The Research was carried out to examine the Nigerian stock
exchange investment on trading at margin. The objectives of this study were to
examine the trading at margin and the Nigerian stock exchange plays a vital
role in the development and growth of the banking sector. It also examines the effect of indigenization
policy and regulatory frame work of the Nigeria stock exchange.
The data (i.e. information) for research was derived
through the distribution of questionnaire.
To be able to assess the signification the role of Nigeria
stock exchange investment, a descriptive statistics of analysis of variance was
adopted to test the hypothesis formulated in the study.
The study showed that Nigeria stock exchange significantly
influence work of the baking activities in Nigeria.
Therefore the researcher recommended that there should be
sustained effort to stimulate productivity in both the public and the private
sector, and also the stock prices should be regulated.
CHAPTER ONE: INTRODUCTION
Background of the Study
Statement of Problem
Objective of Study
Significance of the Study
Scope and Limitation of Study
Definition of Terms
CHAPTER TWO: LITERATURE
Stock Market and Economic Growth
Studies on the Impact of Stock Market on Economic Growth
Historical Background of the
Nigerian Stock Exchange (Nse)
The Nigerian Stock Exchange in This
Function of the Nigerian Stock
2.5.1 The Role
of the Nigerian Stock Exchange in a Developing Economy
Stock Exchange Listing Requirement
Nigerian Stock Exchange as a Measure of
Stock Market Size
Characteristics of the Nigerian Stock
CHAPTER THREE: RESEARCH
Restatement of Research Questions
Area of Study
Procedure for Data Collection
Procedure for Data Analysis
CHAPTER FOUR: PRESENTATION
AND ANALYSIS OF DATA
4.2 Respondent Characteristics
and Analysis of Data According To Research Question
CHAPTER FIVE: SUMMARY,
CONCLUSIONS AND RECOMMENDATIONS
5.0 Summary, Conclusions and Recommendations
5.2 Summary of Findings
TO THE STUDY
Mobilization of resources for national development has
long been the central focus of development economist. As a result, the
centrality of savings and investment in economic growth has been given
considerable attention (Aigbonkan, 1995, Soyode 1990, Samuel 1996).
For sustainable growth and development, funds" most
be effectively mobilized and allocated to enable business and the economy to
harness their human, material and management resources for optional output.
The stock market is an economic institution, which promote
efficiency in capital formation and allocation. The market enables government,
banks and industries to raise long-term finance for new projects, expanding and
modernizing commercial concern if capital are not provided to the key economic
areas; especially industries where demand is governing and where they are
capable of increasing production and productivity of all sectors of the
economy, the rate of expansion of the economy of ten suffers.
A unique benefit of stock market to banks and corporate
entities is the provision of long-term, non-debt financial capital. Through the
issuance of equity securities, companies arid banks acquire perpetual capital
for development through the provision of equity capital, the market also enable
banks to avoid over reliance on debt financing thus, improving corporate
The existing literature clearly shows that developed
economy has explored the two channels through which resources mobilization
affects the economic growth and development, money and capital market (Samuel
However, not the case in developing economics where
emphasis was placed on money market with little consideration for capital
market (Nyong 1997).
Since the introduction of the Structural Adjustment
Programme (SAP) in Nigeria; the country's stock market has grown very
significantly (Allie 1996, Soyode 1990).
This is as a result of deregulation of the financial
sector and the privatization exercise as well as the directive of the Central
Bank of Nigeria (CBN) requesting bank to increase their asset base, which
exposed investors and banks to the significance of the stock market. Equity
financing from the capital market became one of the cheapest and flexible
source of finance from the capital market and remains a critical element in the
sustainable development of the banking sector.
Through the stock market is growing, it is however
characterized by characterized by complexities. These complexities arises from
trend in globalization and increased variety of instruments being traded,
equity option, derivatives of various forms, indeed futures etc. However, the
central objectives of the stock exchanges worldwide remain the maintenance of
the efficient markets with attendant benefit of economic growth. The link between
Stock Market performance and Trading at Margin (economic growth) has often
generated strong controversy among analysts based on their study of development
and emerging market.
As economist develops, more funds are needed to meet the
rapid expansion. The stock market serves as an irresistible tools in the
mobilization and allocation of savings among competing uses, which are critical
to the growth and efficiency of the banking sector. The determination of the
other growth of the banking sector depends on how efficiently the stock market
performs its allocation functions of capital.
As the stock market mobilizes savings, concurrently it
allocates a large portion of it to the firms with relatively high prospects as
indicated by its rates of returns and level of risk.
The importance of this function is that capital resources
are channeled by the mechanism of the forces of demand and supply to those
firms with relatively high aid increasing productivity thus, enhancing the
expansion and growth of the banking sector.
It is no longer news that the per-capital income of
Nigeria is low, compared with other countries having potentials and resources
both natural and manmade. As a result of low per-capital income, bank has low
capacity utilization due to the inability of the people to save and thus, make
it difficult to accumulate fund which could be borrowed or lent to industries
of relatively high prospects in order to increase the growth of the banking
Therefore, my statement of problem lies on: What Role Can
Nigerian Stock Exchange Play in Fund Mobilization / Raising for Individuals in
1.2. RESEARCH QUESTION
Does Trading at Margin IS a poor strategy for
capital market investment activity?
What are the impacts of
trading at margin on the Nigerian Stock Exchange?
Does the stock market
promote borrowing from the banking sector?
Does the Nigerian Stock
Exchange provide an additional channel for engaging and mobilizing domestic
saving for productive investment?
at margin is not a poor strategy for capital market investment activity.
at margin IS a
poor strategy for capital market investment activity.
Ho: There is no positive impact of trading at margin on the Nigerian
is positive impact of trading at margin on the Nigerian stock exchange.
Ho: The stock market does not promote borrowing from the banking
Stock market promotes borrowing from the banking sector.
The aim of the research work is to investigate the
importance of the Nigerian Capital Stock Exchange (NSE) in the Nigerian capital
market, which tends to improve the efficiency of capital of banks, which serves
as a contributing factor for the development of the banking sector in terms of
their returns as compared to the administrative of public sector corporations.
Apart from the fact that the stock exchange market has an
impact on the economic development in terms of how it helps stimulate
industrial as well as financial growth and development of the Nigerian banking
sector, other objectives of this study includes:
To assess the role of
the stock exchange in a developing economy like Nigerian
To investigate the
problems faced by the stock exchange
To suggest ways the
Nigerian stock exchange can be made more efficient and effective.
OF THE STUDY
The target of this research work is to establish the
existence of a positive link between trading at margin and the Nigerian stock
exchange market. Also sectors of the economy tend to act in a collaborative
manner such that optimum benefit of linkage between the stock market and
financial growth can be realized in Nigeria.
The proposed study will help in suggesting ways the Nigerian
stock exchange can equip itself to face the challenges of the future thereby
taking its rightful place as a major wheel In Nigeria's march towards financial
prosperity and stability.
AND LIMITATION OF STUDY
The scope of the research work will be limited to Lagos
and its environs, Lagos being the centre of financial activities in the
Nigerian economy, the Lagos floor of the Nigerian stock exchange in general.
However, there are some uncontrollable elements, which will affect the
effective carrying out of the study, which are:- Limited time is utilized to
cut between lecture and time to go on research; This is an important factor as
the research is a student; we have no personal source of income to fund the research.
This also includes the high cost of transportation to Lagos and movement around
the metropolis and all other incurable expenses to be incurred.
The Nigerian Stock Exchange.
STOCK EXCHANGE: A market where those intending to buy and sell of shares
and stocks meet to transact business
CAPITAL MARKET: This is a long-term and of the financial market. It is
made up of markets and institutions which' make the issuance and secondary
trading a long term instruments.
EQUITIES: This is also known as ordinary shares. This is the most
common type of shares issued by limited liability companies. Holders own a
positive of such company.
MONEY MARKET: This market mainly provides short term funds using
short-term instrument such as treasury bills, commercial papers etc.
SECURITIES: This is defined as a documentary evidence of ownership or
entitlement of chain upon the asset of the issuing organization, which may be a
business firm, government institutions.
HARE OF STOCK: These are financial instruments that give the shareholder
a share (state) in a firm ownership and therefore, grant him the right to share
in the firms profit in of dividend.
TREASURY BOND: These are promissory note issued by the government when
they need money for capital financing.
CORPORATE BOND: These are promissory note issued by large companies when
they bond money (mobilize funds).
MANICIPAL BOND: These are issued by the local government bodies for rural
development before independent and shortly after
INCOME BOND: This is the interest paid on this bond depend on the
earning guaranteed from the project.
MORTGAGE BOND: It is a lien given the bondholder a prior right to some
assets of the borrower. It represents a conditional transfer of the pledged property
from the borrower to the lender.
MARKET CAPITALISATION: This is defined as the market mechanism that determines
the growth rate of funds and availabilities of fund in the stock market.
GUARANTEED BOND: This is where guarantee may be requested in additional to
the pledged assets.