EFFECTIVE MARKET CAPITALIZATION AND THE NIGERIA STOCK MARKET GROWTH.
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
EFFECTIVE MARKET CAPITALIZATION AND THE NIGERIA STOCK MARKET GROWTH.
Chapter one
INTRODUCTION
1.1 Background of the Study
The capital market is one of the components of the financial system that encourages saves and investment in an economy by providing a vehicle for saving and making it available to borrowers. The other component of the financial system is the money market, which is overseen by the Central Bank of Nigeria (CBN).
The stock exchange is a network of individuals, institutions, and instruments that facilitates the efficient flow of funds from surplus to deficit economic units (Alile, 1999).
The stock exchange might be any number of things at once. It is a location where securities such as bonds, stocks, and shares of various shades and varieties are freely traded, and where any of these securities can be bought or sold with reasonable ease.
As Alile (1986) accurately puts it, securities are written evidence of ownership or entitlement to a claim on the assets of the issuing organisation, which could be a corporate enterprise, government, or quasi-government organisation.
It is sufficient to notice that some documentary or paper proof has no set value, but is tested on the stock exchange market at subjective rates or values determined by buyers and sellers of such securities.
Anao (1970) identified the stock exchange as an economic entity that serves a variety of functions in the economy. In truth, an ordinary investor sees it as a place where rapid money can be made or lost.
It provides an opportunity for the astute and courageous speculator to make a fortune with little work in terms of adding anything significant to national output, while the naïve can lose a lot via poor judgement.
The stock exchange is widely regarded as the HALLMARK or HEART of the capital market since it serves such an important and necessary role. This is because, by definition, the stock exchange is a market for exchanging outstanding issues.
Alile (1999) remarked that the potential it provides for subsequent trading in existing securities has made it a critical factor in the success or failure of many corporate offerings, and, by extension, the efficiency of capital information in an economy.
Under a free enterprise system, like we have in Nigeria, the stock exchange is an important part of the country’s economic life. Its functions enable the government and companies to raise long-term financing to fund development projects, as well as the expansion and modernization of industrial/commercial concerns.
After factoring in risk, an efficient stock market mobilises savings and assigns a bigger percentage to companies with the highest future rates of return. Thus, this study seeks to assess the impact of the Nigerian stock market on economic growth (Alile 1999).
1.2 Statement of Problem
The question of whether a market is precisely efficient or not cannot be satisfactorily answered because various issues must be addressed.
Given the significance that the capital market has played during the privatisation of public-owned firms, recent recapitalization of the stock exchange market, and as a source of long-term funding for various Nigerian governments and corporations.
Some scholars and researchers have argued that market recapitalization has not significantly contributed to the growth of the Nigerian stock exchange, whereas others believe that registered small and medium-sized enterprises on the Nigerian stock exchange market outperform unregistered ones in terms of performance in an effective market environment.
The purpose of this research is to determine whether effective market capitalization contributes to the expansion of the Nigerian stock exchange between 1983 and 2009.
1.3 RESEARCH QUESTIONS.
To obtain a dependable outcome that can be used to solve the problem under consideration.
i. Does effective capitalization actually assist to the growth of the Nigerian stock exchange?
ii. What are the challenges of achieving effective capitalization on Nigeria’s stock exchange?
iii. How much did the capitalization of the Nigerian stock exchange market help to corporate performance?
iv. Is it better for registered small and medium-sized businesses than unregistered ones?
1.4 Objects of the Study
The primary goals of this study are effective market capitalization and the growth of the Nigerian stock exchange.
The precise aims include:
1. Determine the efficiency and effectiveness of market capitalization.
ii. To determine the extent to which market capitalization contributed to the Nigeria stock exchange.
iii. Investigate the challenges of the Nigerian stock exchange and market capitalization.
iii. Investigate the performance of registered and unregistered small and medium-sized firms in an effective market environment.
1.5 Research Hypotheses
The following assumptions will be developed based on
Hypothesis One
Ho: There is no substantial correlation between effective market capitalization and the expansion of the Nigerian stock exchange.
Hi: There is a strong correlation between effective market capitalization and the expansion of the Nigerian stock exchange.
Hypothesis two.
Ho: Registered small and medium-sized firms on the Nigerian Stock Exchange are no better off than unregistered small and medium-sized enterprises in terms of performance in an active market environment.
Hi: Registered small and medium-sized firms on the Nigerian Stock Exchange outperform unregistered small and medium-sized enterprises in terms of performance in a competitive market environment.
1.6 Significance of the Study
The stock exchange plays an important role in the economy by transferring funds from those who have surplus to those who require them for project development (Ndi Okercke 2000).
She stated that improving, assisting, and developing stock market activities will contribute significantly to the overall betterment of the Nigerian economy.
It is believed that the study’s conclusions will be valuable to parishioners and anybody else who is directly or indirectly involved in the financial market.
Furthermore, the study is crucial since it will shed light on how to attract investors and support the growth of the nation’s economy.
Finally, it is hoped that the findings of this study will add to the body of knowledge and spark additional research interest.
Need help with a related project topic or New topic? Send Us Your Topic