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  • Name: THE ROLE OF THE STOCK EXCHANGE IN CAPITAL FORMATION IN NIGERIA
  • Type: PDF and MS Word (DOC)
  • Size: [204 KB]
  • Length: [49] Pages

 

CHAPTER ONE

1.0 INTRODUCTION

The Nigerian stock exchange market is a highly organized market where investors can buy and sell existing securities like shares, stock, debenture, gilt-edge etc.

This is a market where those who are interested in purchase of securities are brought into contact with the sellers.

This Nigeria stock exchange market is an essential part of the capital market, it serve as a source of raising capital as well as forum for financial investment the market deals with old existing share only ie new ones are not trade in it. The stock exchange market ensure that every transaction must follow prescribed set of rules and regulation which are complex in nature quoted companies are organization whose share are quoted in the stock exchange market, the Nigeria stock exchange market in Lagos with branches across the country.

The Nigeria stock exchange market was established in 1977 through the act of parliament, some of the companies quoted in the Nigeria stock exchange market are Nestle food Nigeria plc, Nigeria Breweries plc, Guinness plc, Union Bank plc, First Bank plc etc.

1:1BACHGROUND OF THE STUDY.

The Nigeria stock exchange market was founded in 1960 as the Lagos stock exchange market, it started operation in Lagos in 1961 with 19(nineteen) companies listed for trading. In December 1977 it became known as the Nigeria stock exchange market, with branches in Nigeria established in some of the country. There are now thirteen(13branches of the Nigerian stock exchange market excluding the head office in Lagos. Each branch has an electronic trading floor, the head office in

Lagos was opened in 1961 Kaduna in 1978, Port-Harcourt in 1980,Kano in 1989, Onitsha february 1990, Ibadan in august 1990, Abuja October 1999, Yola in April 2002, Benin in January 2005, Uyo in 2007 Ilorin in 2008 Owerri in October 2009, and Buachi in 2009.

The Nigeria stock exchange market currently has about 283 listed companies with a total market capitalization of about 125 billion dollars as at the end of 2007. the type of securities trade include industrial loan stock , government bon d and equity or ordinary shares, the implementation of the automated trading system has significantly enhances the trading process and made it easier for ordinary people who struggle with trading technicalities. The central securities clearing system limited was incorporated m as a subsidiary of Nigeria stock exchange in 19992 and some of its responsibilities including clearing,

settlement and delivery of transaction electronically on the Nigeria stock exchange.

The stock exchange market continues to evolve to meet the needs of its valued customers and to achieve the highest level of competitiveness. The Nigeria stock exchange operates fair, orderly and transparent market that brings together the best of Africa enterprises and the local and global investor champion the acceleration of Africans economic development and to become the gateway to African market.

1:2 STATEMENT OT THE PROBLEM

The factor responsible for this could be identified to include.

High cost of transaction

Poor economic performance

Lack of transparency (ie they don’t allow the pubic to part take in the business operation unless the shareholders)

At the Nigeria stock exchange, buyers and sellers are the same people so that market is no more than where corruption and lack of transparency have brought misery and poverty investors. How could and describe a situation where market crashed in 2008 with capitalization collapsing from fifteen(15) trillion naira to six(6) trillion naira without anybody lifting a finger? Because of this know deficiency corruption has now permeated the system.

1:3 OBJECTIVES OF THE STUDY

This study is primarily aim at examining critically the activities and performance of the Nigeria stock exchange market, specifically the study aim to:

Evaluate the performance and growth of the Nigeria stock exchange market.

To investigate the role of the stock exchange in capital formation in Nigeria.

To make suggestion on how the stock exchange could stimulate investment.

To mobilize long-term fund for investment.

To improve the efficiency of capital by provider market measure of return.

1:4 RESEARCH QUESTIONS

The study will examine the following questions:

i what is the rate of new issues on the Nigerian stock exchange to date?

 

ii to what extent does the Nigeria stock exchange stimulate capital formulation in the country?

iii how could the stock market be positioned to stimulate investment generation in the country.

1:5 RESEARCH HYPOTHESES

The hypothesis that could be tested in this research study is stated below:

HO(null hypothesis): there is no significant relationship between the Nigerian stock exchange market and stimulated capital formulation in Nigeria.

HI(alternative hypothesis): there is significant relationship between the Nigeria stock exchange market and stimulated capital formulation

1:6 SIGNIFICANCE OF THE STUDY

The significant of the study is to carryout the statistical analysis of stock exchange over a given period, for individuals and investors to understand   the force at work and use it to suggest ways of improving their service for the benefit of the world and Nigeria in particular.

1:7  SCOPE OF THE STUDY

The economy is a large component with a lot of diverse and sometimes complex part. This research work will only look at a particular part of the economy ie. The financial sector, this study will not cover all the factor that makeup the financial sector, but shall focus on the stock market and its activities as it impacts of the Nigeria capital formulation.

The empirical investigation of the role of the Nigeria stock exchange market in capital formulation in Nigeria shall be restricted to the period between 2001 to 2012 due to non- availability of all the necessary data to date.

1:8 LIMITATION OF THE STUDY

While in this study, I the researcher encountered problem and series of obstacle to this study in the case of carrying out the research. Some of the limitations are;

DITANCE: during this study I the researcher was confronted with the task of actually touring the Nigeria stock exchange market in Benin City and also search in some internet.

TIME: It seemed there were not a enough chance to meet up with this work, but the time was managed efficiently.

FINANCE: During this study, it was difficult and nearly impossible to carry on because of the deficiency of finance.

FATIQUE: The human being factor also attempted to hamper the study constant body breakdown resulting from tiredness and distraction.

HOARDING OF INFORMATION: During the research I pointed out that these approved for information were not really prepared to give it out and extraction of data from the blur document which in one way or the other affect the accuracy of the data collected for this study.

1:9 DEFINITIONS OF TERMS

For the aim of this research, the under listed term are defined below:

STOCK BROKER: This is an agent who is professionally engaged in the purchase and sales of securities in the stock market.

SHARES: this can be defined as an individual portion of the company capital owned by shareholders.

STOCK JOBBER: A jobber is a member of the stock exchange market who is the actual dealer in securities. The jobber  act on behalf of the investors.

STOCK EXCHANGE: This is a market for the sale and purchase of  securities, where the pricing is controlled by law of supply and demand.

STOCK HOLDERS: these are individual, business and group owning stock in every operation.

SECURITIES: these are investment which are trade in the stock exchange market in order to yield income.

STOCK: This is defined as the  bundle of share or mass of capital which can be transferred in fractional amount.

SECURITIES EXCHANGE COMMISSION (SEC) : this is the regulatory arm on the Nigeria capital market.

 

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