fixed rate while the
preference share usually have fixed rate
of dividend and their holders are paid
if company makes profit
6-
To mention few other could be bulls, bear,
stag and others which the meaning will be in details in the study.
-
plans and organization of the study
the research work will be divided into five chapters. Each
chapter contain the following:
chapter one will have the background of the study,
objective of the study, scope of the study, statement of the problem, research hypothesis, limitation of the study ,
significant of the study and definition
of terms
chapter two will b theoretical frame work which will forces
on the laterally review of Nigeria stock exchange and capital market, reason for establishment of the Nigeria capital
market, composition of capital market,
Nigeria stock exchange, development of stock exchange in Nigeria, functions of the stock
exchange and instrument use in stock
exchange.
Chapter three will state briefly the analysis of various method used in data collected and
emphasized on research design, method of data collecting sampling population, questionnaire design.
While the chapter
four will contain introduction, data
analysis and presentation, interpretation of data and analysis, testing of hypothesis and general comment.
And finally chapter
five will discuss summary, conclusion
recommendation and suggestion for
further studies
Bibliography reference
The will state the list of materials text books
journal magazine consulted in the writing of the proposal and those that will be use to write the main
project.
CHAPTER
ONE
1.0
INTRODUCTION
1.1
background of the study
The Nigeria stock exchange provide a market where
holding of existing “ quoted” shares wishing
for sell; such share be sold by making contact with individual and institution which are interested in buying and selling of shares, stocks bonds and
security. Also any one who has
surplus fund after current living expenses and a reserve for an emergency might decide to invest such surplus fund in
security.
The stock exchange is otherwise known as “ security market” the
stock exchange play on important roe in the economy in mobilizing
resources for development of capital
market, the stock exchange provides
facilities for bringing together suppliers and users of capital
Security
Market:
A stock exchange therefore, is a market where large / small
shares of companies and government securities
are traded.
Former director general of the Nigeria stock exchange apostle H.I
Alike describe the stock exchange as the corner stone in the nations capital formation and the achieving of the engine of
the financial institution resolve for
example.
Nigeria
security and exchange commission
(N.S.E.C) of public enterprise, savers,
underwrite issuing houses, fund user, stock brokers, security registers.
The establishment of the exchange in 1960 market the
informal birth of Nigeria capital market which
serves as a range of purpose including
the following.
i-
Mobilization
of savings from numerous
economics units of economic growth and development.
ii-
Provision of adequate liquidity to investor.
iii-
Broad of the ownership base of Assets as well
as the creation of private sector.
iv-
Provision
of alternative source of fund for government other than taxation.
v-
Encouragement
of more efficient allocation of new investment through price mechanism
vi-
Encouragement of more efficient of given
amount of tangible wealth through
changes in the composition and ownership wealth
vii-
Promotion
of rapid changes that exist to link together sellers and buyer of quoted investment. They
help to widen there base of ownership of public companies. Stock liquidity
also provides especially for
making it easy for government and
industries to raise fund (s) for
development of their programmes.
1.2
OBJECTIVE OF THE STUDY
The main aims of the
research work are as follows:
i-
To focus on the examination of the role of
stock exchange in Nigeria
in the development of capital market.
ii-
To
show the history of stock
exchange and review of their operation
in the past
iii-
To bring into limelight the effect and importance of stock exchange
as a unit of capital market on industrial development
iv-
To show significant impact on the investor
and issues of the securities
v-
To know the nature and participant of the
capital and exchange in the capital market operation
vi-
To know the nature of participant in the
capital market.
vii-
To bring out limitation of problems of Nigeria
stock exchange in the capital market
operation.
1.3 Scope Of The Study
With
available data on the Nigeria stock exchange system the case study will
focuses its attention on the management and role of the stock exchange system.
This research work was not carried out without
difficulties, many of the limitation which is considered very important are
listed below:
v Financial
Problem: considering
the global economic melt down and
devastating economic problems
confronted by non- political
aligns in the country, the
researcher is confronted with
financial inadequacy due to other academic commitment
which involves money, to say
categorically that the cost used in
caring out this research work involves
thousand (s) of naira. It is not an over statement
v Time Factor: Another prominent
obstacle faces by the researcher
is that of time factor. Talk about the time took to travel, planning organizing
and collecting of materials to be used for the write-up
v Transportation Problem: During the period of
carrying out this research work in collection of data the researcher spent a lot of money on
the cost of transport fare (s) and on
some occasion the researcher will have to “trek”
1.4
STATEMENT
OF THE PROBLEM
The
presentation is mainly concerned with
the role of stock exchange in the development of capital market in Nigeria
stock exchange.
In this research work, the role of stock exchange in Nigeria
stock exchange shall be thoroughly
examined with particular emphasis on the following
-
Exchange rate problem the unstable nature of
the exchange rate is a major headache to the Nigeria stock exchange prior to
march 1992, exchange rates were still
easy and investors could be able to invest their money
-
The number of companies trading on the
floors is alarmingly affected by the
operation of the exchange
1.5
RESEARCH HYPOTHESIS
The following hypothesis is considered as the basis of the
question to be answered for the purpose of the study
Ho: The role of stock
exchange has not developed the capital market
Hi: The role of stock
exchange has developed the capital market.
Ho: The stock exchange
marker perform no function to the country
Hi: The stock exchange market perform function to thee country
1.6
LIMITATION OF THE STUDY
It is normal for human being
to be face with certain problems in the achievement of a particular objectives which should be considered
challenges, therefore there are
numerous difficulties confronted with in
carrying out this research work which
can be trained to lack of finance
to various companies for adequate
information gathering which might have enriched the research work.
1.7 Delimitation Of The Study
The research work covers the evolution and
historical background as well as role of stock exchange in the development of
capital market focuses on Nigeria
stock exchange as case study
1.8 SIGNIFICANT OF THE STUDY
The importance of a
well developed stock market and its role in the banks recapitalization cannot
be over emphasized, hence, this study is aimed at examining and analyzing the roles or impact of Nigeria stock exchange on the assets base of banks it
aimed at assisting prospective
researcher into the factors that led to
the mergers and acquisition of the consolidation of banks.
1.9
DEFINITION
OF TERM
The capital
market: This is the market which deals with long
term funds. The most important role play
in this market is the stock exchange, while the regulatory institution is the Nigeria
securities and exchange commission it is
a market place where listed securities such as bond, debentures stocks and
shares of varying type are bought
and sold
A stock exchange is
established to act as catalyst of
business expansion or growth.
Stock market operators: The stock
market operator involves the following:
v Jobbers
v Stock Brokers
v Investment Advisers
v Issuing
Houses
Jobbers: The jobbers
otherwise known as market makers are independent dealers i.e. they trade on
their account and bear the risk of price fluctuation. They do no receive commission
the jobbers returns depend on the
spread between bid and offer prices.
The function of the
jobber includes maintaining a
continuous and orderly market with the
aim of ensuring that securities are readily available and trade and prevailing market prices.
Stock
Brokers: These are member of the exchange who buy and sell
securities on behalf of the investment public
They also sponsor
issues to the stock exchange for
listing an also underwrite and handle primary distribution
of securities.
Investment
Advisers: these are non- registered members of the exchange who perform functions similar to stock brokers. Not being members of the exchange, they cannot
sponsor issues to the stock exchange for listing
Issuing House: These are agent who arrange the
issues of securities on behalf of the governments or firms intending to raise money from the investing
public. Merchant banks or stock broker
do this job.
Prime market: Is regarded as the original or the main
market deals in fully listed share or quoted on the stock exchange
Second
tier securities market: This
is a segment of capital market where small companies operates
The
bull and the bear market:
Bulls is an investor who believes that the market price are
certain to go up. Bull means upward trend. In the context of the stock market, it means the
market is going up and doing well as reflected in share prices.
Bears (s)
is
an investor who believes that the market
prices are certain to go down. Bear trend means that the market is going down and not doing well
Stag (s)
is a male deer, In the context of
shares, it refers to equities. with
potentials of upward movement in price.
Therefore on investor desirous of making profit form now issues of
shares buys the shares before they are listed and sells them
at a higher price.
Investment: simple means
of giving up cash now is exchange for
the promise of more cash in the future.
Shares (s): it represent
evidence of investment interest of a person in a company and government
establishment
Ordinary
and preference share: The
UK
term for a share in the equity of a company. The US equivalent term is common stock.
The holder of an ordinary share is entitle to share in any distribution of dividend in proportion
to number of share hold. Ordinary shares
usually but not invariably entitles
their holders to vote at company meetings. They are contrasted with debentures
and preference shares. Debenture holder normally have a fixed entitlement to interest but no vote provided the interest is paid and any other conditions
are compiled with preference share holders have not vote but must be paid heir
dividend before any distribution to ordinary shareholder is allows. In the event of winding
up a company, ordinary shareholder is rank last in any claim to company
assets, but get in unlimited part of any residual there is after paying off the
others .
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