CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Prior to 1977, there was no stock exchange in Nigeria apart from the Lagos stock exchange which was not centralized. Also, before the Lagos stock exchange cam into being (existence), Nigeria was not having any such market before independence in 1960. Rather, like many developing countries in the 1950s and 1960s, the financial system comprised foreign owned commercial banks which provided mainly short-term loans, commercial and trade credit.
As stated above, the Nigeria stock exchange did not just come into existence, but with gradual process (development) of the Nigerian financial system which has been one of the greatest achievements of the Central Bank of Nigeria (CBN) since its establishment on July 2nd, 1959.
This system consists primarily of the money market (for short-term loans) and the capital market (for long-term loans) and (medium-term loans). The Nigerian stock exchange (previously known as the Lagos stock exchange) is the pivot or the fulcrum around which the entire capital market operates or rotates. It is the market for the sale and purchase of securities (that is stocks and shares). A market in which individuals and institutions (firms) who have surplus funds to their immediate requirement cam employ them profitably.
As this study is geared towards the Nigeria Stock Exchange (NSE) market. The problems militating against it will be highlightened and solution being sourced for, to curtain these problems. Mean by which this market can prosper will be looked into as well and recommendations being made to look at the various problems militating against the market.
As mentioned earlier that the study is geared towards the problems and prospects of Nigeria stock exchange, the emphasis of the study will be laid on Nigeria Capital Market (NCM). As advocated earlier on the establishment of the Nigeria stock exchange, it can then be said that the Nigeria Capital Market (NCM) has been in existence before the establishment of the Nigeria Stock Exchange (NSE). This is so because, prior to 1977, there was no market of such rather, there was Lagos stock exchange that controls the money and capital market.
Although, the Lagos stock exchange was in operation, it was not centralized as the stock exchange in any nation would be. Because of this, a financial system review panel was setup in 1977 and with the recommendations of this panel, the federal military government decided to change the name of the stock exchange from Lagos stock exchange to its present name; the Nigeria Stock Exchange and to decentralized its location and operations with branches now in Port-Harcourt, Asaba, Kaduna, Ibadan etc. Its head office is still situated in Lagos.
It is worthy to note that since the establishment of the Lagos stock exchange in 1961 and the subsequent changing of its name to Nigeria stock exchange in 1977, it has provided a major local investment out-let for Nigerian investors.
1.2 STATEMENT OF PROBLEMS
The problems of this study were to analyze the nooks and cranny of the Nigeria stock exchange. That is the areas in which Nigeria stock exchange is erring in the location of securities and to explain whether firms get needed attention in the quotation of their shares (either small or big firms).
