Key Features:

- No of Pages: 59

- No of Chapters: 5

Buy Now

Introduction:

Abstract

This project seeks to examine the role of capital market in development of Nigeria Economy. This study investigate the techniques of bench marking of Nigeria capital market toward economic development of the nation and discuss the importance of bench marking to over come perceived weaknesses within the process. This study intended to find out the operations of the Nigerian capital market and evaluate the performance of the capital market in relation to the economic growth in Nigeria.

The literature review describes the various instrument of capital market and the role it has played to towards economic development. All aspect of this work is very relevant in one way or the other to Nigeria as a whole and for those who may be interested in carrying out further study in this topic. Also, data were collected through secondary source. The secondary data involves statistic analysis on central bank bulletin.

The study observed that the problems that drags the Nigerian capital market is clued lack of interest in securities, Nigerians prefer to in vest in real assets against investment in financial assets should be curbed by deregulation of security pricing. The evidence from this study also reveals that the activities in the capital market tend to impact positively on the economy. It is recommended therefore that the regulatory authority should initiate policies that would encourage more companies to access the market and also be more proactive in their surveillance role in order to check sharp practices which undermine market integrity and erode investors’ confidence.

The study further recommended that, to promote the capital market and stimulate economic growth and development great emphasis should be made on those things that will help in booting the market.

Table of Content

The table of content of this research is only available in the paid version.

Introduction

INTRODUCTION



BACKGROUND OF THE STUDY



The capital market is a highly specialized and organized financial market and indeed essential agent of economic development because of its ability to facilitate and mobilize saving and investment. To a great extent, the positive relationship between capital accumulation real economic developments has long affirmed in economic theories (­­­Anyanwu, 1993).



Success in capital accumulation and mobilization for development varies among nations, but it is largely dependent on domestic savings and inflows of foreign capital. Therefore, to arrest the menace of the current economic downturn, effort must be geared towards effective resources mobilization. It is in realization of this that consideration is given to measure for the development of capital market as an institution for the mobilization of finance from the surplus sectors to the deficit sectors.



The development of capital market in Nigeria, as in other developing countries has been induced by the government. Though prior to the establishment of stock market in Nigeria, there existed some less formal market arrangements for the operation of capital market. It was not prominent until the visit of Mr. J. B. Lobynesion in 1959, on the invitation of the Federal government, to advice on the role the Central Bank could play in the development of local money and capital market. As a follow-up to this, the government commissioned and a set up the Bareback Committee to study and make recommendations on the ways and means of establishing a stock market in Nigeria as a formal capital market. Acting on the recommendation of the committee, the Lagos Stock Exchange (as it was called then) was set-up in March 1960, and in September 1961, it was incorporated under Section 2 cap 37, through the collaborative effort of Central Bank of Nigeria, the Business Community and Industrial Development Bank (Alile&Anao, 1990). With the establishment of the Central Bank of Nigeria in 1959 and the coming into existence of the Lagos Stock Exchange in 1961 and Subsequently, the Nigeria Stock Exchange by an Act in 1979, a sound foundation was laid for the operation of the Nigerian Capital Market for trading in securities of long term nature needed for the financing of the industrial sector and the economy at large. After the incorporation of the Lagos Stock Exchange, it was granted further protection under the law and its activities was placed under some sort of control by the government, hence the passing of the Lagos Stock Exchange Act. However, the Lagos Stock Exchange was only operational in Lagos. By the mid 70’s, the need for an efficient financial system for the whole nation was emphasized, and a review by the government of the operations of the Lagos Stock Exchange market was advocated. The review was carried out to take care of the low capital formation, the huge amount of currency in circulation which was held outside the banking system, the unsatisfactory demarcation between the operation of Commercial Banks and the emerging class of the Merchant Banks, and the extremely shallow depth of the capital.

In response to the problems mentioned above, the government accepted the principle of decentralization but opted for a National Stock Exchange, which will have branches in different parts of the country. On December 2nd 1977, the memorandum and article of association creating the Lagos Stock Exchange was transformed into the Nigerian Stock Exchange, with branches in Lagos, Kaduna, Port-Harcourt, Yola and now in Federal Capital Territory (FCT) Abuja some other cities. The history of Nigeria Capital Market could be traced to 1946 when the British colonial administration floated a N600, 000 local loan stock bearing interest at 3¼% for the financing of developmental projects under the Ten-Years Plan Local Ordinance. The loan stock, which had a maturity of 10-15 years, was oversubscribed by more than N1 million, yet local participation of the issued was terribly poor. Certainly, potential fund abound in Nigeria, but the overriding consideration in this project is to examine the role of the capital market in harnessing and mobilizing these resources (fund) to generate economic development in the country and consequently economic development.