THE IMPACT OF CAPITAL MARKET DEVELOPMENT ON THE NIGERIAN ECONOMIC (1980-2006)..

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The success or failure of any economic is hinged on the viability of the financial system which invariably and undoubtedly depend main on the structure of the capital market of such economy in which the Nigerian stock exchange (NSE) occupy the central position of the financial system. It plays a very vital role in the general performance of the economy.

Currently, majority of Africa economic including Nigeria suffer from financial regression and financial under-development. These maladies combines with economy dualism have continued to aggregated Nigerian development problems Faki 2006.

Since the performance of financial sector impinges on the state of the economy, Nigeria, as every other nation is consistently in search of a viable financial sector in the process of doing the quite a reforms and restructuring have been carried out in the financial sector such as the deregulation and liberalisation of financial sector. The revolution of the colonial era in 1946 when the colonial government issued the first Nigeria registered stock (FURS) in (1956-1961). The origin of the Nigeria stock exchange date back to the 1950’s when there were discussions and academic crisis about the formulation of stock market in May 1958. Then, the ministry of commerce and industry appointed the bar stock committee to advice the government on ways and means of fostering a share capital market in Nigeria.

On the 15th September 1960, the Lagos stock exchange was incorporated as nonprofit making organization. The Lagos stock exchange was allowed to disperse with word “LIMITED”. Although it was a company listed by a guarantee.

The Lagos stock exchange act enacted in 1961 strengthened the Lagos exchange; it was change to Nigeria stock exchange (NSE) by the indigenization decree 1977 on second of December 1977 with branches initially in Lagos, Kaduna, and Port-Harcourt.

The stock exchange is the very hub of the capital market. It does for the economy what the money market does at the short end of the spectrum. Those who are desirous of long-term fund goes to the capital market for .0the excess liquidity of other (Nwankwo, 1987).