ROLE OF CAPITAL MARKET IN FEDERAL GOVERNMENT FINANCING
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ROLE OF CAPITAL MARKET IN FEDERAL GOVERNMENT FINANCING
ABSTRACT OF THE CAPITAL MARKET’S ROLE IN FEDERAL GOVERNMENT FINANCING
Nigeria has increasingly matured in terms of the financial institutions that comprise the system. The Nigerian financial system has experienced remarkable expansion in the recent decade. The complexity of these institutes’ operations demonstrates this.
The expansion can be attributed to the oil boom, the populace’s awareness of the importance of money (monetization), and the development of investment methods.
Long-term financing is a concern since banks constantly want to avoid the problem of liquidity. In other words, any individual or corporate entity looking for investment rarely finds it easy.
This difficulty prompted the foundation and growth of the capital market in order to provide long-term securities and/or vestible finds. There are both legal and informal capital markets in Nigeria. This is owing to the widespread financial discrepancy caused by the population’s educational disparity.
This article was written with the potential of capital markets as a catalyst for economic development in mind, as a result of economic liberalisation of the capital market.
However, my project’s first chapter will begin with a prelude to the investigation, while chapter two will focus on the literature review, or how information about the study was collected through the work of numerous authors.
The third chapter is exclusively dedicated to the Nigerian capital market. It addressed the indigenous capital market prior to colonial infusion, the definition and structure of the current Nigeria capital market,
its participants who are vital to the market’s proper functioning, and the effects of economic liberalisation and deregulation on the capital market.
The fourth chapter discusses the findings, while the fifth chapter makes some recommendations and draws conclusions about the study.
INTRODUCTION TO CHAPTER ONE OF THE ROLE OF THE CAPITAL MARKET IN FEDERAL GOVERNMENT FINANCING
1.1 BACKGROUND OF THE STUDY
In general, there are two types of chance revolutionary or discontinuous change that is gradual, common (subtle), and dynamic.
This second type of transformation is supported for the development of the Nigerian securities market as a means of obtaining funding for the public sector, as opposed to the capital market.
From the day Nigeria regained independence until today, the country has sought economic reform and growth in order to provide a higher standard of living for its suffering people.
This economic transformation and development could only be made possible if the public sector provided sufficient funding for its long-term ambition.
However, the Nigerian capital market plays a critical part in the nation’s development. Today’s public sector knows no bounds. What was termed the public sector twenty years ago will be terribly inadequate when regarded the public sector of today’s Nigeria.
Because of the public sector’s almost boundless scope, which includes municipal, state, and federal governments. The expenditures of these numerous governments are constantly increasing.
However, the privatisation and commercialization of federal government parastatals has either reduced or eliminated it.
The capital market deregulation is intended to provide rationality to the capital market’s operation in order to encourage the critical role of delivering capital or finances to the public sector for its financial commitments.
1.2 STATEMENT THE PROBLEM
Some issues concerning the Nigerian capital market have been uncovered during the course of this research.
These are some examples:
1. Frequent changes in the federal government do not result in changes in economic policies. These changes may have an impact on how the capital market operates.
2. With the final release of the capital market deregulation guidelines, the issuing houses are now to securities valuation. These could lead to insider trading, in which persons with information on stocks that have yet to be made public take advantage of the situation and buy up the shares.
3. The Nigerian capital market lucked out on infrastructure such as dependable telecommunications networks, data storage capacity, and so on. Where vital information can be accessed as needed.
4. Corruption manifested by public officers charged with the responsibility of managing government finances is a major issue in Nigeria.
5. The legal system intended to guide the operation of the capital market where money is virtually borrowed. These prevent Nigerian companies and even government institutions from actively participating in the stock exchange activity.
1.3 OBJECTIVES OF THE STUDY
This study is entirely focused on the capital market and its funding effects on government financing of the public sector.
Following the analysis, one should be able to understand what the Nigeria capital market looks like, as well as some of the contributions. It has made significant contributions to the nation’s economy through the various levels of government. This should be done with the following goals in mind.
1. To critically assess the Nigerian capital market in terms of its operation as it affects the public sector.
2. To investigate the impact of economic liberalisation, which is sweeping the globe, on the Nigerian capital market.
3. To investigate the various methods or mechanisms by which money are made available to the public sector.
1.4 THE SIGNIFICANCE OF THE STUDY
Given the nature of the study and the fact that it contains a lot of excuses and accuracy statistics linked to statistical representations and timetables, the author chose secondary sources data above any other.
The importance of this study is to understand what the Nigeria capital market looks like, as well as some of the contributions. It has made significant contributions to the nation’s economy through the various levels of government.
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