IMPACT OF CAPITAL MARKET ON NIGERIAN ECONOMY.
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
IMPACT OF CAPITAL MARKET ON NIGERIAN ECONOMY.
Chapter one
INTRODUCTION
1.0 Background of the Study
Any nation’s economic development rate is directly related to the sophistication of its financial markets.
Financial markets help nations around the world with the necessary financial resources and capabilities for growth and development.
Aside from promoting a reliable and fast payment system, financial intimidation.
The financial market is an institutional framework that allows for the intermediation of funds in an economy. Financial intermediation refers to the mobilisation of financial resources from surplus spending units and channelling them to deficit spending units for production investment, as well as the formation of assets or securities in the process.
Thus, the financial system develops a diverse range of financial instruments (assets) that are used to transfer purchasing power and are suited to the time preferences of both lenders and borrowers.
The financial market serves an economic purpose by facilitating the movement of actual economic resources from lenders to borrowers. By incentivizing interest income, the market allows the transfer of purchasing power from the lender to the investor who seeks to exert demand for resources.
When the financial market operates efficiently, funds flow freely and quickly between its different sources and purposes. As long as financial instruments are interchangeable, changes in supply and demand in the money market have a quick spillover impact onto the capital market.
Financial markets are therefore constitutional when players use infrastructural technologies and over devises to enable the mobilisation and channelling of capital into productive activities.
The financial market is important because it facilitates financial intermediation between the deficit sector and the economy’s surplus. In the intermediation process, financial intermediaries primarily match lenders and borrowers.
They connect savers and borrowers by selling debt instruments, securities, and deposits to savers and lending the proceeds to borrowers. As a result, investors’ lenders obtain investment claims with a stable market value and high liquidity.
Financial intermediation does not result from direct lending and borrowing, but rather from lending-borrowing transactions that include the creation and exchange of debt instruments or securities.
The emphasis is on how financial intermediaries leverage their own liabilities to create extra assets, help mobilise funds, pool resources to gain economies of scale, and minimise risk.
The financial markets system includes a diverse range of banking and nonbanking financial intermediaries. The banking sub-sector of the system consists of commercial and merchant banks, a development bank, and the Central Bank, which serves as the apex institution.
The non-bank financial institution sub-sector encompasses a diverse group of organisations that serve as regulators, facilitators, and investors.
The list includes Nigeria’s Securities and Exchange Commission Market, which will be assessed for its impact on the Nigerian economy. In order to reach its major (SEC), the stock exchange, stockbrokers, regionals, insurance companies, pension and provident funds, and investment firms.
The financial market is primarily divided into two major markets, which are:
1. Money Market.
2. Capital Market.
The money market is the market for short-term funds and securities such as treasury bills, treasury certificates, negotiable certificates of deposit, commercial paper, and other funds with a duration of less than one year, whereas the capital market is the market for long-term funds and securities with a tenure of more than one year.
These include long-term loans, mortgages, bonds, preference shares, common stock, federal government bonds, and industrial loans.
The capital market is a complicated structure and mechanism that provides intermediate and long-term cash to the government, businesses (firms), and individuals.
The capital market is thus an instrumental arrangement that mobilises private and public savings from surplus spending units and directs them to deficit units for the creation of goods and services.
Unlike many money markets, which operate simply to manage liquidity, the capital market bridges the gap between saving and long-term investment by facilitating intermediation through equity bonds, debentures, mortgages, and investment stocks.
The market enables the private and public sectors of the economy to raise long-term capital to carry out government development projects, as well as to increase outputs, employment, and income through the expansion and modernization of private businesses.
The capital market is frequently regarded as a key component of a country’s economy, critical to economic growth and development. In a nutshell, it is a location where the nation’s wealth is acquired.
The capital market itself consists of:
1. Primary Market.
2. Secondary Market.
Merchant banks, stockbroking firms, issuing houses, development finance companies, the central bank, the securities and exchange commission, and the stock exchange are among the market’s operators.
With this background, this project attempts to provide a broad overview of the extinction of the Nigerian capital market, its functions, growth, and development, with an emphasis on the period and challenges for the future, particularly in light of the liberalised trade and exchange regimes implemented under the Structural Adjustment Programme (SAP).
1.1 Statement of Research Problem
The capital market is a long-term financial market made composed of markets and institutions that allow for the issuance of long-term financial instruments.
Unlike other markets, which primarily supply short-term cash, the capital market provides financing to industry and governments to meet long-term capital requirements such as financial or tried investments in building, plant and machinery, bridges, and so on.
The following are research problems.
1. Why is there still a low level of foreign investment in the market, notwithstanding the reform?
2. Does the capital market reform have a favourable impact on the economy?
3. Is there any impact on capital market securities due to the reforms?
Need help with a related project topic or New topic? Send Us Your Topic