CAPITAL MARKET STRUCTURE AND DEVELOPMENT BUSINESS ADMINISTRATION
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CAPITAL MARKET STRUCTURE AND DEVELOPMENT BUSINESS ADMINISTRATION
Chapter one
INTRODUCTION
1.1 Background of the Study
The Nigerian capital market serves the same tasks for the economy as the money market does in the short term. Thus, while those who are short of funds and need to borrow for the short term suggest borrowing from the money market, those who are short of funds and want to borrow for the long term go to the capital market.
Similarly, those who have funds in excess of their immediate needs and want to lend or invest them for short durations do so in the money market, whereas those who have such funds and want to lend them for long periods invest or lend them in the capital market.
The regulation of financial markets and the emancipation of economies’ capital flows in certain African countries create a number of difficult concerns. Policymakers and practitioners are concerned and involved in these concerns. A wide range of challenges impact the establishment and design of capital market operations (trading structures).
This applies the capital market building philosophy, the role of the capital market (stock) market in achieving overall financial objectives (auctions and dealerships)
the choice of the relative competitiveness of emerging stock markets, and the connections between innovative trading and global market regulations.
1.2 Statement of the Problem
The Nigerian stock exchange has witnessed a remarkable transformation throughout the years. The Nigerian stock exchange has been around for around 38 years, which is long enough to allow for a thorough examination of its structure and growth. The stock exchange has been around long enough to allow for a thorough examination of its structure and growth.
The stock exchange or its establishment was expected to provide appropriate machinery to facilitate further offerings of stock and shares to the general public in the private sector of the economy, as well as to encourage savings investment as soon as it became clear that stocks and shares were readily available.
However, most countries’ experience during the 1980s has erased any doubts about the necessity of domestic capital markets in supporting balanced economic growth. The recurrent difficulties of national and corporate debt have led to the folly of mixing too much short-term with too little long-term capital.
Things have not been as “smooth” for the Nigerian capital market as they were intended when it was first established. There are some constraints in this area.
Some economists say that Nigeria’s capital market is underdeveloped and has not grown significantly since independence. And that shares are infrequently traded, and prices do not represent the trading characteristics of the listed companies.
It is also feared that the Nigerian capital market has “too many” responsibilities and will be unable to build its market structure properly and efficiently.
1.3 Objectives of the Study
This study effort aims to highlight Nigeria’s capital market structure and development. It examines capital market activities, important actors in the Nigerian capital market, and analyses capital market structure in order to promote Nigerian economic development.
In light of this, capital market activities, the need for stock exchanges, Nigerian capital make-up, capital structure, and development are thoroughly examined for analytic purposes.
1.4 Significance of the Study
This study will educate and expose ignorant businessmen and students to the operations of the NSE, thereby broadening the horizon of knowledge of the general public, particularly the operations and policymakers of the capital market recommendations, which will in no small measure serve as a guide to improved performance.
1.5 Statement of Hypothesis
A hypothesis is a conjectural assertion about the relationship between two or more variables. They are always declarative sentences that refer to variable-to-variable relationships.
As a result, the following invalid and alternative hypotheses may assist us achieve a more rational and unbiased conclusion:
Ho: The NSE has not played a big impact in Nigeria’s economic progress.
Hi: The NSE has played a vital part in Nigeria’s economic development.
1.6 Scope of the Study
This project is limited to the study of the Nigerian stock exchange, using Lagos as a case study. And covers the years 2005 through 2007.
1.7 Definition of Terms
NSE – Nigeria Stock Exchange
SEC: Securities and Exchange Commission
SECURITIES – These are written on printed financial documents to secure the claims of holders in specialised areas. They could be stock, shares, bonds, or debentures listed on a stock exchange.
STOCK EXCHANGE: An organised market for securities.
SHARE HOLDING – Shares owned by a specific payer.
ISSUING HOUSE – This is a dealing member who assists in the preparation of prospectuses for the sale of new securities offered to the public by companies and governments.
EQUITY – Ordinary shares of a company that retain residual ownership of a firm’s assets.
DIVIDEND – a portion of a company’s profits distributed to shareholders.
DEBENTURE – A document that acknowledges your debt.
JOBS – Those that help map out all surplus inventory and release it to the market as demand allows.
STOCK BROKERS – A corporation or individual who buys and sells shares on behalf of investors for a fee known as brokerage.
INVESTORS – Individuals or institutions who utilise their savings or borrow to purchase securities.
BROKERAGE – This is a commission that stock brokers charge for services provided.
RIGHT ISSUE – These are funds obtained through the issuance of shares to cash ordinary share holders in proportion to their existing holdings, unless shareholders in general meeting approve differently.
PRICE EARING: – This is the current market price of a ratio (PIE) dividend divided by the earnings per share. The ratio represents both the investor’s trust in the stock and the stock’s payback period.
BONUS SHARES SCRIPT – These are new shares that have been fully paid for by the capitalization of reserves and are given free of charge to ordinary shareholders in proportion to their current holdings.
NSEC: Nigeria Stock Exchange Commission
IPOs: The Pricing of Securities
BOND – Securities with a nominal value that entitles the bearer to regular interest payments from the issuer until the bond is redeemed.
BOND HOLDER – the person who owns the bond.
CAPITAL MARKET – A market for the provision of capital to businesses.
ECONOMIC DEVELOPMENT – This is a sustained improvement in material well-being, which might be expressed in an increasing flow of commodities and services.
OFFER FOR SALE – A public offer of shares of a firm made by an issuing house in which the shares being sold are not new shares but have already been sold by existing shareholders.
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