effectiveness and growth of capital market in Nigeria economy is a problem that
has assumed of recent an intractable dimension.
The concept market is one of the compartments of financial system that
promotes harm and investment in an economy.
The stock exchange market is one of the key institutions of the capital
market, a network or individuals, institution and instrument involved in the
effective channeling of funds from the surplus to deficit economic unit.
question whether a market undergone growth and development or not cannot be
adequately answered by simply ‘Yes or No’ there are some issues to be
main purpose of this study is to show how investors can dissever when a market
has attained growth and development for their top investors to know the
correctiveness of a price, which depends on the use of the information at time
of the price decision.
the study is designed to cover the practical and theoretical area of the stock
market. The study is about the market
and how effective it is in setting prices, which reflect the worth of the
securities, traded in the market.
TABLE OF CONTETNS
1.1 Statement of research Problem
1.2 Objective of the Study
1.3 Research Question
1.4 Limitation and Scope of the Study
1.5 Justification of the Study
1.6 Research Methodology
1.7 Statement of the Hypothesis
1.8 Plan of Study
1.9 Definition of Terms and Concept
II: LITERATURE REVIEW
2.1 Concept of Capital Market
2.2 Role of Capital Market
2.3 Efficient Market Hypothesis (EMH)
2.4 Capital Market Development and Successful
III: THEORETICAL FRAMEWORK
3.1 Evolution of the Nigeria Capital Market
3.2 Structure of the Nigeria Capital Market
3.3 Regulatory Body in the Capital Market
3.4 Instrument of Capital Market in Nigeria
3.5 The Benefit to Companies in the SSM
3.6 Growth and Significant of the Capital
3.7 Contribution of the Stock Exchange to
3.8 Problems of the Nigeria Capital Market
3.9 The Impact of Liberalization policies in
the Nigeria Capital Market
3.10 Reform of the Nigeria Capital Market
3.11 Depth of market
IV: METHODOLOGY AND ANALYSIS
4.1 Evaluation criteria
4.2 Data Presentation
4.3 Data Analysis
V: SUMMARY, RECOMMENDATION AND
TO THE STUDY
rate of economic development of any nation is inextricably linked to the
sophistication of its financial markets.
markets assist the nation of the world to give the needed financial resources
and skills for growth and development.
from promoting a sound and efficient payments mechanism, the financial intimidation.
financial market is an institutional arrangement that facilities the
intermediation of funds in an economy.
By financial intermediation, it means mobilization of financial
resources from surplus spending units and the channeling of such to deficit
spending units and the channeling of such funds to deficit spending units for
production investment and the generation of assets or securities in the
the financial system generates a wide range of financial instruments (assets),
which are means of transferring purchasing power and are tailored to suit the
time preferences of both lenders and borrowers.
financial market performs an economic function by facilitating the transfer of
real economic resources from the lenders to the borrowers. By the inducement of interest income, the
market facilitates the transference of purchasing power from the lender to the
investor who wishes to exercise demand over resources.
the financial market is efficient, funds flow freely and rapidly among its
various sources and uses. As long as
financial instrument remains substitutable for each other, changes in supply
and demand in the money market have a rapid over effect into the capital
markets are therefore constitutional whenever participants with aid of
infrastructure technology and over devises facilitates the mobilization and
channeling of funds into productive investments. The importance of the financial market lies
in financial intermediation to link the deficit sector with the surplus of the
economy. In the intermediation process,
financial intermediaries engage principally in matching lenders and borrowers. They bring savers and borrowers together by
selling debt instruments or securities and deposits to savers for money and
lending that money to borrowers. As a
result, the lenders of investors receive claims on investment, which have
stable market value and high liquidity.
intermediation does not ensure from direct lending and borrowing process but
arises from the lending-borrowing proves, which involves the generation and
exchange of debt instrument or securities.
The point of emphasis therefore is the financial intermediaries use
their own liabilities to create additional assets, help mobilize funds, gather
together to reap economics of scale and minimize the investors.
financial markets system features a wide array of banking and non-banking
financial intermediaries. The banking sub-sector of the system comprises
Commercial and Merchant Banks, Development Bank and Central Bank, as the Apex
non-bank financial institution sub-sector includes a wide range of organizations
operating as regulators, facilitators and investors. The list includes the Securities and Exchange
Commission Market in Nigeria, to assess its impacts on Nigeria economy. In order to achieve its major (SEC), the
Stock Exchange, Stockbrokers, Regionals, Insurance companies, Pensions and
Provident funds and Investment Companies.
financial market is really segmented into two major markets, which are:
1. Money Market
2. Capital Market
money market is the market for short-term funds an securities including
treasury bills, treasury certificates negotiable certificates of deposits,
commercial paper and other funds of less than one year duration on the other
hand, the capital market is the market for long-term funds and securities whose
tenure extends beyond one year. These
include long-term loans, mortgage, bond, preference share, ordinary shares,
federal government bonds and industrial loans.
capital market is a complex institution and mechanism through which
intermediate and long run funds are made available to government, business
(firm) and individuals. The capital
market therefore is an instrumental arrangement that performs the function of
mobilizing private and public savings from surplus spending units and
channeling them to the deficit units for the production of goods and
services. Unlike the many money market
which primarily exist as a means of liquidity adjustment, the capital market
provides a bridge of transforming saving into long term investment by using
equity bonds, debentures, mortgages and investment stocks to facilitate
market makes it possible for private and public sectors of the economy to rise
long-term capital to execute government development programmes and from the
expansion and modernization of the private business to enhance outputs,
employment and income. The capital
market is often described as an important part of country’s economy, which is
indispensable to economy growth and development. In short, it is a place where nation’s wealth
capital market itself is composed of:
1. Primary Market
2. Secondary Market
in the market include Merchant Banks, Stock broking Firms, Issuing Houses,
Development Finance Companies, the Central Bank, Securities and Exchange
Commission and the Stock Exchange. With
this background; this project attempts to review broad outline the extinction
of the Nigerian Capital market, its functions, growth and development with
emphasis on the period and challenge for the future especially in the lights of
the liberalized trade and exchange regimes adopted under the Structural
Adjustment Programme (SAP).
1.1 STATEMENT OF RESEARCH PROBLEM
capital market is the long-terms and of the financial market that is made up of
market and institution which facilitate the issuance of long term financial
the more market that provides basically short term funds, the capital market
provides funds to industries and government to meet their long term capital
requirements such as financial or tried investments building, plant and
machinery bridges and so on.
following are research problem.
is there still low level of foreign investment in the market notwithstanding
2. Is the capital market reform impacting
positively on the economy?
3. Is there any on the securities of the
capital market attributed to the reform?
1.2 OBJECTIVES OF THE STUDY
major objective of this study is to evaluate the growth and performance of the
capital market in Nigerian to assess its impacts on the Nigerian economy.
following are the objectives of the study.
the structures and the roles of the capital markets in Nigerians and the
evolution of the market including institutional development market.
2. Examine the instruments used in the
market and their used fullness.
3. Examines the future prospect of the
Nigerian Capital market.
out the various problems facing the workings and the operations of the capital
5. To evaluate the impact of such reforms on
the Nigerian capital market.
1.3 RELEVANT RESEARCH QUESTION
1. What is the impact of the capital market
on the National Income?
is the effect of the capital market on the share holder investment or
is the impact of the capital market on the earning per shares (EPS) of the
is the effect of the capital market on the effectiveness: Development of the institutional in the
arrangement for long-term financial assets, such as shares, debentures stock
and mortgage equity bond.
AND SCOPE OF THE STUDY
Nigerian capital market since its inceptions in 1946. These will include involution and impact of
the sector on the growth of Nigeria economy.
early 70s and 80s then it because a significant factors in financial system of
study will further examine its roles during the Structural Adjustment
Programmes (SAP) and the impact its plays in the dominance of the country
1.5 JUSTIFICATION OF THE STUDY
importance of the capital market in economic development cannot be over
emphasized. There is consensus of
opinion that the nature and the content of the not benefit which the capital
market offer country be judged by the effects on the mobilization of savings, capital inflow and out flow the
mobility of investible surplus funds, resources allocation, distribution of
income and wealth and the response of economic policies.
the development of the capital market should encourage efficient mobilization
of both domestic and foreign savings for productive investment in order to
achieve economic development. Without
productive investment, there will be no growth and saving and there will be no
1.6 RESEARCH METHODOLOGY
study will make use of secondary data.
The date at sources from the various publications of the Central Bank of
Nigeria (CBN) such as B. Williams, Economic and financial Review, Annual Report
and Statistical Bulletin: Lagos Publication form the Nigerian Sick Exchange
(NES), Securities and Exchange Commission (SEC) and other Financial
1.7 STATEMENT OF THE HYPOTHESIS
1. H0: There is no relationship between Capital
market transaction and long
term sources of funds.
H1: There is relationship between Capital market
transaction and long term sources of funds.
2. H0: There is no relationship between investment
in capital market and the
earning per share (EPS) of the
H1: There is relationship between investment in
capital market and the earning per share (EPS) of the shareholders.
1.8 PLAN OF STUDY
study tells us what the evolution functions and impacts of the capital market
One is the introduction and explains what capital market is all about. Chapter Two is the literature review and it
review the work of notable economists.
Chapter Three will be scope of the study and examines evolution,
operation and impact or the sectors on the economy. Chapter Four will be methodology and its
analysis is based on secondary data from central bank of Nigeria, Nigerian
stock exchange commission. Chapter Five
will be the summary recommendation and conclusion giving suggestion and ways to
improve the operation on the Nigeria capital markets.
1.9 DEFINITION OF TERM AND CONCEPT
market: The market is concerned
with the mobilization and intermediation of long term funds.
Analysis: This refers to the
use of data to analysis the project work.
This data include in formulation got from official sources.
3. Methodology: This can be described as the method by
which this study will be carried out.
4. Equity: This is the shareholder’s ownership interest
in a company represented by their common and preferred stock.
in the Market: They are the
players in the stock exchange, this players include the financial
intermediaries for statement long term fund form investors and allocating some
to institution that required them.
6. Securities: This can be defined as documentary evidence
of ownership or entitlement to part of the asset of the issuing organization
which may be a business, firm, and government in government institution.
Market: This exists for the sale
and purchase of old securities.
Market: This market is for new
securities. It is platform where a
company or government raises funds for investment purposes.
E. A “The Development of Capital
Market in Africa with particular reference a Kenya and Nigeria IMF Staff paper
(Washington) volume 2 July 1997.
G.O: Money and Capital Market in
Nigerian Today University of Lagos Press Page 16-135 1991.