This study was an attempt to look at the impact of global
financial crisis on Nigerian capital market. The population sample consists of
people in different level of age and education in Lagos State.
The sample of thirty (30) people was picked, which emerged
from non- probability sampling techniques. The researcher employed the use of
questionnaire to generate adequate information. The data collected were
analyzed using chi-square statistical method.
Moreover, it was also revealed that:
1. Adequate control will ensure that the
global financial crisis are decline on Nigerian capital market
ii. Adequate control is a means of identifying
variance between global financial crisis and Nigerian capital market.
TABLE OF CONTENTS
Table of Contents
Background to the
Objectives of Study
Significance of the
2.2 The implication of global financial crisis on Nigerian economy
2.3 Causes of the Crisis
2.4 Effects of global financial crisis
2.5 Nigerian Foreign Reserve
2.6 The Role of Nigerian banks
3.1 Source of data
3.2 Procedure for analysis of data
3.3 Questionnaire and Assumption
3.4 Analysis of research techniques
3.5 Sampling Size
3.6 Validity Test
3.7 Level of Significance
DATA PRESENTATION ANALYSIS AND INTERPRETATION
4.2 Data Analysis and Interpretation
4.3 Presentation and Analysis of Data According to hypothesis
4.4 Analysis of other data and interpretation
4.5 Decision Rule
SUMMARY, CONCLUSION AND RECOMMENDATIONS
1.1 BACKGROUND OF THE STUDY
The current global financial crisis
has been described by many economists as a great challenge to the world
economy. They are of the opinion that the current crisis is largely different
from past crisis, which are usually region- based. As a result of the current
financial turmoil which is rapidly spreading across continent, concerned
parties such as economist, financial analysts have been pointing to the need to
take serious action to shore up faltering economics and restore confidence in
the global economy.
The reason for this crisis are varied
and complex. The crisis can be attributed to a number of factors pervasive in
both the housing and credit market, which was developed over an extended period
There are many different views of the
causes including the inability of homeowners to make their mortgage payments,
poor judgment by the borrowers and/ or the lender speculations and overbuilding
during the boom period, risky mortgage products, high personal and corporate
debt level, complex financial innovations that distributed perhaps concealed
default risks, central bank policies and government regulation. The significant
decline in housing price led to delinquencies in mortgage payment and
foreclosure which caused ripple effect across the financial market and global
banking systems, as investment related to housing prices declined significantly in value,
placing the health of key financial institution and government sponsored
enterprises at risk.
Reputable organization in the united
states such as Done Jones have been witnessing a cyclical bear market since
July 2, 2008 coupled with series of panics related to financial instability
cause by the failure and / or sub
primary mortgage lending difficulty of the investment banking industry.
It is however noteworthy that this
wild financial periods is not confined to the United States. According to a
time magazine essay, the global stock market lost a whopping $6.5 trillion as
measure by standard and poor's BMI global (an index of major markets worldwide)
on October 6 and 7 2008 alone, the world has become global village sewn
together through telecommunication and technological advancement. Financial
product particularly mortgage backed on securities (MBS) are traded across borders on line, hence on global
This is a clear indication that the
global economy is interrelated; hence, what effect one country directly or
indirectly affects the others.
The economy of Nigeria, as a
developing country largely depends on the economics of various foreign
developed countries that are being plagued by the current global financial
1.2 STATEMENT OF THE PROBLEM
Nigeria is facing the problem of
uncertain economic situation both in the near and future as a result of the
ongoing global and domestic financial crisis.
However, government problems of
financial crisis capital market can be overcome if crucial measures are taken.
Firstly, there is an essential need
to handle the issue diversification of the economy to ensure that the country
gets enough funds for development.
Secondly, the government has also
been advised to exercise control over how the proceed of petroleum profit tax
is channeled in order to promote economic growth.
1.3 OBJECTIVE OF THE STUDY
The purpose of this study is to
access the impact of global financial crisis on capital market in Nigerian
economic and for government both executive end the national legislative as well as the Nigerian Stock Exchange (NSE), the
Securities and Exchange Commission (SEC), the Nigeria Deposit Insurance
Corporation (NDIC) and Central Bank of Nigerian (CBN) should all coordinate
their activities and rise to the occasion that has been attempted by various
government around the world.
1.4 RESEARCH QUESTIONS
i. Is there any relationship
between the effect of global financial crises and capital market in Nigerian
ii. What are the effect of global
financial crises and capital market in Nigeria economy?
1.5 STATEMENT OF HYPOTHESIS
Hi: There is relationship between the effect of global
financial crises and capital market in Nigerian economy.
HO: There is no relationship between the
effect of global financial crises and capital market in Nigerian economy.
The relevant conclusions are drawn on
the basis of acceptance or rejection of the hypothesis.
Hi: Alternative hypothesis
HO: Null hypothesis
1.6 METHODS AND PROCEDURES
For this study, both primary and
secondary data will collected.
Primary data will be collected by
means of self-administered questionnaire and face - to - face interview.
While secondary data will be
collected from relevant text book, annual report, account, journals, the stock
exchange report, business time/ guardian paper, presented at seminal and
1.7 SIGNIFICANCE OF THE STUDY
This study significant for the
following reasons. To identify Nigerian economy as a system which operates
within, and environment that is greatly influence by other actors is the
broader system (global economy), it is imperative to consider how the global economic
turmoil would affect our economy. Since the commencement of the current global
financial crisis, fear has been expressed on its likely implication to Nigerian
bank in particular and economy at large. Without prejudice to the assurance
given by those who should know that the Nigerian economy is immune to the
global financial crisis. There is the need to look at the wider implication of
the economic crises ravaging developed economies in the United State, Europe
1.8 LIMITATION AND DELIMITATION
In any part of the world, national
economy depend on one another for survival and as such no economy can be
insulted form what is going on from the rest of the world. In reality, the
global financial crisis has damaged global economics by reducing demand for
goods and services and growth but societies that are properly governed are
expected to experience limited impact of the crisis. Already, government is
soliciting support from bodies such as CBN, SEC, NSE and these bodies are
embarking on proactive measure to ensure that operators in the nation capital
market have access to credit facilities. The central bank of Nigeria has
expanded the discount window and reduced cash reserve ratio for 40% to 30% to ensure increased
lending and aid liquidity.
1.9 DEFINITION OF THE TERM
Capital market: Capital markets exist to allocate
surplus fund efficiently for capital information in the economy.
Economic: Contemporary economic literature has
shown that history is yet to identify a discipline that is as challenging as
economies. It is perhaps the most dynamic, interesting and embracing field of
Globalization: Refers to shift toward more
integrated and interdependent world economy. Globalization has several facets
including the globalization of market and the globalization of production.
Globalization of market: Refers to the emerging of historical
instinct and separate market into one huge global market place.
Crisis: In the foregoing concept of crisis is
highly relevant here, for it dialectically constitute what the Chinese called
Weiji that is, the problems and the solution, if and only if the lesson
provided by the problem are assiduously learnt and applied.