The Capital Market In The Mobilization Of Funds For Industrial Development (The Nigerian Case)
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This work is dedicated to the Holy Spirit for fulfilled inspiration throughout the period of this research work.
I also want to thank and sincerely appreciate the inputs of my supervisor, Chief A.A Ojiuko., my parents Mr. & Mrs. Michael chukwu, my fellow colleagues and the department of banking and finance for their support.
I am greatly indebted to a lot of people for making this possible. Special mentions are my parents Mr. & Mrs. Micheal chukwu and my sponsor Mrs. Grace Chukwu for their moral and financial contributions.
Most worth of thanks is my outstanding supervisor, Chief A.A Ojiuko who was of an immense help throughout the cause of this work. I won’t forget to mention and appreciate the Dean of school of business and management technology. My HOD, Mr. Ngwu T.C, and my lectures Chief A.A Ojiuko, Mr. N.O.N Kanu, Mr. N.N Uzoka, Mr. Ifeanyi Nwokoro, Dr. J.U Osubor, Dr. Mrs, Anyanwu F.A and the host of others.
Furthermore, I recognize the members of my family especially Mrs Nnenna Okechukwu, my siblings and my cousins and as well as my spiritual father Rev. prince Okoro Nnanna, whose prayers are really answered in the completion of this project work. I will not fail to thank my friends, Chiemela Nwamnna, Obasi Okeke, Chioma Okechukwu, Columbus Ogechi, Hannah Okechukwu for their care and support.
Finally I humbly acknowledge every person and the material that contributed to the efficiency of this work. The federal polytechnic library and all the website that provided information. What more can I render than to thank you Lord.
The Nigerian capital market came into prominence when the Nigerian enterprise decree, which is also known as the indigenous degree was promulgated in 1972, and amended in 1977. The public became aware of the importance of Securities Avenue for industrial development, especially through the introduction of privatization and the N25 billion capital base for banks. Market in the developing economy was stock exchange established in 1961 as Lagos stock exchange in 1977, was used as a case study.
It was found out that Italy market despite some problems or shortcoming have helped in development of industrial sector with the involvement of Nigerian stock exchange market, which have been machine in for mobilizing private and public savings and making them available for productive investment through share and stocks. Also it has provided a meeting place for dealing members to buy and sell existing stocks and shares which is an avenue for raising new capital for industrial development.
The statistics were gotten through the use of primary data and secondary data where inferences were drawn to arrive at a given conclusion.
Table Of Contents
- Title page i
- Approval page ii
- Dedication iii
- Acknowledgement iv
- Abstract v
- Table of contents vi
- 1.0 Introduction 1
- 1.1 Background of the study 1
- 1.2 Statement of the problem 2
- 1.3 Objectives of the study 3
- 1.4 Research of the questions 4
- 1.5 Significance of study 5
- 1.6 Scope of the study 5
- 1.7 Limitations of the study 6
- 1.8 Definitions of terms 6
- 2.0 Literature Review 9
- 2.1 Introduction 9
- 2.2 Historical background of Nigeria capital market 10
- 2.3 Challenges of capital market 17
- 2.4 Operations of the capital market 20
- 2.5 Control of capital market 24
- 2.6 The impact of Nigeria stock exchange in the economy 28
- 2.7 The capital market in the mobilization of fund for Industrial development 30
- 2.8 Comparative analysis of money & capital market 32
- 2.9 Objectives of money and capital market 33
- 2.10 Instrument of money and capital market 35
- 3.0 Research Design and Methodology 39
- 3.1 Introduction 39
- 3.2 Research design 39
- 3.3 Source/method of data collection 40
- 3.4 Population & sample size 41
- 3.5 Sample techniques 42
- 3.6 Validity and reliability of measuring instrument 43
- 3.7 Method of data analysis. 44
- 4.0 Presentation and Analysis of Data 46
- 4.1 Introduction 46
- 4.2 Presentation of data 46
- 4.3 Analysis of data 47
- 4.4 Analysis of research question 48
- 4.5 Interpretation of result 53
- 5.0 Summary of Findings, Conclusion & Recommendation 56
- 5.1 Introduction 56
- 5.2 Summary of findings 56
- 5.3 Conclusion 58
- 5.4 Recommendations 59
- Bibliography 62
- Appendix 64
1.1 Background Of The Study
The capital market is the market for dealings (that is lending and borrowing) in long term loanable fund. The market is the source from which industry obtains its capital for establishment, expansion and modernization and from which the government borrows on long-term basis for development purposes. It offers access to variety of financial instruments that enables economic agents to pool price and exchange risk. Through assets with affricative yields, liquidity and risk characteristics, it encourages savings in financial form.
This is very important for government and other institutions in need of long term funds and for suppliers of long-term funds who because of the nature of their liabilities undertake to maintain part of their assets in the relatively liquid form (Ekezie 1997)
According to Kanu N.O.N (2004) capital market refers to that market for the mobilization of medium and long term funds from the surplus units for allocation to the decifit unit of the economy.
1.2 Statement Of The Problems
Although the capital market has contributed significantly to the mobilization of funds for industrial development of the Nigeria economy, certain lingering problems still constrains its optional operations, they include:
This has resulted to delays in effecting transactions between issuing houses brokers, dealers, registrators, inventors, and their bank. The drag in the delivery service discourages many inventors who sometimes view with distrust their registrars and brokers within share certificates are undelivered or proceeds of share sold not delivered promptly. Also infrastructural limitations insulate many investors especially those in the rural areas from broker dealer there by, trading in securities which would have aided development
- Ignorance also on the part of most members of the Nigerian public as to the meaning of shares and stocks as well as benefits derivable from market operations.
- Reluctance of the Nigerian businessmen to go to public for the fear of losing control of family business.
- Macro-economic instabilities and high cost of raising funds in the market.
- Political instability which makes returns and premiums uncertain and there by discouraging prospective investors both local and foreign.
1.3 Objectives Of The Study
Having the above problems in mind as militating against the development of capital market, the purpose of this study is to determine
- Contribution of the capital market to the economic growth.
- The possible strategies to enhance the efficiency of the capital market.
- The relevance or usefulness of Nigerian stock market in the developing economy.
1.4 Research Question:
- How can capital market provide a local market for borrowing and lending of long term funds for the economic development of Nigeria?
- Is it possible for the lack of public awareness to militate against the realization of the potential of the stock market fund mobilization?
- How can the capital market help in the mobilization of fund for industrial development of a country?
- Which instrument is more often used by the capital in raising fund?
- What ways do you think that the Nigeria capital market will be improved?
1.5 Significance Of The Study
This study will be of importance to individuals, private and public companies, financial institutions, government parastatals, as it will enable them to understand how capital market help in the mobilization of fund for industrial development. The part of stock exchange in mobilizing the funds needed for investment by them.
This is important also because it will encourage the investors to invest into the stock market with the full assurance that their investments are intact.
1.6 Scope Of The Study
This research work resolves on the Nigerian stock exchange and how it aids the capital market in the mobilization of fund for industrial development. It is important to note that the capital market is not a single entity; rather it is a network of specialized financial institutions that In various ways brings together suppliers and users of capital which will be fully emphasized in this study. It will also examine the various regulatory bodies of the capital market specially the Nigeria stock market, its operations and impact in the economy generally.
1.7 Limitations Of The Study
In the case of this research I encountered few constraints; the reluctance of some respondents to volunteer information because they did not believe the assurance given to them that the data collected were purely for academic purposes. Other limitations include financial and time constraints as this report writing was combined with attending of lectures.
1.8 Definition Of Terms
Some terms or concepts have various meanings depending on who or how it is used.
The terms in this study are used in the following context.
It is used interchangeable with the stock market which is an integral part of the countries, financial system where money securities are bought and sold.
A share holder is one who holds a share certificate, who has a legal title to shares. It is also called or referred to as stock holder.
It is made up of a number of bonds, stock or share selected from a list of various traders or business with their market price added together.
It is the buying and selling of goods with the objective of gaining from differences in prices.
One who speculates on the stock exchange by subscribing to a new issue with the hope of selling his allotment at a profit as dealings.
an individual who sells securities that he does not own or which he does not want to deliver in the hope that they can be repurchased at a profit before delivery has to be made.
It is a term for equity or common stock.
An intermediary who buys or sells shares on behalf of a client.
They refer to various promissory documents adopted as evidence of claim in the market.
It is where securities are offered for sale in the public from the issuer for the first time.
It is where people or investors can buy or sell previously quoted securities can get their money back for alternative uses.
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