THE ROLE OF CAPITAL MARKET IN A DEVELOPING ECONOMY A CASE STUDY OF NIGERIAN STOCK EXCHANGE

ABSTRACT

The Nigerian capital market come into prominence when the Nigerian enterprise decree, which is also known as the indigenous decree was promulgated in 1972, and amended in 1977. The public became aware of the importance of securities as avenue for investment, especially through the introduction of privatization and the N25 billion capital base for banks. Market in the developing economy. Were stock exchange established in 1961 as Lagos stock exchange in 1977, was used as a case study. It was found out that ital market despite some problems or shortcoming have helped a developing economy like Nigeria with the involvement of Nigerian stock exchange market, which have been machine in for mobilizing private and public savings and making them available for productive investment through share and stocks. Also it has provided a meeting place for dealing members to buy and sell existing stocks and shares which is an avenue for raising new capital for investment and development of the economy.

The statistics were gotten through use of primary data and secondary data where inferences were drawn to arrive at a given conclusion.

TABLE OF CONTENTS

TITLE PAGE——————————————— i

APPROVAL PAGE—————————————–       ii

DEDICATION———————————————       iii

ACKNOWLEDGEMENT———————————– iv

ABSTRACTS———————————————-       v

TABLE OF CONTENTS————————————       vi

CHAPTER ONE

1.0  INTRODUCTION———————————— 1

1.1  OVERVIEW OF THE STUDY———————— 1

1.2  STATEMENT OF PROBLEM————————- 5

1.3  OBJECTIVES OF THE STUDY———————-  7

1.4  RESEARCH QUESTIONS—————————  7

1.5  SCOPE OF THE STUDY—————————-  8

1.6  SIGNIFICANCE OF RESEARCH STUDY————  9    

1.7  LIMITATIONS OF THE STUDY——————— 9

1.8  DEFINITION OF TERMS—————————- 10

CHAPTER TWO

2.0  LITERATURE REVIEW—————————— 12

2.1  HISTORICAL BACKGROUND OF NIGERIA CAPITAL MARKET———–12  

2.2  CHALLENGES OF CAPITAL MARKET—————-       18

2.3  OPERATIONS OF THE CAPITAL MARKET———– 20

2.4  CONTROL OF THE CHPITAL MARKET—————       24

2.5  THE IMPACT OF NIGERIA STOCK EXCHANGE

 IN THE ECONOMY———————————-      28

2.6  THE ROLE OF THE CAPITAL MARKET IN A

DEVELOPING ECONOMY—————————-       30

• COMPARATIVE ANALYSIS OF MONEY AND CAPITAL MARKET———-32

CHAPTER THREE

3.0  SUMMARY, CONCLUSIONS AND RECOMMENDATION- 38

3.1  SUMMARY OF FINDING—————————–      38

3.2  CONCLUSIONS————————————–      40

3.3  RECOMMENDATIONS——————————-       41

BIBLIOGRAPHY————————————–      44  

APPENDIX——————————————–     46

CHAPTER ONE

1.0  INTRODUCTION

1.1  OVERVIEW OF THE STUDY.

The capital market is the market for dealings (that is lending and borrowing) in longer-term loanable fund. The market is the source from which industry obtains its capital for establishment, expansion and modernization and from which the government borrows on long-term basis for development purpose. It offers access to variety of financial instruments that enables economic agents to pool, price and exchange risk. Through assets with affricative yields, liquidity and risk characteristics, it encourages savings in financial form. This is very important for government and other institutions in need of long-term funds and for suppliers of long-term funds who, because of the nature of their liabilities, undertake to maintain part of their assets in the relatively liquid form (Ekezie 19997).

       According to Kanu N.O.N (2004) capital market refers to that market for the mobilization of medium and long term founds from the surplus units for allocation to the deficit units of the economy. The market provides opportunities for the issuance and resale of government securities, corporate bonds, stock, shares and, mortgage loan.

       A broad definition of the term capital market according to Alile (1986) includes the entire financial system, commercial banks and other financial institutions providing short, medium and long term loans to finance both consumption and investment while an intermediate definition would include only those institutions which are concerned with providing long-term credits however, the narrow definition of capital market rulers to it as involving the problem and prospects of equity investment. The relates to the issue and market of shames, bonds, debentures, and other long-term securities using the service of brokers, dealers and underwriter.