THE IMPACT OF STOCK EXCHANGE IN THE DEVELOPMENT OF CAPITAL MARKET (A CASE STUDY OF NIGERIA STOCK EXCHANGE)

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ABSTRACT

A case study of Nigeria, the contribution  of stock  exchange  in the banking  sector and in economic  well being of the general public.

          In a nutshell, the stock exchange aims to provide an atmosphere where buyer and sellers of securities  meet to buy  and sells  shares (securities)

          The importance of stock exchange  cannot  be over emphasized  in the banking  sector and even it performs prominent roles in Nigeria  economy at large. In developing our economy  in Nigeria in Banking sector, with  stock exchange  had came into being so as to perform this active part in  banking  and Nigeria  as well, in view of the above, the stock exchange  market aimed at motivating and encourage the Investor, Brokers as well  as the general public  to have improvement in their aims of buying and selling securities, through  proper usage of the instrument  used in the stock exchange market.          

TABLE OF CONTENTS

Title page

Certification

Dedication

Acknowledgement

Abstract

Table of content

CHAPTER ONE

1.0     Introduction                                                       1-2

  1. Background of the Study                                   2-5
    1. Objective of the Study                                        5-6
    1. Scope of the Study                                              6-7
    1. Statement of the Problem                                  7-8
    1. Research  Hypothesis                               8-9
    1. Limitation of the Study                                     9
    1. Delimitation of the Study                                  9
    1. Significant of the Study                                     10
    1. Definition of Terms                                            10-14

CHAPTER TWO:

2.0     Literature Review                                             

  • The Capital Market                                           15-16
    • Reasons for Establishment of the Nigeria Capital Market 16-17
    • Function of the Nigeria capital market            17-18
    • Composition of capital market                         18-27
    • Nigeria stock exchange                                     27-28
    • Development of stock exchange in Nigeria     28-27
    • Function of the Nigeria stock exchange           27-34
    • Instrument Used in Stock Exchange                 34-36

CHAPTER THREE

3.1     Introduction                                                        37

3.2     Research Design                                       37-39

3.3     Method of Data Collection                                39-34

3.4     Sampling Population                               40-42

3.5     Research instrument                                42-43

3.6      Questionnaire Design                                       43

CHAPTER FOUR

  • Introduction                                                      44
    • Data Analysis and Presentation                     44-45
    • Interpretation of Data and Analysis               45-58
    • General Comments                                          58-

CHAPTER FIVE

  • Summary Conclusion and Recommendation
    • Summary
    • Conclusion
    • Recommendation

Appendix

References

INTRODUCTION

The capital market is a market which  deals in long – term loans. It supplies industry with fixed  and working capital  and finances medium- term  and long term  borrowing  of the federal, state and local governments.

          The capital  market deals in ordinary  stocks and shares and debentures of corporations and bond and securities  of government and it should  be noted that the fund which flow into the capital market come from individuals  who have savings to invest.

          In another  sense the stock exchange plays an important  role in the economy, it determine the economics health of the country  and has a pivotal  role  in mobilizing  resources for the  development of capital market. It is  patient to know that the capital market functions through stock exchange market under the stock  exchange of every country.

           A case study of  Nigeria stock exchange, the contribution  of stock exchange in the banking sector  and in the economic will being  of the public

          In a nut shell, the tock exchange aims to provide an atmosphere when buyer and seller of securities must to buy and sell shoves (securities) the study on the role of stock exchange in the development of capital market will focus on:

  • the role  of stock  exchange  in Nigeria and the capital  market
  • history  of Nigeria stock exchange and it past operations
  • Effect and important of stock exchange as a unit of capital market on the industrial development.
  • Impact on the  investor and issues of the securities
  • Nature of the capital market and exchange in the capital market operations.
  • Participant in the capital market
  • Problem  of Nigeria stock  exchange in the capital  market operations

Statement of the problem

The focus of the study will be to identify the role of stock.

Stock exchange in the development of capital market, and Nigeria stock exchange will be the case- study. In the course of the study answer will provided to the following.

  1. What are the role of stock exchange in Nigeria in the capital market
  2. What is the historical background of stock exchange and review of their operation in the past.
  3. What are the effect and importance of stock exchange as a unit of capital market on industrial development.
  4. What are the  participant in the capital market and exchange in the capital market operation
  5. Who are participant in the capital market and exchange in the capital  market operation.
  6. What  is the nature and who are the participant of the capital market
  7. What are the limitation  of problems  of Nigeria stock  exchange  in the capital market  operation

Aims and objective of the study

It is important to know that every country how their own stock exchange which contribute and determine the economy of respective country. This research work will only cover Nigeria stock exchange and it role in the development of the Nigerian capital market. By so doing, the main reason for embarking on these studies is to derived answer to the statement of the problems, which will fill the existing knowledge gap.

The aims and objective of this study include:

  1. to focus on the examination of the role  of stock exchange  in Nigeria, and the  capital  market.
  2.  To show the history of stock exchange and review of their operation in the past.
  3. To bring into time light the effect and important of stock exchange as a unit of capital market on the industrial development.
  4. To show the significant impact of the investor and issue of securities
  5. To know the nature of participant of the capital  market  and exchange in the capital market operation.
  6. To know the nature and participant  of the capital market.
  7. To  bring out limitation of problems of Nigeria stock exchange in the capital market operation.

Statement of hypothesis

          The general hypothesis that will be tested in the study of the research  is as follow

Ho: the role of stock exchange has not develop the capital  market

Hi: the role of stock exchange has developed the capital  market

Ho: the  stock exchange  performs no function to the country

Hi: the stock exchange perform  functions to the country.

Research  methodology  

          Base on the topic, the study will use primary and secondary  sources of information as well as other psychological devices;

The primary sources will include:

  • Response  from questionnaire
  • Materials  from the case study materials,
  • Materials  from the internet.

The secondary  source will include

  • Text books

and  the psychological devices  will be to studying their behavior  scenically and much emphasis  will be places on the  questionnaire  as it will cover a wider  population  than when other instrument (s) are  being  for the same purpose

question: list of  question will be drawn for respondent to answer. The study will avoid difficult and ambiguous question, the question will be simple and  straight  forward and rooms for the expression of views / findings of respondents (s) regarding the study will be created

          a complete presentation of population from which it is drawn a sample, well be precisely  be part of the population, as it is a subject of the entire population of any kind.

Definition of terms/ concepts

 In the  stud emphasis  may be placed on some wards and may be used repeatedly which it meaning they differ from English dictionary meanings, such  wards and short meaning  needed to be know to started  below for these proposed/ study:

  1. the  capital market which is the market that deal with long- term fund
  2. stock  market  operators: these are those  that are included in the operation  of the stock market such as jobber, stock brokers, investment  advisers, and issuing houses  etc
  3. prim market which is regarded as the original  or the main market
  4. second tier  securities market which is segment of capital  market where small  companies operate.
  5. Ordinary  and reference shares: ordinary shows are common shares  and generally carry no fixed rate while the preference share usually  have fixed rate of dividend and their  holders are paid if company makes profit
  6. To mention few other could be bulls, bear, stag and others which the meaning will be in details in the study.
  7. plans and organization of the study

the research  work will be divided into five chapters. Each chapter contain  the following:

          chapter one will have the background of the study, objective of the study, scope of the study, statement  of the problem, research  hypothesis, limitation of the study , significant  of the study and definition of  terms

          chapter two will b theoretical frame work which will forces on the laterally review of Nigeria stock exchange  and capital market, reason  for establishment of the Nigeria capital market, composition of  capital market, Nigeria stock exchange, development of stock exchange  in Nigeria, functions of the stock exchange  and instrument use in stock exchange.

          Chapter three will state briefly the analysis  of various method used in data collected and emphasized on research design, method of data collecting sampling  population, questionnaire design.

          While  the chapter four will contain  introduction, data analysis and presentation, interpretation of data and analysis, testing of hypothesis  and general comment.

           And finally chapter five will discuss summary, conclusion  recommendation and  suggestion for further studies

Bibliography reference

          The will state the list of materials text books journal  magazine  consulted in the writing  of the proposal  and those that will be use to write the main project.

CHAPTER  ONE

  1. INTRODUCTION
    1. background of the study

The  Nigeria stock exchange provide a market where holding of existing “ quoted” shares wishing  for sell; such share be sold by making contact with  individual and institution  which are interested in buying  and selling of shares, stocks bonds and security. Also  any one who has surplus  fund after current  living expenses  and a reserve for an emergency  might decide to invest such surplus fund in security.

The stock exchange  is otherwise known as “ security market” the stock  exchange  play on important  roe in the economy in mobilizing resources  for development of capital market, the stock exchange  provides facilities for bringing together suppliers and users of capital

Security Market:

          A stock exchange therefore, is a market where large / small shares of companies and government securities  are traded.

          Former director general of the Nigeria stock exchange apostle H.I Alike describe  the stock exchange  as the corner stone  in the nations capital  formation and the achieving of the engine of the financial institution   resolve for example.

          Nigeria security  and exchange commission (N.S.E.C) of public  enterprise, savers, underwrite issuing houses, fund user, stock brokers, security registers.

          The establishment of the exchange in 1960 market the informal  birth of Nigeria capital market which serves  as a range of purpose including the following.

  1. Mobilization  of savings  from numerous economics units of economic growth and development.
    1. Provision of adequate liquidity to investor.
    1. Broad of the ownership base of Assets as well as the creation of private sector.
    1. Provision  of alternative source of fund for government other than taxation.
    1. Encouragement  of more efficient allocation of new investment through price mechanism
    1. Encouragement of more efficient of given amount of tangible  wealth through changes in the composition and ownership wealth
    1. Promotion  of rapid changes that exist to link together  sellers and buyer of quoted investment. They help to widen there base of ownership of public companies. Stock  liquidity  also provides especially  for making it easy  for government and industries to raise fund (s) for  development of their  programmes.

1.2 OBJECTIVE OF THE STUDY

The main aims of the research  work are as follows:

  1. To focus on the examination of the role of stock exchange in Nigeria in the development  of capital  market.
  2. To  show the  history of  stock  exchange and review of their operation  in the past
  3. To bring into limelight  the effect and importance of stock exchange as a unit  of capital  market on industrial development
  4. To show significant impact on the investor and issues of the securities
  5. To know the nature and participant of the capital  and exchange  in the capital  market operation
  6. To know the nature of participant in the capital market.
  7. To bring out limitation of problems of Nigeria stock exchange in the capital  market operation.

1.3 Scope Of The Study

With available data on the Nigeria  stock exchange system the case study will focuses its attention on the management and role of the stock exchange system.

This  research work was not carried out without difficulties, many of the limitation which is considered very important are listed below:

  •  Financial  Problem: considering  the global  economic melt down and devastating  economic  problems  confronted by non- political  aligns  in the country, the researcher  is confronted with financial  inadequacy  due to other academic  commitment  which involves  money, to say categorically  that the cost used in caring out this research  work involves thousand (s) of naira. It is not an over statement
  • Time Factor: Another  prominent  obstacle  faces by the researcher is that of time factor. Talk about the time took to travel, planning  organizing  and collecting of materials to be used for the write-up
  • Transportation  Problem: During the period of carrying  out this research  work in collection of  data the researcher spent a lot of money on the cost of transport fare (s)  and on some occasion the researcher will have to “trek”
THE IMPACT OF STOCK EXCHANGE IN THE DEVELOPMENT OF CAPITAL MARKET (A CASE STUDY OF NIGERIA STOCK EXCHANGE)