The Impact of Capital Market on the Nigerian Economy with Emphasis on the Role of the Nigerian Stock Exchange.
ABSTRACT
The researcher’s mind on the topic, “The impact of the Capital market on the Nigerian Economy with emphasis on the role of the Nigerian Stock Exchange” was captured when a similar topic was discussed at a seminar organized by the Bureau for Public Enterprise (BPE) to conscientize and sensitize Nigerian people to accept the privatization programme.
The organizers sought to expose how highly underutilized the Nigerian Stock market is and what individuals and Corporations would gain in patronizing the market.They also compared the operations and volume of transactions with other emerging stock markets in the world. The research work is basically, all about assessing the extent of the impact of the capital market on the socio-economic development of this country and an in-depth search into ways of improving upon the operations of the Nigerian Stock Exchange.
In his findings, the researcher noted (among other things) that there was underutilization of the Stock Exchange market due to poor enlightenment campaign, and lack of transparency and accountability on the part of the operators of the market. In the conclusion, the researcher admitted that the future prospects of the exchange market is still bright but emphasized that the operators of the market must engender accountability and transparency as this will go a long way to re-installing much desired confidence in the investing public and guarantee the market’s future development.
TABLE OF CONTENTS
Title Page … … …. … … … … … … i
Certification … … …. …. … … … … … ii
Dedication … … … … … … … … … iii
Acknowledgement … … … … … … … … iv
Abstract … … … … … … … … … … v
List of Figure … … … … … … … … … vi
List of Tables … … … … … … … … vii
Table of Contents … … … … … … … … vi
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study … … … … … … 1
1.1.1 Evolution of the Capital Market … … … … … 3
1.2 Statement of the Research Problems … … … … 7
1.3 Objective of the Study … … … … … … 8
1.4 Research Question … … … … … … … 8
1.5 Research Hypothesis … … … … … … 9
1.6 Significance of the Study … … … … … … 10
1.7 Scope of the Study … … … … … … … 10
1.8 Limitation of the Study … … … … … … 11
1.9 Definition of Terms … .. … … … … … 12
References … … … … … … … … 14
CHAPTER TWO: REVIEW OF THE RELATED LITERATURE
2.1 Wall Street – Where It All Began … … … … 15
2.2 The Nigerian Capital Market … … … … … 16
2.3 The Role of the Nigerian Capital Market … … … … 17
2.3.1 The Pooling Function … … … … … … 19
2.3.2 Facilitating Capital Formation … … … … … 19
2.3.3 Risk Reduction Function … … … … … … 20
2.4 The concept of the Nigeria Stock Exchange … … … 20
2.5 The Nigerian Stock Exchange Market … … … 23
2.5.1 Membership of the Nigerian Stock Exchange … … 24
2.5.2 Functions and Importance of the Nigerian Stock Exchange 25
2.6 Securities and Exchange Commission (SEC) … … 27
2.6.1 Duties and Functions of the Securities
and Exchange Commission … … … … … 28
2.7 The Impact of the NSE Crisis on the Nigerian Capital Market 29
2.8 The Stock Exchange in Operation … … … … 34
2.8.1 The Primary Market … … … … … … 34
2.8.2 Evaluation of the Nigerian Stock Exchange … … … 39
2.8.3 The Daily Stock Summary … … … … … 41
2.9 Problems Associated with the Nigerian Stock Exchange … 47
References … … … … … … … … 50
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction … … … … … … … … 51
3.2 Research Design … … … … … … … 51
3.3 Sources of Data … … … … … … … 52
3.3.1 Primary Data … …. … … … … … … 52
3.3.2 Secondary Data … … … … … … … 53
3.4 Method of Data Collection … … … … … … 53
3.4.1 Reasons for using the Aforementioned Methods … … 53
3.5 Determination of Population Size … … … … 54
3.6 Sample Procedure … … … … … … … 54
3.7 Methods of Administering Questionnaires … … … 55
3.8 Decision Rule … … … … … … … 55
References … … … … … … … … 57
CHAPTER FOUR: PRESENTATION AND ANALYSIS
4.1 Introduction … … … … … … … … 58
4.2 Presentation and Analysis of Responses from Questionnaire 59
4.3 Analysis of Interview … … … … … … 80
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS.
5.1 Summary of Findings … … … … … 86
5.2 Conclusion … … … … … … … … 87
5.3 Recommendations … … …. … … … … 88
Bibliography … … … … … … … 90
INTRODUCTION
Nigeria has a formal and active capital market. Before 1961, nearly all formal savings and deposits went through the banking system while the then colonial masters invested major capital balances for the country on the London stock exchange. However, following the establishment of the CENTRAL BANK OF NIGERIA in 1959, it was logical to have a stock exchange in 1960, which commenced operations in 1961.
Thus, the foundation was ordered for the operations of the Nigerian capital market. The capital market tends to provide a forum for the interaction of the economic surplus and economic deficits to attract business under a highly regulated environment. Earlier in 1959, the Central Bank of Nigeria had floated the first Nigerian development loan stock, which was listed overseas.
Subsequent issues in 1961 and thereafter were listed on the new local exchange. The Nigerian stock exchange is a private, non-profit making organization limited by guarantee. It was incorporated via the inspiration and support of businessmen and the federal government through the CBN, owned by about 300 members. The membership includes financial institutions, stockbrokers and individual Nigerian of high integrity who have contributed to the development of the stock market and the Nigerian economy.
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