The Impact Of Stock Exchange Market On The Generation Of Capital For Commercial Banks

Project and Seminar Topics with material for Banking and Finance

The Impact Of Stock Exchange Market On The Generation Of Capital For Commercial Banks


Abstract


The stock exchange in Nigeria has been enmeshed in a series of controversies in recent time, therefore this study examined the impact of the stock exchange on the generation of capital for commercial banks in Abeokuta metropolis. This descriptive survey research design was adopted and the sample size comprised 50 bankers crown from different commercial banks in Abeokuta metropolis wing the simple random sampliy technique. Two research question were raised to guide the study and findings revealed the stock exchange has impacted commercial banks is the areas of recapitalization, asset acquisition, expansation, fund generation and capital boost. Findings also revealed that the activities of the stock exchange are hampered by some naggling challenges. Finally it was recommended that concerted effort by all stockholders should be geared towards transparency in the activities of the stock exchange.


Chapter One


Introduction

1.1. Background to the Study

A stock exchange is a form of exchange which provides services for stock brokers and traders to trade in stock, bonds and other financial instruments and capital events including the payment of income and dividends by Joseph Penso a writer of stock trading. Securities traded on a stock exchange includes shares issued by companies unit trusts, derivatives, pooled investment. Usually, there is a central location at least fork record keeping, but trade is increasingly less linked to such a physical place as modern markets are electronic network, which gives them advantage of increasing speed and reduced cost of transaction. Trade on an exchange is by members only.

The Nigeria stock exchange was established in 1960 as the Lagos stock exchange. In December 1977 it became “The Nigeria Stock Exchange with branches established in some of the major commercial cities of the country. At present there are six branches of “The Nigerian, Stock Exchange, each branch has a trading floor, the branch in Lagos was opened in 1961; Kaduna 1978; Kano 1989; Onisha 1990; Ibadan 1999 and Abeokuta branch. Lagos is the head office of “The Exchange. An office has just been opened in Abuja. The exchange started operation in 1961 with 19 securities listed for trading, the stock exchange and most of the nation stock broking firms and issuing houses are staffed with creative financial engineer that can complete anywhere in the world.

Therefore, the market has in place a network of intermediating organization that can effectively and creditably meet the challenges and growing needs of invested in Nigeria. Integrity is the watch word of “The stock Exchange”. Market operators subscribe to the code; “Our word is our bond”. Thus, public trust in the Nigeria stock market has grown tremendously with about three million individuals investors, (including foreigners who own about 47%), the initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market.

A stock exchange is often the most important component of a stock market. Supply and demand in stock market are driven by various factors as obtainable in all free markets. The importance of stock exchange market in the generation of capital for commercial banks has now become very necessary and important element of every economy. They serve a vital purpose of accumulation of savings and their availability for productive purposes. Infact the rise of joint stock companies and commercial bank and the sustained performances would have been impossible in the absence of stock exchange, against this general background, the researchers will examine the impact of stock exchange market on the generation of capital for commercial banks in Abeokuta metropolis.


1.2 Statement of the Problem

In recent time, the Nigeria Stock Exchange has been involved in one crisis or the other. The researchers are thus concerned if the stock exchange will be able to fulfill its roles.

The questions therefore are:

  1. How effective are the promotional strategies used by the corporate bodies in creating awareness for their services in stock exchange market?
  2. How dynamic and effective is the pricing policy of the stock exchange market as regards the quoted commercial banks?
  3. What effects do government regulations have on the stock exchange market as regards the commercial banks?

1.3 Purpose of the Study

This study intends to access the impact of the stock exchange market on the generation of capital for commercial banks in Abeokuta metropolis. Specifically the study will:

  1. Identify the major problems facing the stock exchange market in generating capital for commercial banks in Abeokuta metropolis
  2. Find out the roles of the stock exchange market in the generation of capital for commercial banks.
  3. Determine if the stock exchange market has any significant effect on the capital base of commercial banks.

1.4 Research Question

The following questions were raised to guide the study:

  1. What are the major problems facing the stock exchange market in generating capital form commercial banks.
  2. Is there any significant effect of the stock exchange market on the capital base of commercial banks?

1.5 Scope of the Study

The study will look into the meaning and operations of the stock of exchange. Additionally the study will cover the activities of commercial banks on the stock exchange and how they raise their capital. Finally, the study covers the roles of the stock exchange market in helping commercial banks to raise capital.


1.6 Significance of the Study

The study will be beneficial to stock-brokers because the findings will enable them identify the challenges facing the stock market and how to tackle them. Additionally, company executives will find the study useful as the findings will reveal to them, strategies for improving the performances of the companies on the stock exchange market. Government bodies will equally benefit from the study as the finding will help them design a parameter to critically evaluate the performance of the stock exchange. Finally, business scholars and future researchers will benefit from the study as it will help to create a data base for them.


1.7 Definition of Terms

Capital:

Funds sources from the stock exchange to start or boost a commercial business.

Commercial Banks:

Accept deposits from the public and they are as well making a lot of profits when the money is lend to the public inform of loan and overdraft.

Shares:

An individual portion of a company’s capital owned by a single shareholder. It is a unit of capital measured by a sum of money.

Stock:

The bundle of shares which can be transferred into fractional amounts. Stock can be quoted per 100 nominal value, stock are not issued but convented from shares issued.

Stock Exchange Market:

A stock market which provides services for stock brokers and traders to trade stocks, bonds and other securities. Stock exchange also provides facilities for issuing and redemption of securities and other financial instruments and capital and including the payment of income and dividends.


Chapter Five


Conclusions and Recommendation

5.1 Conclusions

The study established that good liquidity requires a strategic management plan, possible action plans, and ongoing analysis and monitoring at all levels, liquidity management should be designed to provide required cash at the appropriate time, while, at the same time, allowing for investment policies that maximize returns on investments, thus the study concludes that good liquidity management had a positive impact on financial performance of general commercial banks Nigeria

The study revealed that deposits were crucial in developing financial markets, Banks should mobilize deposits by making finances and by investing in various financial markets therefore the study concludes that deposits had positive impact on financial performance of commercial banks in Nigeria.

The study revealed that credit positively affect the generation of capital for commercial banks to a great extent , thus the study concludes that credit positively affect profitability of commercial banks to a very great extent .
The study revealed that the role of financial intermediaries in providing liquidity to an economy may be duplicated by trading on security markets, thus the study financial convulsed that financial intermediary had a positive effect of on profitability of commercial banks


5.2 Recommendations

The study recommends that there is need for commercial banks in Nigeria to enhance their liquidity through participation in capital market as the study revealed that good liquidity risk management had appositive impact on financial performance of general commercial banks Nigeria

There is need for commercial banks in Nigeria to participate in capital market through deposit mobilization as the study established that deposits were crucial in developing financial markets which in return affected profitability of commercial bank.

The study revealed that credit positively affect the profitability of commercial banks in Nigeria to a great extent , thus there is need for commercial banks to participate in capital market through credit provision as it positively affect their profitability .

There is need for commercial banks in Nigeria to engage in financial intermediaries as the study revealed that financial intermediary had a positive effect of on profitability of commercial banks in Nigeria.


Get Complete Project Material

5,000 5000

The Complete Material Will Be Sent to You in Just 2 Steps

Quick & Simple…


Step One Purchase

Make Payment (Through Transfer) of ₦5,000 to the Account Below

Zenith BankAcc No: 1225513212
Samphina Academy
Current Account

Or CLICK HERE To Pay With Debit Card


FOR STUDENTS OUTSIDE NIGERIA
CLICK HERE To Purchase Material ($15)

Step Two Purchase

Send the Following Details on WhatsApp ( 08143831497) After Payment

  1. Payment Details

  2. TOPIC: The Impact Of Stock Exchange Market On The Generation Of Capital For Commercial Banks

The Complete Material Will Be Sent To You On WhatsApp After Receiving Your Details
T & C Apply


  Contact Our Help Desk


Need a Different Topic? Perform a Quick Search



List of Related Works

Click on Any Topic to Preview the Content

samphina.academy

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.