ROLE OF CAPITAL MARKET IN ECONOMIC DEVELOPMENT
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ROLE OF CAPITAL MARKET IN ECONOMIC DEVELOPMENT
A SHORT SUMMARY OF THE CAPITAL MARKET’S IMPACT ON ECONOMIC DEVELOPMENT
The study examines the impact of the Nigerian market on economic growth. Research questionnaires will be created and given to the chosen group in order to conduct a thorough study.
As we will see, the Nigerian capital market mobilises capital and distributes it to various economic units. Additionally, it serves as a hub for those economic units looking to raise additional capital to finance their troubles and those with spare savings to invest.
The goals of this study are to examine the issues and future of the Nigerian capital market, to look at how the market contributes to economic development, and to make suggestions on how to enhance these activities to support Nigeria’s economic growth.
Some of the conclusions include the fact that the Nigerian capital market has some issues, the resolution of which will result in the growth of an efficient Nigerian capital market.
Additionally, it was found that the efficient capital market will always promote industrial and economic growth through the money it raises.
The government should make a concerted effort to ensure the development of the capital market by either creating more funds or establishing more branches of the capital market in nearly every state of the federation so that the general public,
government agencies, states, and local governments can easily finance their projects through the market with ease, according to the recommendations made in light of the aforementioned findings.
The capital market should also be liberalised by the government so that market forces can determine how much securities and exchange commission cost.
CHAPTER ONE
1.0 Introduction
1.1 General Overview
The development and evolution of the Nigerian economy have always been significantly influenced by the capital market there. It aide in the financing of growth and the construction of production facilities during periods of economic boom.
The capital market is a complicated structure and system by which medium- and long-term money are pooled together and made accessible to big companies, the government, and regular people, as well as stock brokers with the necessary licences.
It is a market where current instruments that are already in circulation are transferred. It has been offering financing for facility maintenance, diversification, and acquisitions during the present recession.
In addition to its role in mobilising capital, the capital market connects individuals with idle or surplus funds who want to invest with ultimate borrowers and those who want to borrow with ultimate lenders on a medium- or long-term basis.
The importance of the capital market cannot be overstated given how much it has expanded. Due to its many functions, this research will seek to provide a brief review of the history of the Nigerian capital market as well as explore the capital market’s contribution to economic development, which is the focus of this study.
STATEMENT OF THE PROBLEM
Despite its enormous potential, the Nigerian economy has fallen short of its lofty goal of becoming a developed economy.
In order to remove barriers that prevent indigenous enterprises from receiving quotes and to give small and medium-sized indigenous businesses access to a wider and more affordable long-term finance source, the second tier securities market was developed.
Despite this, the majority of our indigenous businesses still avoid the stock market. Other issues include the need for a stock exchange before a quotation, the evolution of the stock exchange over time, as well as people’s lack of understanding of the actions of the capital market.
The research above raises the following questions: Why, despite the capital market’s many advantages, do some economic sectors avoid it? Are the drawbacks of the capital market greater than their benefits? These questions are addressed by the research work.
1.3 OBJECTIVE OF THE STUDY
The purpose of this study is to analyse how Nigeria’s capital market affects economic growth. As a result, I have chosen this topic to raise general awareness among various sectors of the economy about how the Nigerian capital market can be of assistance to them.
The government’s ability to carry out its capital programme depends on the availability of finance, and the economy remains undeveloped where fund is not available. As a result, the study’s objectives are:
1. To investigate the role played by the Nigerian capital market in economic growth.
2. To understand the challenges and future of the Nigerian capital market.
3. To offer suggestions for enhancing the activities of the Nigerian capital market. to continue promoting Nigeria’s economic progress.
1.4 SCOPE OF THE STUDY
As much as feasible, this study will evaluate the Nigerian capital market. the justification for its founding, as well as its functions and economic activity.
It also covers the institutional participants in the Nigerian capital market and their roles. Additionally, it will describe the pertinent elements impeding the Nigerian capital market’s operations as well as potential solutions.
1.5 RESEARCH HYPOTHESES
The null (H0) and alternative (H1) hypotheses are the two main types of hypotheses, according to Mr. Aguwa (1998). These theories will be applied in this study.
1. The Nigerian Capital Market raises enough money for economic growth.
2. The capital market’s fund-raising activities are related to the rate of increase in industrial production.
1.6 SIGNIFICANCE OF THE STUDY
The purpose of this study, “Role of Capital Market in Economic Development,” is to help us comprehend and appreciate the value and ways in which the capital market has shaped the economic growth landscape in Nigeria.
The study is essential because the government, private investors, enterprises, and the general public will greatly benefit from its suggestions and recommendations.
It motivates academics, professionals, and researchers to conduct more in-depth study and studies on certain topics. Additionally, it advances knowledge.
LIMITATION OF THE RESEARCH
The following are some of the issues our study has run into:-
Time: Because the researcher had to mix lectures, examinations, assignments, and the semester exam, there was not enough time to do a thorough investigation into the subject.
Finances: The researcher’s severe financial limitations restricted her ability to travel, and the high cost of publications also worked against the research effort.
Data: It was difficult to travel around in order to get the required data. The research was hampered by several staff members of the Nigerian stock market who were frequently unwilling to share the necessary details.
1.8 DEFINITION OF TERMS
The following operational words shall be used for the duration of this study and are hereby defined as follows.
A market where financial assets with a maturity of more than a year are bought and sold is the capital market.
STOCK BROKERS: This term refers to people or businesses that buy or sell stocks on behalf of investors and public limited liability companies in exchange for a fee known as brokerage.
ISSUING HOUSE: This term refers to investment banks or merchant banks that often managed a company’s operations prior to its stock market float.
They market the company’s shares in addition to serving as advisors. For their services, they are compensated with fees or commission.
STOCK: This alludes to a company’s ownership certificate. It is a company’s ownership right. The right to a firm belongs to the stock owner.
FINANCIAL MARKET: It is a place where financial assets and financial liabilities are bought and sold. It is an entity that connects buyers and sellers of assets.
BOND: A bond is a type of credit instrument whose holder, a creditor, receives both the face value of the bond when it matures plus a certain amount of interest.
JOBS: Are market stall owners who buy and sell shares to brokers operating on behalf of the general people.
Rights Issue: These new shares are being offered to current owners at a discount from the price at which they will be made available to the general public.
Capital is the driving force behind economic growth.
A individual or organisation known as an investor purchases securities using savings or borrowed funds.
A procedure known as a “offer for sale” allows current shareholders to make all or a portion of their shares available for public purchase.
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