THE ROLES AS NIGERIA CAPITAL MARKET IN ECONOMIC DEVELOPMENT 1991 – 2011
CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND OF THE STUDY
It is a known fact that the investment that promotes economic growth and development requires long term financing, far longer than the duration for which most savers are willing to commit their funds.
Capital market is a collection financial institution set up for the granting of medium and long-term loans. It is a market for the government securities, for corporate bonds, for the mobilization and utilization of long-term funds for development. It is the long-term end of the financial system. In exchange for long-term financial assets offered by borrowers.
The market embraces both the new issues (primary) market and secondary market; such securities might be raised in an organized market such as the stock exchange. In this sense it involves consortium under writing loans and project financing thus it is a mechanism whereby economic unit desirous to invest their surplus funds interact directly or through financial intermediaries with those who wish to procure funds for their business.
More so the capital market synchronize the divergent preference for portfolio managers and financial institution and those of savers by mobilizing long-term funds for portfolio managers and financial institutions, while providing avenues for savers to invest when the need arises through the secondary market, without affecting the operation of the firm, their savings had earlier financed in other word, through the secondary market, the capital market converts long-term or perpetual investment enlarged and economic growth accelerated.
Universally, capital market are primarily created to provide avenues for effective mobilization of idle funds from surplus economic units and channeled to deficit units for long-term investment purposes. The suppliers of funds are basically individuals and corporate bodies as government rarely supply funds to the market. The deficit units by contrast consist only of corporate bodies as government. Moreover, capital markets through secondary arms provide opportunities for the purchase and sales of existing securities among investors.
 1.1.1    BRIEF HISTORY OF THE NIGERIAN CAPITAL MARKET
According to Alile and Anao, the history of Nigeria stock Exchange dates back to be the 1950’s when there were discussion in the business and academic circles about the formation of an organized stock market in May 1958, the then federal minister of commerce and industry appointed the Bareback committee to advise the federal government on ways of fostering, a share capital market in Nigeria on 15th September 1960, the then Lagos stock exchange was in corporate as a non-profit making organization.
Though a company listed by guarantee, the Lagos stock exchange was allowed to dispose with the work “limited” the Lagos stock exchange at enacted in 1961 strengthen the Lagos stock exchange. The main purpose of the Act was to restrict the business of buying and selling of listed (quoted) securities of the Nigeria stock exchange, following the recommendation of the financial system review committee and government decisions on 2nd December 1977 into the Nigeria stock exchange. The activities during the first ten years of the exchange were dull.
The Nigeria capital market is now bigger in activities much more diversified and more sophisticated in operations and with the recent introduction of the Automated Trading System (ATS) and the central securities clearing system (CSCS), has made it improve.
In recent times the market had witnessed considerable growth in new issues and listing activities as well as the local value of market capitalization. These have resulted from government liberation policies and programme, increased awareness of the market as a source of long-term fund and the establishment of the second tier security market (STSM)
1.2    STATEMENT OF RESEACH PROBLEMS
Capital market remains a means through which an economy can attain high performance. It is obvious that the Nigeria capital market is still emergent.
The statement of the problem therefore arises out of these questions:
To what extent has the Nigerian capital market play a vital role in stimulating economic growth and development in Nigeria?
To what extent has the Nigerian capital market been able to examine the challenges affecting the capital market development and the economy?
To what extent has the Nigeria capital marked been able to provide solutions on the challenges of the capital market development?
To what extend has the issues affecting the Nigeria capital market been examined.
To what extent has the capital market activities influence the Nigeria economic positively.
1.3    OBJECTIVE OF THE STUDY
The general objective of this study is to present an overview of the Nigeria capital markets in terms of raising finance to assist companies and government on long-term basis.
The specific objectives of this study are
1.    To critically examine the relationship between capital marked development and the Nigerian economy.
2.    To examine the extent to which the capital market actively influence the economy positively.
3.    To examine the issues affecting the Nigeria capital market
4.    To identify various challenges affecting capital market development and the Nigeria economy
5.    To determine various solutions to challenges on capital market development.
1.4    STATEMENT OF HYPOTHESIS
The hypothesis of this study is stated in this form
Ho:    That there is no significant relationship between the Nigeria capital market development and the economy
Ho:    That there is no significant relationship between the Nigeria capital market development and economic policies.
Ho:    The capital market has not impacted positively on the growth and development of the Nigeria economy
1.5    SIGNIFICANCE OF THE STUDY
The importance of the capital market as an instrument of raising long-term funds cannot be over emphasized.
over the years the Nigeria capital market has been experiencing reasonable growth. A lot of service has been introduced into the market and with the globalization of the world into one big village and development information technology. The Nigeria capital market has had to adapt to the changes enveloping the world.
This study is important as it would examine to what extent the capital market and also to examine the various services offered in this market and it’s effectiveness.
This study is important as it would examine to what extent the capital market should contribute to economic growth and development in Nigeria.
Prospective shareholders and investor would find the work relevant as the research study will focus on the Nigeria stock exchange where activities of the capital market are usually carried out.
1.6    SCOPE OF THE  STUDY
This research shall cover the Nigeria capital market, it shall also cover all the participants in the capital market, challenges, solutions, issues in the Nigeria capital market.
It would cover geographical domain of Nigeria capital market based on activities on the various trading floors of Nigeria stock Exchange
To be able to capture the activities of the capital market substantially, a period of 15years encompassing January 1991 to December 2011 will be considered and will subsequently be used as the time horizon for the study.
1.7    LIMITATION OF THE STUDY
The limitation encounter in the course of this study are
1.    Availability of data and information. Most of the information and data that will be used in this work were gotten basically from SEC and the Nigeria stock exchange. Most stockbrokers approaches seemed rather unenthusiastic in providing information.
However, information provided by the above source proved to be adequate
2.    The ability to obtain completely random sample.
1.8    DAFINITION OF TERMS
1.    Capital market: is the long –term end of the financial system
2.    Primary market: This is market were fresh funds are being raised. Any company that has not raised fund before goes to the primary market to do it.
3.    Secondary market: is a market for second-hand securities were securities that have been traded in the primary market are traded.
4.    ATS: (Automated Trading System) is a computer trading system in which stock brokers or dealings clerks buy and sell securities on the trading floor with the network system.
5.    CSCS (Central Security and clearing system) was created for efficient speedy conclusion of transaction and delivery of share certificate.
6.    Portfolio: A portfolio is a combination of investment held by an investor.
7.    Investment: is a commitment of resources today with the aim of getting future benefit.
8.    SEC: security and Exchange commission
9.    Securities: These are shares, stock and bonds that are traded on, both in the capital and money market
10.    Consortium: An organization of several business or banks joining together as a group for a shared purpose
11.    Corporate bonds: An official paper given by the government or a company to show that you have lent them money that they will pay back to you at an interest rate that does not charge.
12.    NSE: Nigeria stock exchange
13.    Stock Exchange: This is the market where shares bonds and stocks are bought and sold
14.    Participants in the capital market: These are the fund provides, fund users, financial intermediaries investment advisers and regulators in the market
15.    New Issue: This is security of a company that is offered to the public for the first time.