effectiveness and growth of capital market in Nigeria economy is a problem that
has assumed of recent an intractable dimension.
The concept market is one of the compartments of financial system that
promotes harm and investment in an economy.
The stock exchange market is one of the key institutions of the capital
market, a network or individuals, institution and instrument involved in the
effective channeling of funds from the surplus to deficit economic unit.
question whether a market undergone growth and development or not cannot be
adequately answered by simply ‘Yes or No’ there are some issues to be
main purpose of this study is to show how investors can dissever when a market
has attained growth and development for their top investors to know the
correctiveness of a price, which depends on the use of the information at time
of the price decision.
the study is designed to cover the practical and theoretical area of the stock
market. The study is about the market
and how effective it is in setting prices, which reflect the worth of the
securities, traded in the market.
TABLE OF CONTETNS
1.0 Background to the Study
1.1 Statement of research Problem
1.2 Objective of the Study
1.3 Research Question
1.4 Statement of the Hypotheses
1.5 Limitation and Scope of the Study
1.6 Justification of the Study
1.7 Research Methodology
1.8 Plan of Study
1.9 Definition of Terms and Concept
2.1 Concept of Capital Market
2.2 Role of Capital Market
2.3 Efficient Market Hypothesis (EMH)
2.4 Capital Market Development and Successful
3.1 Evolution of the Nigeria Capital Market
3.2 Structure of the Nigeria Capital Market
3.3 Regulatory Body in the Capital Market
3.4 Instrument of Capital Market in Nigeria
3.5 The Benefit to Companies in the SSM
3.6 Growth and Significant of the Capital
3.7 Contribution of the Stock Exchange to
3.8 Problems of the Nigeria Capital Market
3.9 The Impact of Liberalization policies in
the Nigeria Capital Market
3.10 Reform of the Nigeria Capital Market
3.11 Depth of market
4.1 Evaluation criteria
4.2 Data Presentation
4.3 Data Analysis
RECOMMENDATION AND CONCLUSION
1.0 BACKGROUND TO THE
The rate of economic development of any
nation is inextricably liked to the sophistication of its financial markets.
Financial markets assist the nation of
the world to give the needed financial resources and skills for growth and
Apart from promoting a sound and
efficient payments mechanism, the financial intimidation.
The financial market is an
institutional arrangement that facilities the intermediation of funds in an
economy. By financial intermediation, it
means mobilization of financial resources from surplus spending units and the
channeling of such to deficit spending units and the channeling of such funds
to deficit spending units for production investment and the generation of
assets or securities in the process.
Thus the financial system generates a
wide range of financial instruments (assets), which are means of transferring
purchasing power and are tailored to suit the time preferences of both lenders
The financial market performs an
economic function by facilitating the transfer of real economic resources from
the lenders to the borrowers. By the
inducement of interest income, the market facilitates the transference of
purchasing power from the lender to the investor who wishes to exercise demand
When the financial market is efficient,
funds flow freely and rapidly among its various sources and uses. As long as financial instrument remains
substitutable for each other, changes in supply and demand in the money market
have a rapid over effect into the capital market.
Financial markets are therefore constitutional
whenever participants with aid of infrastructure technology and over devises
facilitates the mobilization and channeling of funds into productive
investments. The importance of the
financial market lies in financial intermediation to link the deficit sector
with the surplus of the economy. In the
intermediation process, financial intermediaries engage principally in matching
lenders and borrowers. They bring savers
and borrowers together by selling debt instruments or securities and deposits
to savers for money and lending that money to borrowers. As a result, the lenders of investors receive
claims on investment, which have stable market value and high liquidity.
Financial intermediation does not
ensure from direct lending and borrowing process but arises from the lending-borrowing
proves, which involves the generation and exchange of debt instrument or
securities. The point of emphasis
therefore is the financial intermediaries use their own liabilities to create
additional assets, help mobilize funds, gather together to reap economics of
scale and minimize the investors.
The financial markets system features a
wide array of banking and non-banking financial intermediaries. The banking sub-sector of the system
comprises Commercial and Merchant Banks, Development Bank and Central Bank, as
the Apex institution.
The non-bank financial institution
sub-sector includes a wide range of organizations operating as regulators,
facilitators and investors. The list
includes the Securities and Exchange Commission Market in Nigeria, to assess
its impacts on Nigeria economy. In order
to achieve its major (SEC), the Stock Exchange, Stockbrokers, Regioners,
Insurance companies, Pensions and Provident funds and Investment Companies.
The financial market is really
segmented into two major markets, which are:
The money market is the market for
short-term funds an securities including treasury bills, treasury certificates
negotiable certificates of deposits, commercial paper and other funds of less
than one year duration on the other hand, the capital market is the market for
long-term funds and securities whose
tenure extends beyond one year. These
include long-term loans, mortgage, bond, preference share, ordinary shares,
federal government bonds and industrial loans.
The capital market is a complex
institution and mechanism through which intermediate and long run funds are
made available to government, business (firm) and individuals. The capital market therefore is an instrumental
arrangement that performs the function of mobilizing private and public savings
from surplus spending units and channeling them to the deficit units for the
production of goods and services. Unlike
the many money market which primarily exist as a means of liquidity adjustment,
the capital market provides a bridge of transforming saving into long term
investment by using equity bonds, debentures, mortgages and investment stocks
to facilitate intermediation.
The market makes it possible for
private and public sectors of the economy to rise long-term capital to execute
government development programmes and from the expansion and modernization of
the private business to enhance outputs, employment and income. The capital market is often described as an
important part of country’s economy, which is indispensable to economy growth
and development. In short, it is a place
where nation’s wealth is bough.
The capital market itself is composed
Operators in the market include
Merchant Banks, Stock broking Firms, Issuing Houses, Development Finance
Companies, the Central Bank, Securities and Exchange Commission and the Stock
Exchange. With this background; this
project attempts to review broad outline the extinction of the Nigerian Capital
market, its functions, growth and development with emphasis on the period and
challenge for the future especially in the lights of the liberalized trade and
exchange regimes adopted under the Structural Adjustment Programme (SAP).
OF RESEARCH PROBLEM
The capital market is the long-terms
and of the financial market that is made up of market and institution which
facilitate the issuance of long term financial instruments.
Unlike the more market that provides
basically short term funds, the capital market provides funds to industries and
government to meet their long term capital requirements such as financial or
tried investments building, plant and machinery bridges and so on.
The following are research problem.
is there still low level of foreign investment in the market notwithstanding
the capital market reform impacting positively on the economy?
there any on the securities of the capital market attributed to the reform?
OF THE STUDY
The major objective of this study is to
evaluate the growth and performance of the capital market in Nigerian to assess
its impacts on the Nigerian economy.
The following are the objectives of the
the structures and the roles of the capital markets in Nigerians and the
of the market including institutional development market.
the instruments used in the market and their used fullness.
the future prospect of the Nigerian Capital market.
out the various problems facing the workings and the operations of the capital
evaluate the impact of such reforms on the Nigerian capital market.
is the impact of the capital market on the National Income?
is the effect of the capital market on the share holder investment or
is the impact of the capital market on the earning per shares (EPS) of the
is the effect of the capital market on the effectiveness: Development of the institutional in the
arrangement for long-term financial assets, such as shares, debentures stock
and mortgage equity bond.
OF THE HYPOTHESES
1. H0: There is no relationship between Capital
market transaction and long
term sources of funds.
is relationship between Capital market transaction and long term sources of
2. H0: There is no relationship between investment
in capital market and the
earning per share (EPS) of the
is relationship between investment in capital market and the earning per share
(EPS) of the shareholders.
AND SCOPE OF THE STUDY
capital market since its inceptions in 1946.
These will include involution and impact of the sector on the growth of
Since early 70s and 80s then it because
a significant factors in financial system of the economy.
The study will further examine its
roles during the Structural Adjustment Programmes (SAP) and the impact its
plays in the dominance of the country financial base.
OF THE STUDY
The importance of the capital market in
economic development cannot be over emphasized.
There is consensus of opinion that the nature and the content of the not
benefit which the capital market offer country be judged by the effects on the
mobilization of savings, capital inflow
and out flow the mobility of investible surplus funds, resources allocation,
distribution of income and wealth and the response of economic policies.
Therefore, the development of the
capital market should encourage efficient mobilization of both domestic and
foreign savings for productive investment in order to achieve economic
development. Without productive investment,
there will be no growth and saving and there will be no investment.
This study will make use of secondary
data. The date at sources from the
various publications of the Central Bank of Nigeria (CBN) such as B. Williams,
Economic and financial Review, Annual Report and Statistical Bulletin: Lagos
Publication form the Nigerian Sick Exchange (NES), Securities and Exchange
Commission (SEC) and other Financial Institution.
This study tells us what the evolution
functions and impacts of the capital market in Nigeria.
Chapter One is the introduction and
explains what capital market is all about.
Chapter Two is the literature review and it review the work of notable
economists. Chapter Three will be scope
of the study and examines evolution, operation and impact or the sectors on the
economy. Chapter Four will be
methodology and its analysis is based on secondary data from central bank of
Nigeria, Nigerian stock exchange commission.
Chapter Five will be the summary recommendation and conclusion giving
suggestion and ways to improve the operation on the Nigeria capital markets.
OF TERM AND CONCEPT
market: The market is
concerned with the mobilization and intermediation of long term funds.
Analysis: This refers to
the use of data to analysis the project work.
This data include in formulation got from official sources.
3. Methodology: This can be described as the method by which
this study will be carried out.
4. Equity: This is the shareholder’s ownership interest
in a company represented by their common and preferred stock.
in the Market: They are the
players in the stock exchange, this players include the financial
intermediaries for statement long term fund form investors and allocating some
to institution that required them.
6. Securities: This can be defined as documentary evidence
of ownership or entitlement to part of the asset of the issuing organization
which may be a business, firm, government in government institution.
Market: This exists for the sale
and purchase of old securities.
Market: This market is for new
securities. It is platform where a
company or government raises funds for investment purposes.
AROWOLE E. A “The Development of Capital Market in Africa with particular
reference a Kenya and Nigeria IMF Staff paper (Washington) volume 2 July 1997.
NWANKWO G.O: Money and Capital Market in Nigerian Today University of Lagos
Press Page 16-135 1991.