The development of the stock exchange market is a
pre-requisite to the growth and development of any economy. The capital marked
comprises the primary market and secondary market.
market is the market for new issues. It is a platform where a company or
government can raise money for investment quoted companies can also raise
funds. Both SEC and NSE are involved in the primary market activities. While
the secondary markets are vehicles for providing liquidity to investors where
existing securities are traded openly, the stock exchange provide free entry
and exist for investors, through trading in secondary market. The establishment
of the second tier security market in April 1985 for companies that cannot meet
up with the listing requirements of the first-tier (main) security market, has
encouraged the small and medium scale enterprise to raise money through the
stock exchange market.
the industrial development of any country remains vital as it affects directly
her economic growth and subsequently the standard of living of her populace.
The industrial sectors of any country car only develop when the country has an
efficient capital market (stock
exchange). The efficient stock exchange market will give rise to capital
formation, which is needed for investment in the country’s industries.
growth of capital market and its consequences on a developing economy cannot
waved aside, because it has play a significant role in the economic growth and
development of Nigeria.
Thus, it has helped in contributing more to corporate tax revenue,
capitalization of industries, capital formation, and the growth of gross
domestic product (GDP).
two pivotal roles that the capital market plays:
It signals the state of health of the national
It provides a measures of the resilience of the
rational economy by the extent to which economic activities rely on it.
first role, the trends in the market indicate in clear terms whether the
economy is headed in the right direction or not, since its vagaries reflect the
level of confidence in polices, their implications and implementation. In the
second role, the market serves as an active and effective balance against the
more regulated money market.
TABLE OF CONTENTS
1.1 Background to Study
1.2 Importance and Relevance of the research
1.3 Research Problem (s)
1.4 Research Objective/Questions
1.5 Guide to Subsequent Chapter
2.1 The structure of the Nigerian Capital
2.2 The role of Capital Market In Nation
2.3 The Capital Market in Policy Formulation
2.4 The Growth of Capital Market (The Federal
2.5 Fiscal Measure in Capital Market
2.6 Need for Paradigm Shift in the Development
2.7 Historical Perspective of the Nigerian
2.7.1 The Primary Market
2.7.2 The Secondary Market
2.8 Market Operation of the Nigerian Capital
2.8.1 The First Tier Securities Market
2.8.2 The Second Tier Securities Market (SSM)
2.9.1 Responsive Capital Market in Global
2.9.2 Challenges to Market Responsiveness
3.2 Appropriateness of Research Paradigm
Framework and how it Relate to the Research Problem and Guides the Research.
3.4 Nature and Development of Methodology
3.5 Limitation of Study
3.6 Data Collection Method.
3.7 Reliability and Validity
3.8 Administration of the Instrument
3.9 Procedures for Analyzing Data
of Analyzing Regression.
Dept of Market
BACKGROUND TO STUDY
capital market is a sub-set of the financial system that serves as the engine
of growth in modern economies. The capital market is the segment of the
financial market where medium to long-term financial instruments are created
and/or traded, to meet the long-term funding needs of economic activities. The
degree of effectiveness and efficiency of the market will determine the extent
to which is will contribute to the process of economic growth and development.
development of and reliance of economic activities on the capital market have
been offered as important explanations of the interrelationship between
macro-economic stability and soundness of the financial system. When national
policy formulation ignores this, a major plank of opportunity for stabilizing
the economy and fast tracking its growth would be lost or vitiated.
the market place in question, where this kind of transaction could take place
in the Nigerian stock exchange.
stock exchange provides the trading ground for the sale and purchase of
securities thereby mobilizing funds for medium and long-term financing, the
stock market is regarded as the most visible sign of the capital market, hence
it naturally (as an operator) derive its role from the capital market.
it the general belief if that capital market provides the capital, it does so
through the help of its authorities and regulators, which are the ministry of
finance, the Central Bank of Nigerian (CBN) the Nigerian Stock Exchange (NSE)
and the Securities and Exchange Commission (SEC). Above all, the Nigeria Stock
Exchange is seen as the most viable because it provides the market place for
the re-sale of the transferable securities, thereby mobilizing the needed
I believe the outcome of this reserve with be to explore the basis of the
growth of capital market and its consequences on a developing economy of this
1.2 IMPORTANCE AND RELEVANCE OF THE RESEARCH
research is of importance because as a future manager it is useful to serve as
a guide to practitioners and individual corporate organizations associated with
security markets, educate policy makers and the organized private sector on the
contributions of the capital market to the capital formation process and
disclose the need for more small and medium enterprises to make use of the
second- tier security market of the stock exchange. The research will be
practical guide to perspective investors. The study will provide a ready source
of information for all person (s) interested in knowing about the capital
1.3 RESEARCH PROBLEM (S)
capital market has improved significantly terms of market capitalization volume
of long-term debt stock sold, volume of transactions and the number of
operators (eg stock brokers). It however remains a relatively small source of
is argued this background that in the course of this study, some problems
associated with the capital market have been identified.
The constraining regulatory environment of the
securities and exchange commission affects the volume and value securities
stock market is yet to contribute and provide the needed amount of investment
that will boost the percentage of the manufacturing sector is the growth rate
educational disparity among the populace maintain it out most impossible for
some people to understand investment possibilities.
ineffectiveness of the second-tier security market is due to the poor response
and lack of interest of the indigenous companies to get quoted on the Nigerian
1.4 RESEARCH OBJECTIVE/QUESTIONS
The main objective of the proposed
research is as follows:-
To examine the role of the capital market in economic development.
To evaluate the performance/growth economic
contributions of the capital market in the Nigerian economic development
To point out problems confronting the Nigerian capital
market in national policy formulation.
Need for paradigm shift in the development process.
main research question to be addressed are:
What is the depth of the market?
What are the percentages of the market capitalization
to the rate of GDP from 1992-2002
How many companies and stock brokerage firms operates
on the capital stock exchange
1.5 GUIDE TO SUBSEQUENT CHAPTERS
a final part to the introduction, a guide to subsequent chapters is briefly
two provides evidence of the research done and criticize it constructively.
There are prior research stating the economic roles and contribution of the
capital market and its consequences on a developing economy. Capital market in
national policy formulation, fiscal measures in capital market development, the
micro-economic objectives, and the growth of the capital market and its
consequences the structure of the capital market.
the chapter four the particular approach used in the entire process of this
research study is provided. The probable methodology, with particular reference
to a unit of analysis, this approach enables one to understand the dynamics
present within a single setting. The unit of analysis is the Nigeria capital
market (the Nigerian Stock Exchange). This section starts with an introduction
describing briefly the main features of the methodology and how appropriate it
is to the research topic, area of study and, the population of study, sample
and sampling techniques, sources of data collection and instrument for data
collection and date analysis is described along with its strengths and
weaknesses stating its validity and reliability.
is collected from different sources such as books, journals, seminar papers
presentation, the Nigerian Stock Exchange fact book, CBN Bullion, dictionaries
and from online databases such as the internet. Conclusion drawn form this
research work is that the initial role play by the capital market was just the
beginning of the economic development simultaneously. Data were collected prior
to the research study, and the data is analyzed based on the non-quantifying
method of analysis using a general analytical procedure.
four shows the different data collected which is directly related to the
analysis carried out, it also show market capitalization, value of transaction
GDP and Gross Fixed Capital, also contribution of newly created capital to GDP
and Gross Fixed Capital, table show debt of market (value of transactions) and
turnover rate securities transaction (value), number of listed companies, share
price index. Also included is the presentation and analysis of regression
result and decision rule.
the summary and conclusion summaries the research work done, with
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