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Nigeria Stock Market as an Instrument in Mobilization of Investment Capital

Nigeria Stock Market as an Instrument in Mobilization of Investment Capital

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Reference ID: PS-139-TM

DEDICATION

This research material titled “Nigeria Stock Market as an Instrument in Mobilization of Investment Capital” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.

ACKNOWLEDGEMENT

I extend my sincere gratitude to all those who contributed to the completion of this project. Special thanks to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Accountancy / Accounting, Book Authors and Profound Scholars of existing or related project material on “Nigeria Stock Market as an Instrument in Mobilization of Investment Capital” for their invaluable guidance, support, and expertise throughout the journey.

I am also grateful to your study area (mention any funding organizations, if applicable) for their financial assistance. This research would not have been possible without the encouragement and assistance of some stakeholders (mention any mentors, teachers, or colleagues). Additionally, I would like to acknowledge the understanding and patience of my family and friends during this endeavor. Your unwavering support has been a constant source of motivation. Thank you all for being part of this meaningful endeavor.


Nigeria Stock Market as an Instrument in Mobilization of Investment Capital

TABLE OF CONTENTS

PRELIMINARY PAGES


CHAPTER ONE

INTRODUCTION

  • 1.1 Background Of The Study
  • 1.2 Statement of Problems
  • 1.3 Aim and Objectives of Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of Study
  • 1.7 Scope of the Study
  • 1.8 Limitations of the study
  • 1.9 Operational Definitions of Terms

CHAPTER TWO

LITERATURE REVIEW

  • 2.1 Introduction
  • 2.2 The Nigeria capital Market
  • 2.3 Environment for an Efficient Stock Market
  • 2.4 Operation of the Stock Market
  • 2.5 Conducive Factors for Attracting Investment in the Stock Market
  • 2.6 NSM as Instrument for Mobilizing Capital
  • 2.7 Theoretical Framework
  • 2.7.1 Matching Buyers to Sellers
  • 2.7.2 Benefits of Stock Exchange Listing
  • 2.7.3 Problems of Stock Exchange Listing

CHAPTER THREE

RESEARCH METHODOLOGY

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Population of Study
  • 3.4 Sampling Technique
  • 3.5 Research Instrument
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Questionnaire
  • 3.8.1 Interview
  • 3.8.2 Key Informants Interview
  • 3.8.3 Observation
  • 3.9 Statistical Analysis

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

  • 4.1 Introduction
  • 4.2 Presentation and Analysis of Data
  • 4.3 Test of Hypotheses
  • 4.4 Discussion of Findings

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

  • 5.1 Introduction
  • 5.2 Summary
  • 5.3 Conclusion
  • 5.4 Recommendation

REFERENCES

APPENDIX A - “QUESTIONNAIRE”

ABSTRACT

The study determines the Nigeria Stock Market as an Instrument in Mobilization of Investment Capital. In achieving this aim, the following specific objectives were laid out to contribution of the capital market to the development of industrial capabilities and economic growth, the possible strategies to enhance or increase capital market, the mission or objective of the Nigeria stock exchange in promoting increased capital information in Nigeria by the 2010, and the relevance or usefulness of stock market in the mobilization of investment capital. The research design used in this report is descriptive design, utilizing questionnaire method to obtain information from the respondents for this project. Primary data were collected from the primary source which questionnaire was used as an instrument of data collection while secondary data were sources from textbooks, journals, newspapers and the internet were employed. The data were presented on a frequency distribution table and analyzed using simple percentage, while hypothesis was tested using chi-square test. This commencement of deregulation, banks, operated in a regulated controlled sector, which ensured discipline and professionalism in the banking Industry. Staffs of banks Western highly regarded in society as men of noble profession with procession with proven integrity and entry into the sector was properly screened and virtually. This study will be of importance to individual's private and public companies, financial institutions government and parastatals, as it will enable them to understand the role which capital market plays in the mobilization of funds and their eventual transfer to businesses, the government and individuals that need those funds for investment.


Nigeria Stock Market as an Instrument in Mobilization of Investment Capital

CHAPTER ONE

1.0 Introduction

1.1 Background Of The Study

The development of the stock Market in Nigeria started in 1946 when their year plan local ordinance was promulgated. The ordinance provided for the floating of & 300,000 (N600, 000) to stock bearing interest at 3%. It had maturity of 10-15 years.

Another attempt was made in 1951 through the creation of a loan fund financing public utilities. This, 1945-55 constitute the first significant attempts made under the British colonial administration to create investment opportunities of Nigeria. There they mark the beginning of capital market development in Nigeria but the specific objectives of developing a local capital market was not seriously by the colonial administration.

In 1958, committees under professor barrack. The director of the Nigeria institute of social and economic research was appointed to consider the ways and years of postering a stock market in Nigeria. There was a favourable report recommending the creation of facilities forin stock.

The establishment of rules regulating transfers and Watchers to encourage savings and issue of securities of govt. and other organizations, in 1959, the central bank of Nigeria can attempt to involves a stock market capital the first Federation of Nigeria development loan of N 14 million on behalf of the govt. because a formal stock market had it been established, the central bank had to put a lot of effort and time to ensure that the total floated carried a reasonable assuratey of marketability by introducing arrangement involving the maintenance of a central register for marketing buyers and sellers of shares & suggesting apricesat which the deal stock place the refore, the favourable report of bareback committee led to the registration of Lagos stock exchange in March 1960 (Alile & Arao 1986).

Essentially, the stock market is expected to be the point of re-economic development of any economy. As noted by Adegute (1994). The capital market serves as an integral part of their counting financial system where money securities are bought and sold. It even place for raising funds of various maturities to the individual provides for rising of financial capital on a short, medium or long term basis. He defined capital market to be exclusive of the money market. Market and is in the main a market for securities stock market are where financial instruments such as debts.

According to Okoro (1990), transaction on stock market instrument can be alone either by correspondence or by personal contact there must be an intension to sell (an effort and (abide) before a deal can take place on the trading the or for the stock exchange. Stock market was created an avenue for individual and institutions in the society who wish to invest their money by buying share in companies in the investors do not stand to get back these money under normal circumstances since the money is often used in setting up fixed asset like building machines and other project.

However, an investor may have a pressing need for liquid cash and to increase his liquidity by buys securities which can be easily solid in the stock exchange to acquire liquid cash. The stock market is an encouragement to those that wish to invest by buying securities and those that want to reclaim an invested fund by selling their securities or terms that are agreeable to both parties. Meanwhile, there are still other that are not invested in actual investment but other sell purely for speculate purpose. They growth as speculative (Eiki, 1995,: 25) the growth of the stock market was enhance estimate and saving which include.

  1. The income tax management. Act 1961-section of the act provides for certain proportion at which the relevant pension on provident find could be invested in Federal securities.
  2. The intibal provident Fund Act, 1761-th specifies the nature of investment which the fund may make and it has to be invested only in Federal securities
  3. The trusts investment Act 1962- specifies the types of securities in which the funds of settlement may be invested. The approved securities consist of Federal Government securities and other which are listed on the exchange.
  4. Insurance Act, 1976 the Act requires insurance companies to invest a certain minimum proportion of their funds in presentable securities which are listed on the stock exchange.
  5. The Nigeria enterprises promotion Acts 1976 and 1997 the indigenization measure pursue by government granted impact in the country by increasing the number of listed equality from the figure of 14 in 1971 to over 90 by the end of 1980 (Alile and Amino, 1986)

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Stock Market as an Instrument in Mobilization of Investment Capital.


1.2 Statement of Problems

The stock exchange is expected to mobilize long-term savings to finance long-term investment by providing risk capital in the form of equity or quasi-equity to entrepreneurs. Indeed, the stock exchange is really not just a financial institution, but the very hub of the capital market, the pivot around which every activity of the capital market revolves. Hence, the exchange is expected to encourage broader ownership of productive assets and enhance the efficiency of the capital market through a competitive pricing mechanism.

The stock exchange, as an important component of the capital market, plays a significant role in the capital formation process because of the tremendous opportunities that ensue from its activities. There is an argument that the capital markets in developing countries in general have not lived up to expectations in terms of the extent and degree of capital mobilization for economic development. In spite of policies instituted by the government at various times, the performance of the Nigerian Stock Exchange over the nearly 30 years of its existence has been relatively poor compared to other stock exchanges of similar age in some developing countries.


1.3 Aim and Objectives of Study

The aim of the study is to determine the Nigeria Stock Market as an Instrument in Mobilization of Investment Capital. In achieving this aim, the following specific objectives were laid out as follows:

  1. Contribution of the capital market to the development of industrial capabilities and economic growth.
  2. The possible strategies to enhance or increase capital market.
  3. The mission or objective of the Nigeria stock exchange in promoting increased capital information in Nigeria by the 2010.
  4. The relevance or usefulness of stock market in the mobilization of investment capital.

1.4 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

  • Does the contribution of the capital market increase the development of industrial capabilities and economic growth?
  • What are the possible strategies to enhance or increase capital market?
  • What is the mission or objective of the Nigeria stock exchange in promoting increased capital information in Nigeria by the 2010?
  • Does the relevance or usefulness of stock market facilitate the mobilization of investment capital?

1.5 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

  • H0: Nigeria stock market is not an efficient instrument in mobilization of investment.
  • H1: Nigeria stock market is an efficient instrument in mobilization of investment.

Hypothesis Two

  • H0: Lack of public awareness does not militate against the realization of the potential of the stock market in fund mobilization for investment.
  • H1: Lack of public awareness militates against the realization of the potential of the stock market in fund mobilization for investment.

Hypothesis Three

  • H0: The use of the capital market does not reduce over reliance on the money market.
  • H0: The use of the capital market reduces over reliance on the money market.

1.6 Significance of Study

This study will be of importance to individual's private and public companies, financial institutions government and parastatals, as it will enable them to understand the role which capital market plays in the mobilization of funds and their eventual transfer to businesses, the government and individuals that need those funds for investment. It encourages the investor towards specification, development and mobilization of the economy through investment process.

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.


1.7 Scope of the Study

The research work revolves on the Nigeria stock market and how it serves as an efficient investment in the mobilization of investment capital. It is important to note that the capital market is not a sought entity. It is rather a work to specialized financial institutions to the various ways bring together supplies to capital, which will be fully ensure. This study, It will also examination are regulatory bodies of the capital.


1.8 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

  1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
  2. Research material: availability of research material is a major setback to the scope of the study.
  3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
  4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.9 Operational Definitions of Terms

Some terms concepts have various meanings depending on whom or it is used. The 1/ones in this study are in the following context.

Stock Market: It is used interchangeable with the capital market, which is integral part of the country financial system where many securities are bought and solid.

Share Holder: A shareholder is one who holds a share certificate that has to share is also called or referred as stock holder.

Speculation: It is the buying and selling of goods with the objects of gaining from differences in prices.

Stage: One who speculates on the stock exchange by subscribing to new issue with the hope of selling his allotment at a profit as deal in the securities commences.

Bear: An individual who sells securities 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.

Common Stock: It is a terms for equity or ordinary share.

Bid: The process at which a jobber or investor is prepared by stock or shares, when a prices is quoted as bid” It generally means that there are more, buyers than sellers.

Broker: A intermediary who buys or sells share can behalf of a client.

Double Option: The right to buy securities at an agreed price within an agreed period usually not more than three months.

Primary Market: It is where securities are offered for sale to the public from the issuer for the first time.

Secondary Market: It is where people investments stores can buy or sell previously quoted securities and get their money back for alternative uses.

CHAPTER TWO

2.0 Literature Review

2.1 Introduction

This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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