Abstract
The project examines the structure of the Nigerian
capital market and its impact on economic development in Nigerian Stock
Exchange. The study main objective is to ascertain the means of raising funds
in Nigeria capital market and also to find out if the capital market has any
significant impact on the masses. The primary source of data collection was
used in gathering data from respondents. A structure questionnaire was designed
by the researcher and validity by two experts from the statistics department
was used to obtain data and chi-Square (X2) was used to test
hypotheses formulated. It was discovered ignorance of the public as to the
benefits derived from being a listed number of the capital market has
contributed much to the low level of trading in the stock market. The study
concludes that the capital market does not have a tremendous impact in the
capital market because the more the companies in the market, the higher the
rate of expansion it will have. Based on the findings the study recommends
amongst others that tax laws should be reviewed by the federal government to
see that the tax burden on those who invest in the capital market is reduced to
nearest minimum so that investors will be encouraged to invest more.
TABLE OF CONTENTS
Title Page - - - - - - - - i
Certification - - - - - - - ii
Dedication - - - - - - - iii
Acknowledgments - - - - - - iv
Abstract - - - - - - - - v
Table of Contents - - - - - - vi
Chapter One: Introduction
1.1 Background
to the Study - - - - - 1
1.2 Statement
of Problem - - - - - 3
1.3 Research
Questions - - - - - 4
1.4 Objectives
of the Study - - - - - 4
1.5 Statement
of Hypotheses - - - - - 5
1.6 Significance
of the Study - - - - - 5
1.7 Scope
of the Study - - - - - - 6
1.8 Limitations
of the Study - - - - - 6
1.9 Definition
of Terms - - - - - - 7
Chapter Two: Review of Related Literature
2.1 Introduction - - - - - - - 9
2.2
Concept of
Financial System - - - - 9
2.2.1 Structure of the Financial System - - - 10
2.2.2 Content of Financial Market - - - - 14
2.3
Segment of the
Capital Market - - - - 15
2.4
The Capital
Market - - - - - - 16
2.5
The Financial
Sector in Nigeria Today - - - 18
2.6
Methods of Going
Public - - - - - 19
2.6.1 Functions of the Capital Market - - - - 23
2.6.2 Roles of Capital Market in
the Financial System - 24
2.6.3 How the Capital Currently
aids Business - - 25
2.7
Nature of the
Stock Exchange - - - - 26
2.7.1 Membership of the Stock Exchange - - - 31
2.7.2 Objectives of the Stock Exchange - - - - 32
2.7.3 Functions of Nigeria Stock Exchange - - - 33
2.7.4 Buying Shares - - - - - - - 34
2.7.5 Selling Shares - - - - - - - 36
2.7.6 Summary of
Buying and Selling of Shares - - 37
2.8 The Nigerian Securities and Exchange Commission
(SEC) - - - - - - - - 38
2.8.1 The Visiting Requirements - - - - - 40
2.8.2 Venture Capital/Unit Trust - - - - - 42
2.9 Securities
Traded in the Capital Market - - 45
Chapter Three: Research Method and Design
3.1 Introduction - - - - - - - 50
3.2 Research
Design - - - - - - 50
3.3 Description
of the Population of the Study - - 50
3.4 Sample
Size - - - - - - - 51
3.5 Sampling
Techniques - - - - - - 51
3.6 Method
of Data Collection - - - - - 52
3.7 Method
of data Presentation - - - - 52
3.8 Method
of Data Analysis - - - - - 53
Chapter Four: Data Presentation, Analysis
and Interpretation
4.1 Introduction - - - - - - - 55
4.2 Presentation
of Data - - - - - - 55
4.3 Data
Analysis - - - - - - - 56
4.4 Hypotheses
Testing - - - - - - 66
Chapter Five: Summary of Findings,
Conclusion
and Recommendations
5.1 Introduction - - - - - - - 70
5.2 Summary
of Findings - - - - - - 70
5.3 Conclusion - - - - - - - 71
5.4 Recommendations - - - - - - 73
References - - - - - - - 74
Appendix I - - - - - - - 77
Appendix II - - - - - - - 78
CHAPTER
ONE
INTRODUCTION
1.1
Background to the Study
The
Nigerian capital market is a part of the Nigeria financial system. The
Nigeria financial system has been the life wire on which the Nigeria economy
pilots its macro-economy variables. For any economy to be able to take care of
her responsibilities i.e. the citizen adequately, it must have a very strong
financial system.
The
financial system refers to a set of rules, regulations, aggregation of
financial arrangements, institutions and rest of the world to increase economic
growth and development of nation. It does this by providing a medium of
exchange which promotes specialization, mobilization of facings from the
surplus units and channeling into the deficit units of the economy for
productive capacity and over all output and employment (Akinsulire, 2011).
The Nigerian financial system has evolved over the
last few decades from a rudimentary to a more sophisticated one with numerous
institutions and operators that facilitate the performance of the primary role
of the system savings, mobilization and allocation of resources among
competition units within the system.
The Nigerian financial system comprises of several
financial institutions, instrument and operators. The financial system
regulators include the Central Bank of Nigeria (CBN), the Federal Ministry of
Finance (FMF) and the Securities and Exchange Commission (SEC), these are the
major regulating agencies in Nigeria.
Others are Commercial Banks, Development Banks, such as Federal Mortgage Bank
of Nigeria (FMBN), the Nigeria Bank of Industry (BOI), the Nigeria Agriculture
and Co-operative Bank (NACB), the Nigeria Industrial Development Bank (NIDB)
and specialized banks. Other institutions and funds include the National
Pension Commission (PENCOM), insurance companies, the National Economic
Reconstruction Fund (NERFUN) finance houses, Bureau De Change and the Nigeria
Deposit Insurance Corporation (NDIC). This in terms of number and variety, the Nigeria
financial system is quite robust.
From
the information, it can be seen that the financial system is the tool a nation
uses in raising funds.
The
aim of this research work is therefore to bring to light the ways the capital
market operate by analyzing the importance of corporate capital to the economy
of Nigeria.
1.2
Statement of Problem
The
problem of this research work is to analyze how the capital market operates and
also its impact on the economic development of Nigeria.
However,
the following problems were also identified by the researcher during the course
of the study and there include: unavailability of literature covering the
Nigeria capital market and corporate securities, public ignorance of the
existence and benefit of the Nigerian stock exchange, stressing on the effect
of this ignorance as far as loss of Investment opportunity as well as
understanding the mechanism, structure and rating of the capital market of
Nigeria economy.
1.3
Research Questions
This
research work was guided by the following research questions:
1. Does the capital market provide enough
funds for economic development?
2. Does the capital market have any
significant impact on the masses?
3. How can the capital market role stimulate
economic growth in Nigeria?
1.4
Objectives of the Study
The
purpose or objectives of this research are:
·
To ascertain if capital market provides
enough funds for economic development.
·
To find out if the capital market have
any significant impact on the masses.
·
To find out how capital market role
stimulate economic growth in Nigeria.
1.5
Statement of Hypotheses
For
the purpose of this study, the following hypothesis will be tested and sued in
analyzing data. Firstly, there are two types of hypothesis:
Hypothesis
One
HO: The capital market does
not provide enough funds for economic development.
HI: The
capital market provides enough funds for economic development.
Hypothesis Two
HO: Capital market does not
have impact on the masses.
HI: Capital market has
impact on the masses.
1.6
Significance of the Study
The
environment in which the stock market operates is very complex and not static;
the social economic arch will therefore aid the understanding of the position
of the stock exchange in the capital information accumulation, allocation and
transfer to sounds as it adjusts to the ever changing society. Also, the
careful examination of the operation and structure of the capital market will
lead to public awareness and hence, alleviate the companies and the public for
investment motive will change. The NSE is institutions which help businesses to
raise funds for economic growth i.e. spending on schools, roads or other public
services, to mobilize long term funds.
1.7 Scope of the Study
The scope of this research is to look
into operations of the capital market through the stock exchange floors in Nigeria. But
for the purpose of this research, due to the various constrains as elucidated
by the researcher. Only the Lagos floor of the Nigeria stock
exchange was covered. The researcher did not make any attempt to study other
stock exchange floors in other states and it is between the time ranges of 2009 – 2013.
For the course of this study, the researcher used a
sample size of 120 for effective survey.
1.8
Limitations of the Study
The study is faced with some constraints
which may likely affect the generalization of findings, the constraints include
the following:
·
The compilation of information used for
the preparation of these work has not been easy. One of such problem is the
refusal of some staff having the fear that they might be dismissed if they
disclose any information regarding their work.
·
Problem of sourcing for material: The
research was faced with problems of getting current materials, textbooks,
journals, seminar papers in relation with this research topic. The University
of Benin library are outdated for this research work.
1.9
Definitions of Terms
·
Above
per value: This is where a share is being sold above its
normal value.
·
Allotment:
The
amount of share given to a prospective investor.
·
Asked
price: The amount which the firm wants its shares to be
sold.
·
Bear:
An investor who believes that the market prices are going to go down.
·
Broker:
A broker is a dealing member of the stock exchange. He provides services to
anyone (an investor) who want to buy and sell shares.
·
Bonds:
A kind of security traded on the stock exchange
·
Bull:
Investor who believes that the market prices are going to go up.
·
Stag:
Investor who want to make profit from new issues of shares. He buys the shares
before they are listed, then he sell them at a higher price soon after they are
listed.
·
Profit
earning ratio: This of a share dividend by earning for
a share for a 12 months period.
·
Share:
A lenity of ownership that represents an equal proportion of a company’s
capital.
·
Dividend:
Is that share of a company’s profit that is given to its share holders.
Dividend is not a fixed amount. It does not always remain same.
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