EFFECT OF CAPITAL MARKET ON NIGERIA ECONOMY

ABSTRACT

This research work titled the effect of capital market on Nigeria economy. The researcher examined the role of capital market in the development of Nigerian economy. The relationship between market capitalization and the gross domestic product of Nigeria. The relationship between total new shares and gross domestic product of Nigeria. And also examined the effect of value of transaction in the capital market and gross domestic product of Nigeria. The researcher sourced the data through Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation will be review. Extensive literature review was carried out on the direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables and percentages were used in treatment of data. Chi-square was used in testing the hypotheses. At the end the researcher observed that Capital market plays significant role in the development of Nigerian economy. It was also observed that there is significant relationship between market capitalization and the gross domestic product of Nigeria. The study also revealed that there is relationship between total new shares and gross domestic product of Nigeria. The researcher also discovered that the value of transaction has significant effect on the capital market and gross domestic product of Nigeria. Based on the findings the researcher recommends that the government should enlightened the masses on the need and the importance of the stock exchange in the country. The government should encourage the establishment of branches office of the stock exchange in all local government areas of the federation. Employment of Qualified Staff: Qualified staff should be employed. This is necessary so that the investors will be given efficient services. There is the need for reduction in the interest rates charged in your clients. This is because high interest rates might lead to poor participation in the business by the investors.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The capital market is a highly specialized and organized financial market and indeed essential agent of economic growth because of its ability to facilitate and mobilize saving and investment. To a great extent, the positive relationship between capital accumulation real economic growths has long affirmed in economic theories (Anyanwu, 1993).

The growth and development of the capital market in Nigeria can be traced to 1946 with the floating of N600,000 (more than 300,000 pounds sterling) worth of government stocks. However, an organized market for the secondary trading of issued stocks was lacking. In 1959, following the establishment of the Central Bank of Nigeria (CBN) a year earlier, a N4 million (2 million pounds sterling). Federal Government of Nigeria development loan stock was issued in line with its role of fostering economic and financial development.