Privatization and Commercialization in the Nigerian Economy - ArticlesNG

This study was carried out to determine the effect of stock market on capital formation in Nigeria. The variables included in the model were, Gross Fixed Capital Formation, value of share traded, interest rate, inflation rate, commercial bank investment indicator, and Stock Market Capital.

Data were sourced from CBN statistical bulletin The study employed OLS technique to determine the effect of stock market on capital formation. The empirical finding shows that stock market capital, commercial bank investment indicator, inflation rate, interest rate, value of share traded and Gross Fixed Capital Formation.

Based on the findings, the following recommendations were made. The total liberalization of the financial sector and encouragement of Nigerians to take advantage of the stock exchange. Almost all the economist laid emphasis on capital formation as the major determinant of economic growth. The Nigerian Stock Exchange is one of the institutions on the capital market, which specializes in all forms of marketing trading securities.

It is a network of individual institution and instrument. The rapid economic development of any economy depends, among other things, on ready access of adequate financial resources Alile and Anao, The desire to develop financial market in an economy is intimately connected with the objective of accelerating industrial and agricultural development.

Among this financial market is the stock exchange, which deals with the mobilization of bank medium and long term capital funds Sule and Momoh, The mechanism of stock exchange came into existence to enable investment, which were inherently illiquid to become liquid through reconversion into cast at the decision of the investor without inconveniency the company Olowe, Today, words like globalization have become familiar in economic and finance parlance and past growing intern dependence of economics and financial markets cannot be ignored.

Stock market development, capital formation and growth in Nigeria | International Journal of Current Research

The development of the capital market in Nigeria dates back to , when the first government securities was floated; the institutional facilities for the operation was however absent and did not commence until fifteen years later, when the Nigerian Stock Exchange now the Nigerian Stock Exchange was established in Consequently, in , the Federal Government set up a committee under Professor R.

Barback to advise on ways and means to fostering a shares market in Nigeria.

The report of the committee was published in and it recommended among other things:. As follow up to this report, the then Lagos Stock Exchange now Nigerian Stock Exchange was incorporated on 15th September, through the collective encouragement of the business community, the Nigerian Industrial Development Bank Limited NIDB and the Central Bank of Nigeria.

Conclusively, the availability of a secondary market endangers capital formation and socio-economic development.

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The allocative function as critical in determining the overall growth of the economy ie, the financial sector. Therefore, the role of the Nigerian Stock Exchange in the economy is an engine for capital formation saddles with the private sector in general to achieve economic development program. The Nigerian Stock Exchange market is faced with numerous problems which comprises of decreased trading activities where by persistent rise in the demand for securities without a corresponding increase in its supply.

In this case, investments are not easily found for purchase. Given the number of years since the Nigerian Stock Exchange has been established and the substantial financial resources available in the country, coupled with the existing institutions one can claim that the entire spectrum of the capital market has not been sufficiently active, especially when compared with the capital unit of similar or lesser aged units in other developing countries. The factors responsible for this could be identified to include:.

The spinal effect of the global economic crisis on the Nigerian Stock Exchange continued in with the exorbitant lending rate mounting pressure on the stock market as a result of massive borrowed fund in the market. The rush by stock investors to liquidate their investment to repay their loans in order to avoid the excessive lending rate caused the Nigerian Stock Market to crash. Sere Ejembi, noted that it is not the global financial crisis and the speculative sub prime mortgage bubbles and bust alone that is responsible for the crash of the stock market, other contributory factors lent support.

Some of these, namely; margin lending by the deposit money banks DMBs , stock price appreciation that had no correlation with the fundamentals in the quoting companies and local investors opting to invest in foreign capital markets to take advantage of the low stock price. How does the Nigerian Stock Exchange influence capital formation in Nigeria?

What is the role of Stock Exchange on capital formation in Nigeria. This study is primarily aimed at examining critically, the activities and performance of the Nigerian Stock Exchange especially, the study aims to;. To determine the impact of the Nigerian Stock Exchange on capital formation.

To evaluate the performance and growth of the Nigerian Stock Exchange. To quantify the relative importance of the Stock Exchange in determining the capital formation for national development.

The hypothesis that could be tested in this study is stated below: The Nigerian Stock Exchange has no significant impact on capital formation. The Nigerian Stock Exchange has significant impact on capital formation. The significant of this research is to examine the usefulness of the Nigerian Stock Exchange as a vehicle for capital market shows that Nigerian Stock Exchange contributes positively to the national development because it portrays the capabilities to raise funds from the surplus to the deficit for investment purpose.

Therefore, the design of an optimal capital structure, which ensures adequate and sustainable growth for national development; this is the responsibility of the Nigerian Stock Exchange. The beneficiaries of this research work are the government, industries and individuals would benefit from the capital market role on capital formation. It has been affirmed that economic development is particularly the result of capital formation.

Capital formation, as generally accepted, is the major determinant of economic development. On the other hand, the vehicle for which capital formation is the capital market, which is the institution on the Nigerian Stock Exchange.

This chapter will review some relevant literatures on the Nigerian Stock Exchange on capital formation.

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THE ROLE OF THE NIGERIAN STOCK EXCHANGE ON CAPITAL FORMATION ABSTRACT This study was carried out to determine the effect of stock market on capital formation in Nigeria. The report of the committee was published in and it recommended among other things: The factors responsible for this could be identified to include: What factors influence capital formation in the Nigerian economy? What is the role of Stock Exchange on capital formation in Nigeria 1.

To determine how the exchange could stimulate investment. REQUEST FOR PROJECT MATERIAL For the complete research material visit our CHECKOUT PAGE or fill the request form below: Leave a Reply Cancel reply Enter your comment here Please log in using one of these methods to post your comment: Email required Address never made public. LIKE OUR FACEBOOK PAGE.