The nature and significance of capital markets
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The nature and significance of capital markets
THE NATURE AND SIGNIFICANCE OF CAPITAL MARKETS
This paper is intended to examine the nature of the capital market, its relevance, manner of operation, and its contributing functions in general and in Nigeria in particular.
Using Nigeria as an example, discuss the issues involved with the development of the capital market in emerging countries.
THE NATURE AND SIGNIFICANCE OF CAPITAL MARKETS IN CHAPTER ONE
1.1 FORMAL INTRODUCTION
A capital market is a multifaceted structure that includes regulators, facilitators, issuers, and investors. It is the mechanism by which long-term money for people, businesses, and governments are pooled and made available to various sectors of the economy, including the transfer of existing instruments.
In contrast, the capital market deals with long-term financial claims and liabilities. It provides the essential infrastructure for users and suppliers of capital (long-term) money to interact for mutual gain. As a result, the majority of financial operations required in the investing process take place in that market.
Long-term maturity characterises capital market instruments. Some, such as equity shares, have no set maturity date. In principle, all financial transactions with maturities of more than three years are believed to belong to the capital market.
It also has no fixed location for its operation; although, elements of the market are concentrated in some well-known centres. Market participants include businesspeople,
government officials at all levels, financial intermediaries, and private investors. Buyers in this market are more particular about their needs.
1.2 STATEMENT OF THE PROBLEM
The capital market is a market that deals with long-term money and financing procedures for long-term investments. It is also a market from which small businesses cannot benefit due to the high interest rate.
I want to look into some of the issues that are impeding the growth of the Nigerian capital market, as well as the corrective measures that could be implemented to address these issues.
The researcher seeks to investigate the following issues:
a. A scarcity of financial instruments
a. Inadequate public awareness
c. Attitude towards Retention
d. Insufficient savings
b. Lack of enthusiasm for securities
Some of the remedial measures that could be implemented to address the issue are as follows:
a. Education on the significance of purchasing
b. The government is assisting in raising Nigeria’s standard of living.
c. A high interest rate should be introduced.
d. The formation of more publicly traded firms that will engage in the sale of securities.
1.3 OBJECTIVES OF THE STUDY
The primary goal of the research is to determine how capital market institutions can detect and regulate some of these issues in the issuance of securities to the public in order to strengthen the Nigerian capital market.
The following are some of the study’s objectives:
1. To provide a comprehensive picture of the nature capital market, its importance to economic growth, and economic development.
2. To understand the root reasons of the challenges they are experiencing.
3. Determine the economic implications of these issues.
4. Propose a viable solution to the situation.
1.4 SIGNIFICANCE OF THE STUDY:
The study will be extremely beneficial to the institution under consideration. The research work’s findings, as well as its conclusion and recommendations, will be useful to future researchers. It is also intended that it would act as a springboard for future scholarly endeavours.
The resolution of these issues should strengthen our country’s capital market.
These will also increase the movement of surplus funds towards economic development.
These will bring in foreign capital to Nigeria.
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