The Roles, Operations and Structure of Nigerian Capital Market and its Impact on the Growth Of Nigerian Economy.


This study examines the roles, operations and structure of the Nigerian capital market. It also went ahead to examine the relationship between capital market development and economic growth.

Time series data obtained from Central Bank of Nigeria (CBN) and Nigeria stock Exchange (NSE) were analyzed using simple regression model.

The data set covers annual time series data from 1990-2005. Results showed that capital market development indicators like market size, liquidity and efficiency exert positive influence on Economic growth.


Title page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table of Contents vi

Chapter One

1.0 Introduction
1.1 Background of the Study 1
1.2 Statement of Research problem 5
1.3 Objective of the study 7
1.4 Research Questions 8
1.5 Research Hypothesis 8
1.6 Scope of the study 9
1.7 Significance of the study 9
1.8 Limitation of the study 10
1.9 Definition of Terms 11
References 12


2.1 The Nigeria Financial System and Capital Market Development 13
2.2 The Concept of Capital Market 15
2.3 Roles of the Nigerian Capital Market 16
2.4 Capital Market and Economic Growth Channels of Linkage 19
2.5 Nigerian Market measures 22
2.6 Characteristics of the Nigeria Market 24
2.7 The Role of Government in the Capital Market 24
2.8 Money Market 28
2.9 Capital Market and Fund Raising 28
2.10 Nigerian Capital Market and It’s Structure 29
2.11 Functions of Capital Market 31
2.12 Government Policies, Capital Market Development and Economic Growth 32
2.13 Instruments Employed at the Capital Market 33
2.14 Regulators and Operators of Nigerian Capital Market 30
2.15 Margin Loans, Capital Market Development and Economic Growth 35
2.16 The Effect of Privatization on Capital Market Development 37
2.17 Capital Market Operation 41
2.18 Theories of Economic Growth Models 43
2.19 Empirical Review: origin and Development of Capital Market in Nigeria 45
References 50

Chapter Three

3.1 Research Methodology 54
3.2 Nature and Sources of Data 54
3.3 Population and Sample 55
3.4 Description of Research Variables 56
3.4.1 Dependent Variable 56
3.4.2 Independent Variable 56 Stock Market Turnover Ratio 56 Stock Market Capitalization Ratio 57 Total Value of Shares Traded Ratio 57
3.5 Technique for Analysis 58
3.6 Specification of Models 59
References 62

Chapter Four

4.0 Data presentation and Analysis 63
4.1 Data presentation 63
4.2 Variable Determination 68
4.2.1 Gross Domestic Product Per Capita 68
4.2.2 Stock market Capitalization Ration 71
4.2.3 Turnover Ration 75
4.3 Data Analysis 77
4.4 Regression Analysis 83


5.1 Introduction 89
5.2 Summary of Research Findings 90
5.3 Conclusion 92
5.2 Recommendations 93
Bibliography 98


1.1 Background of the Study

A major engine of economic growth and development of any nation is its capital market. The capital market is a market where equities, shares and bonds are issued and traded either via exchange or over- the-counter market.

It impact positively on the economy of any nation by providing financial resources through its intermediation process, for the financing of long-term projects

. The capital market is made up of various institutions (financial) established for the purpose of mobilization and efficient utilization of long-term development of any financial system.

This is a market where investors provide long-term funds and are given long-term financial assets (securities) in exchange by the borrowers otherwise known as the issuers.

Capital market is very important in any nation that needs to grow economically and otherwise because; it facilitates the provision of fund for new business and already existing business, income for lenders and finally promotes investment in corporate securities.

In principle, a well-develop capital market should increase savings and efficiently allocate to productive investments, which leads to an increase in the rate of economic growth.

The market contributes to the mobilization of domestic saving by enhancing the set of financial instruments available to savers to diversity their portfolios.


Agarwal, S. (2000) “Stock Market Development and Economic Growth”. Retrieved on the 6th of October 2008 From ttp:www.unitaorg/dmf/ resource_ center /documentseries/ document 13/odife/2 Devtaf…1-21.

Akerlof, G. (1970) “The Market for Lemons Quality, Uncertainty and market mechanism”. Quarterly Journal of Economics, 84:488-500.

Arestis, P, Demetriades, P.O and Luintel K.B (2001) “Financial Development and Economic Growth: the role of the Stock Markets”. The journal of Money, Credit and Banking, 33 (1) :16-14

Arestis, P, Demetriades, P.O (2000) “Financial and Growth: is Schumplter right”. Http:/www,

Asika, N. (2001), Research Methodology in Behavioureal Science, lagos: Longman Nigeria PLC.

Atje, R. and Jovanovic, B.  (1993)  ‘Stock  Market Development’. European Economic Review. 37(1): 16-41.

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