THE ROLE OF COMMERCIAL BANKS IN THE DEVELOPMENT OF MONEY AND CAPITAL MARKET IN NIGERIA (A CASE STUDY OF STOCK EXCHANGE & CBN)

ABSTRACT

The study examined the role of commercial banks towards the development of money and capital market in Nigeria. A total for five management staff from seven (7) banks making about thirty (30) respondents were sampled and published data were collected from central bank of Nigeria (C.B.N) and the Stock Exchange in Lagos. The result revealed that a positive and significant relationship existed between growth in commercial banking and the activities in the money market in Nigeria.

It was also revealed that the level of liquidity of commercial banks do determine their investments in the money and capital markets.

Hence, commercial banks were advised to be thorough in their service delivery while government should create the enabling environment for successful banking operations.

TABLE OF CONTENTS

Tittle

Certification

Dedication

Acknowledgement

Abstract

Table of content

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

1.2    Statement of the problem

1.3    Purpose of the Study

1.4    Research Question

1.5    Statement of Hypothesis

1.6    Significance of the Study

1.7    The Scope and Limitation of the Study

1.8    Definition of Terms

1.9    Organization of the Study

        Reference

CHAPTER THREE

RESEARCH METHODOLOGY

3.0    Introduction

3.1    Research Design

3.2    Sample Procedure

3.3    Data Collection

3.4    Selection Variables

3.6    Statistical Techniques

CHAPTER FOUR

DISCUSSION OF FINDING, CONCLUSION AND RECOMMENDATION 

 4.1   Introduction

 4.2   Tabulation of response and analysis of questionnaire

 4.3   Hypothesis testing

 4.4   Commercial banks and the capital market

CHAPTER FIVE

DISCUSSION OF FINDING, CONCLUSION AND RECOMMENDATION

5.0    Introduction

5.1    Summary

5.2    Conclusions

5.3    Recommendation

        Questionnaires

        Bibliography

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

The financial system of any society is the framework when capital formation takes place. It is the framework within which the saving of some members of society are made available to other members of society for productive investment. The process is made possible by the intermediation of financial institutions like commercial banks within the financial system are the framework called the financial market. The financial market consists of two segments.

Ezirim (1996) opined that financial system is the aggregation of financial market arrangement, institutions and other economic units together with the set of rules and regulations that guide their interactions.

In summary, the financial systems exist primarily to improve and sustain the mobilization and allocation of resources in an economy. It is deducible from the foregoing that financial systems consist of financial institution and financial market investment (e.g. money and capital market).

1.2   STATEMENT OF THE PROBLEM

All the counters at commercial banks are part of the money market, capital market operations also relies on commercial banks for its success. Despite this, there is the widely held belief in many financial quarters that the commercial banks have been unable to provide a vibrant financial market) money and capital), which is the engine of sound economic environment. Based on this claim this study attempts to investigate the extent of contribution or otherwise of the commercial banking sector in the development of money and capital market in Nigeria through empirical mean.

1.3   PURPOSE OF THE STUDY

This work will focus on the following issues:

(1)    To ascertain critically, the extent of contribution or otherwise of commercial banks in the development of money market in Nigeria.

(2)    To access the contribution or otherwise of commercial banks in the development of capital market in Nigeria.

(3)    To ascertain the effects of the structure of commercial banks on the development of capital and money market.

(4)    To assess the impact of the regulatory framework on the money and capital market development.

(5)    To examine how negatively or positively the operations of the industry has affected the economic transformation of Nigeria.

1.4   RESEARCH QUESTIONS

With due regards to the forgoing discussions, in a bid to achieve aforementioned objectives, the researcher will ask the following questions

(1) What vital roles does commercial banks play in development of money market?

(2) Has commercial banks lived up to its responsibility with regard to their performance in the capital market?

(3) Does the structure of commercial banks affect the development of money and capital market?

(4) To what extent does the regulatory framework influence the activities of money and capital market?

(5) What are the limiting factors (if any) of commercial banks with regards to their performance?

1.5   STATEMENT OF HYPOTHESES

The research attempts to prove or disprove the following research hypotheses.

H_O:   That there is no positive and significant relationship between growth in Commercial bank and the money market activities in Nigeria.

H_i:    That there is positive and significant relationship between growth in Commercial bank and the money market activities in Nigeria.

H_O:   That there is positive and significant relationship between commercial bank level of liquidity and their investment in the money and capital market.  

H_i:    That there is positive and significant relationship between growth in Commercial bank level and their investment in the money and capital

1.6   SIGNIFICANCE OF THE STUDY

The finding of this work shall playa complementary role with other related works.

It will also present or reveal an in depth position of the participation and contribution or otherwise of the commercial banking sector towards the development of the financial market.

Students and other researchers will find this work as a source of theoretical base for future studies. Finally it will add to stock of knowledge.

1.7   SCOPE AND LIMITATION OF THE STUDY

This study is designed to cover the activities of commercial bank within a space of 10 years (2000 - 2010)

In conducting this work, the following will be the limitations.

(i)   FINANCE: The researcher could not have adequate financial resource to embark on a comprehensive research.

(ii) DATA CONSTRAINT: Most of operators of commercial banks are reluctant to provide needed information concerning their operations.

1.8   DEFINITION OF TERMS

For better understanding of this concept, some terms will be given operational definitions.

(a)   BANKER: An intermediate party between the borrower and the lender

(b)   FINANCIAL MARKETS: There are different facilities provided by the financial system for the creation, custodianship and distribution of financial assets and liabilities.

(C)   MONEY MARKET: A framework in which short-term securities are bought and sold.

(d)   CAPITAL MARKET: A framework, which allow transactions involving long-term debt or equity obligations usually for 5 - 20 years.

1.9   ORGANIZATION OF THE STUDY

This research work will be organized into five chapters. Chapter one will discuss the general background on which the project will be based.

Chapter two will review the literature. Related works on the subject matter will be analyzed.

Chapter three will provide the research methodology. Here, the research design, sample procedure, data collection methods, data analysis techniques.

In the four chapter, effort will concentrate on data analysis; the analysis of the data will be treated under tabulation of responses, testing of hypothesis.

Lastly, chapter five will center on discussion of findings, conclusions and possible recommendation that enhance capital and money market development via commercial banks.