The Influence of the Capital Market on the Nigerian Economy, with a Focus on the Stock Exchange
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The Influence of the Capital Market on the Nigerian Economy, with a Focus on the Stock Exchange
ABSTRACT
The goal of this research is to determine the influence of the stock exchange on the Nigerian economy. In other words, economic development cannot be guaranteed if the market itself is underdeveloped.
In the same vein, the government policy and operation of the central bank prior to the establishment of the exchange are elements that contribute to the slow growth of the stock exchange. They make it easier to issue securities.
I tried to find out if the stock exchange is not intensive because most people are uninformed, and if the stock exchange is underdeveloped.
Following thorough examination of the respondents’ responses. I discovered that, despite the shortcomings discovered in the stock exchange, its creation was necessary and it has added value to the country’s economy. Its development was also due to the government’s pricing policy, communication system,
cast of registering, level of literacy in the country, and information made available to the public based on the constraints; however, some recommendations were made by the research such as arranging mo The computer system that is being installed should be done completely and not in parts.
Only if the stock exchange is well managed by the economy can it aid in the development of the economy.
THE CAPITAL MARKET AND ITS IMPACT ON THE NIGERIA ECONOMY, WITH A SPECIAL EMPHASIS ON THE STOCK EXCHANGE
1. INTRODUCTION
1.1.1 BACKGROUND OF THE STUDY
The capital market includes the stock market, sometimes known as the stock exchange.
It can be described as a gathering place for savers and investors to trade securities and sources of finance. It performs the same functions as any other financial institution in the financial system.
The stock exchange is critical to the development of our economy. They define a developed economy as having a developed financial system. I believe that the basic goal of every nation is to raise the standard of living in the country. How does this requirement relate to the stock exchange and its operations?
Is it successful in this particular field? It should be remembered that the economics of any country, particularly Nigeria, is a very complex topic. The economy has undergone several significant changes since its creation, which was required due to the same compelling circumstances.
As will be mentioned later, the impact of the Nigerian stock exchange on the business world has helped the country in some way. Whether or if it has done so successfully will be determined not only in its brief existence, but also in the years to come.
Although alternative methods of generating funds exist, the stock exchange undoubtedly provides sophistication and consequently efficiency, which is essential for any rising economy, particularly Nigeria.
The project was started primarily to provide a general overview of the exchange’s life and operations. It also intends to highlight some of its shortcomings as well as the perspectives of many persons, corporations, and companies on it. As a result, this project has been separated into chapters, each of which discusses a critical issue or element.
This first chapter focuses mostly on the goal of this study, its objectives, significance, and limits. It will aid in highlighting specific issues with the exchange and its utilisation.
The next chapter is simply a discussion of the stock exchange. It is the project’s literature review. It teaches us what different authors have said on his issue as well as their point of view on it.
Chapter 3 provides a brief explanation of how the research for this project was conducted, the problems encountered, and the kind of data and sampling on which I built this study. The last two chapters, on the other hand,
are thoroughly examined. Here are data obtained from the general population from which I was able to make some conclusions and deduce some facts, all of which have been summarised in the final chapter.
This project has been made possible through a variety of sources. It has been worthwhile because, as a buddy put it, no one can aspire to run an effective, influential, and profitable firm if he is unfamiliar with the financial market.
1.2 STATEMENT OF THE PROBLEMS
The significance of a developed economy cannot be overstated. An efficient stock market helps to carry out these functions. Despite this fact, we discovered that many individuals in this country are unaware of the stock market,
its operations, and how it can aid in the development of the economy. In an underdeveloped economy like ours, the necessity for this market is critical if the economy is to improve.
Another issue related to the stock exchange is that of development. The exchange’s trading volume has been lower than expected. The progress of the economy cannot be guaranteed until the market itself is developed.
If this problem is not effectively checked, it will not only destroy the market’s aims as a financial outlet. This is a significant setback in the economy’s progress. The establishment of the stock exchange is clearly at jeopardy, and if nothing is done now, it may steadily deteriorate.
1.3 AIM AND OBJECTIVES OF THE STUDY
The goal of this project is to give a thorough examination of the stock exchange and shed more light on its significance in the economic world.
Thus, the primary goals are:
To get a better understanding of the stock market, do the following:
i. demonstrating its evolution
ii. Its functions and significance;
iii. Its impact on the corporate world and the economy’s development.
To bring to light the market’s shortcomings.
To identify potential solutions to these problems.
These aims, I feel, should serve to enlighten fellow market users about the deficiencies that exist and alternative solutions to address the deficiencies.
1.4 THE RESEARCH QUESTION
i. Is the stock exchange market more accessible to individuals?
ii. How close to Nigerians is the reality of the stock market in its development?
iii. Has the market influenced the corporate world and the economic development?
iv. What, in your opinion, are the market’s shortcomings?
1.5 RESEARCH HYPOTHESIS
(a) Ho: The use of the stock exchange is limited due to ignorance, particularly on the part of people.
H1: The use of the stock exchange is widespread due to ignorance, particularly on the part of people.
(b) Ho: The stock exchange market has had little impact on the business world or the economic progress.
H1: The stock exchange market has influenced corporate and economic development.
TWO HYPOTHEIS
Ho: The stock exchange market has not imparted in the business sector and the development of the economy.
H1: The stock exchange market has influenced corporate and economic development.
Responses
0
E
(o-e)
(o-e)2
(o-e)2
o-e
Yes
45
26
19
361
13.88
NO
7
26
-19
361
13.88
52
27.76
When the degree of freedom (Df) = (c-1) (R-1)
= (2-1) (2-1)
= 1×1 = 1
1 in the 51st percentile = 3-84
Decision
Because the estimated X2 value of 27.76 exceeds the table value of 3.84. As a result, we reject the null hypothesis (Ho) and adopt the alternative hypothesis (H1), which states that the stock exchange market has an impact on the corporate world and economic progress.
1.6 THE SIGNIFICANCE OF THE STUDY
This research is significant since it pertains to the country’s economy.
We stated that an underdeveloped stock market equates to an underdeveloped economy, thus how standard loving. Nigerians, being conservative people, must be encouraged to embark being relatively when compared to the money market,
which is also an outlet for rising funds but short-term ones, confidence in it must be gradually developed if the market is to be successful and carry out its functions well. As this study sheds more light on this market and its role, it is hoped that readers will gain awareness and take the suggestions into consideration.
1.7 DEFINITION OF TERMS
These words have been defined to ensure a thorough knowledge of this project.
Financial market – A market for raising cash in which saving and investing are combined.
Economic development is the process of increasing or improving a country’s wellbeing through its productive sector.
Securities are financial instruments/assets that are traded in the market in order to raise funds.
Capital is the money needed to finance the creation of products or services.
Investment- Making the best use of one’s capital resources in order to maximise one’s return.
ABBREVIATION
SEC stands for Securities and Exchange Commission.
The NEO – Nigeria Enterprises Promotion Acts of 1972 and 1977
NSE stands for Nigeria Stock Exchange.
SSM stands for second-tier securities market.
FSM stands for first-tier securities market.
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