CAPITAL MARKET AND ECONOMIC GROWTH IN AN EMERGING ECONOMY: EVIDENCE FROM NIGERIA

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Product Category: Projects

Product Code: 00004805

No of Pages: 118

No of Chapters: 5

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Abstract

This research work examines the role of the forensic accountant in fraud detection in Nigeria with comparative analysis of public and private sectors. Forensic accountant plays a significant role in the Nigeria organizations whereby he investigates with the use of technological equipment in its assignment. The researcher employs primary data (questionnaire and personal interview) to collect data. Hypotheses were tested with the use of z- test at 5% level of significance and the result reveal that a good forensic accountant will assist in the growth and development of any organization in which he/she carry out his/her assignment. This study recommends among others that a high degree of mutual trust, respect and understanding should exist among the forensic accountants, in the public and private sectors and management in order to achieve the organizational objectives should have a mutual relationship with the preparers of financial statements.

 

 

 

 

TABLE OF CONTENTS

Title Page

Certification

Dedication

Acknowledgements

Abstract

Table of Contents

Chapter One: Introduction

1.1       Background to the Study

1.2       Statement of Problem

1.3       Research Questions

1.4       Objective of the Study

1.5       Statement of Hypothesis(es)

1.6       Significance of the Study

1.7       Scope of the Study

1.8       Limitations of Study

1.9       Definition of Terms

Chapter Two: Review of Related Literature

2.1       Introduction

2.2   Economic Growth and Development

2.3   Relationship between Capital Market and Economic Growth and Development

Chapter Three: Research Method and Design

3.1       Introduction

3.2       Research Design

3.3       Description of Population of the Study

3.4       Sample Size

3.5       Sampling Techniques

3.6       Source of Data Collection

3.7       Method of Data Presentation

3.8       Method of Data Analysis

Chapter Four: Data Presentation, Analysis and Interpretation

4.1       Introduction

4.2       Presentation of Data

4.3       Data Analysis

4.4       Hypothesis Testing

Chapter Five: Summary of Findings, Conclusion and Recommendations

5.1       Introduction

5.2       Summary of Findings

5.3       Conclusion

5.4       Recommendations

References

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1      Background to the Study

The role of long-term capital in the economic development of a nation cannot be overemphasized. Most economic managers recognize that a well organized many developing countries; capital has been a major constraint to economic development.

The Nigerian economic has over the years been subject to series of social, political and economic policies and reforms. In the pre-1970 era, the economic was basically agrarian and food security was largely achieved with the various regional governments then. The need to encourage private capital in development was realized long enough, with the establishment of the Nigerian Stock Exchange (NSC), then called the Lagos Stock Exchange in 1961 to develop the capital market (Alile & Anao, 1986).

The capital market is a highly specialized and organized financial market and indeed essential agent of economic development because of its ability to facilitate and mobilize savings and investment. The capital market provides the much needed liquidity making documentary evidence of ownership of securities trade-able (Sule & Momoh, 2009, p. 67). To a great extent, the positive relationship between capital accumulation and real economic growth has long been affirmed in economic theories (Anyanwu, 1996).

Success in capital accumulation and mobilization for development varies among nations, but it is largely dependent on domestic savings and inflows of foreign capital. Therefore, to step-up the current efforts on economic recovery, effort must be geared toward effective resource mobilization. It is in realization of this that consideration is given to measure the development of capital market as an institution for the mobilization of finance from the surplus sector to deficit sector.

Undoubtedly, potential investable funds abound in Nigeria, but the overriding consideration on this project will be to examine the role of the capital market in harnessing and mobilizing these resources to generate economic growth in the country and consequently, economic development.


1.2      Statement of Problem

There is abundant evidence that most Nigerian businesses 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-term and long-term capital (Demirguc-Kunt & Levine, 1996, pp. 223-239).

Most recent literatures on the Nigerian capital market have recognized the tremendous performance the market has recorded in recent times. But the performance of the capital market, especially the Nigerian Stock Market, was overcast in 2009 by the global financial and economic crisis with the exorbitant lending rate mounting pressure on the stock market as a result of massive borrowed fund in the market. The rush by stock investors to liquidate their investment to repay their loans in order to avoid the excessive lending rate caused the Nigeria Stock Market to crash. However, Sere-Ejembi (2008, p.4) argue that it was not the global financial crisis and the speculative subprime mortgage bubbles abd-bust along that was responsible for the crash of the stock market, other contributory factors lent support. Some of these included: margin lending by the Deposit Money Banks (DMBs), Stock price appreciation that had no correlation with the fundamentals in the quoting companies and local investors’ opting to invest in foreign capital markets to take advantage of the low stock prices.

However, the vital role of the capital market in economic growth and development has not been empirically investigated thereby creating a research gap tool for economic development.

1.3      Research Questions

This research shall be guided by the following research questions:

a.           How does the capital market impact on the economic growth process in Nigeria?

b.          What is the trend activities on the capital market?

c.           What is the rate at which new stocks are issued on the Nigerian capital market?

d.          How could the capital market, through its crucial role, stimulate economic growth in Nigeria?

1.4      Objective of the Study

The main purpose of this study is to examine the activities and performance of Nigeria capital market. The specific objectives of this study are as follows:

a.           To evaluate the impact of the capital market in relation to the economic growth in Nigeria.

b.          To examine the trends of having activities on the capital market.

c.           To examine the rate at which new stocks are issued on the capital market.

d.          To find out how the capital market through its crucial role stimulate economic growth in Nigeria.

1.5      Statement of Hypothesis

The hypothesis that would be tested in the course of this research is stated below as:

Ho:   There is no significance relationship between the capital market operations and the Nigerian economic growth.

Hi:   There is significance relationship between the capital market operations and the Nigerian economic growth.

1.6      Significance of the Study

The study will explore the impact of effectiveness of capital market instruments on Nigeria economic growth. Though the scope of the study will be limited to the capital market,

i.            It is hope that the exploration of this market will provide a broad view of the operations of the capital market.

ii.           It will contribute to existing literature on the subject matter by investigating empirically the role, which the capital market shows in the economic growth and development of the country.

iii.         The main importance of this study is that it will provide policy recommendations to policy-makers on ways to improve operations and activities of the capital market.

iv.         Researchers: Researchers will find the study relevant because it will serve as a spring bond and contributes to existing literature.

v.           Students: Students will find this research work relevant as it will help them in their studies.

vi.         Regulators of the capital will find this work of importance as it creates the gap that exist between what is currently in operations and that expected to be in operation.

vii.       Investors, stockbrokers and the officials of the NSE will see this study of relevance to them as it will give an eye opening on how much a nation stands to gain from effective activities in capital market.

1.7      Scope of the Study

The economy us a large component with lots of diverse and sometimes complex parts. This study will focus on a particular part of the economy (the financial sector). This study will not also cover all the facets that make up the financial sector, but shall focus on the capital market only and its impacts on the Nigeria economic growth. The empirical investigation of the impact of the capital market on the economic growth in Nigeria shall be restricted to the period between 2003 – 2013 due to the non-availability of some important data.

1.8      Limitations of Study

In the course of this research, some problems were encountered which include the following:

1.          Non-availability of relevant materials as it relates to the subject matter.

2.          Since the study is limited to the NSE if the result is generalized it may not show a true picture of what is obtainable in other emerging economies due to the environmental factors peculiar to the Nigerian.

3.          The biasness of responses received from respondents as regards the questionnaire is a limiting factor.

1.9      Definition of Terms

·                  Equity: This is the residual right of ownership over the assets of a company. A right that can be enforces only when everyone else (e.g. creditors) has been paid. It is specifically the ordinary shares of company.

·                  The Daily Official List: The closing prices of all listed securities as at the end of each day are normally compiled and published in a daily report called The Stock Exchange Daily Official List. This list reflects at any particular time, last price, which was bid for each security irrespective of the date of such bid.

·                  The Stock Exchange Price Index: The index is an aggregate of the market capitalization of all the industrial equities listed in the market.

·                  Market Capitalization: This is the total volume of funds, which the stock market is able to raise and made available for investment purpose at a particular time.

·                  Financial Intermediation: This is the process by which financial intermediaries provide a linkage between surplus units and deficit unit in the economy.

·                  Gilt-Edge Securities: These are government securities that yield interest. They are generally regarded as low risk investment.

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