1.0 Introduction
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:
Infrastructural Inadequencies:
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.
Capital Market:
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.
Share Holder:
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.
Share Index:
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.
Speculation:
It is the buying and selling of goods with the objective of gaining from differences in prices.
Stage:
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.
Bear:
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.
Common Stock:
It is a term for equity or common stock.
Broker:
An intermediary who buys or sells shares on behalf of a client.
Securities:
They refer to various promissory documents adopted as evidence of claim in the market.
Primary Market:
It is where securities are offered for sale in the public from the issuer for the first time.
Secondary Market:
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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