This paper empirically examines the impact of the nigerian capital market on the nigerian economy looking at a 20 years period from 1992 to 2011. Webtv, theanalyst, proshare, personal finance, the nigerian capital market reports, money africa, the nigerian investor, making money in the nigerian capital market, investor relations service, proshare investment clubs, digitaltv, islamic finance, the market. Commission nsec is the government agency responsible for developing and regulating the nigeria capital market. Nigerian stock exchange all share index nse asi recorded a decline of 5% from 31,430. Pinches 14, added that, information available to the market must also be cheap and ascertainable.
Nigeria s other sectors like infrastructure, oil, gas, mining, and telecommunications. This study seeks to evaluate the contribution of capital market to the growth of nigerias economy. The securities and exchange commission sec is the main regulatory institution of the nigerian capital market. The research problem in recent times there has been a growing concern on the role of capital market in economic growth and thus the capital market has been the focus of economic policies and policy makers because of the perceived. Pdf capital market and performance of nigeria economy. The nigeria capital market has grown to being capable of providing facilities both to the private and public sectors to raise long term capital used in executing development programmes as well as finance the expansion and modernization of projects. The nigerian stock exchange nse is privately owned and selfregulating, but the sec maintains surveillance over it with the mandate of ensuring orderly and equitable dealings in securities, and protecting the market against.
Number and branches of banks in nigeria, 19801992 14 2. Impact of foreign direct investment on nigerian capital. This study examines the causal relationship between stock market performance and economic growth in nigeria for the period 1987 2014, using annual secondary data. The capital market in nigeria had been influenced by various factors which are associated with the level of development of the nigerian economy the paper. Webtv, theanalyst, proshare, personal finance, the nigerian capital market reports, money africa, the nigerian investor, making money in the nigerian capital market, investor relations service, proshare investment clubs, digitaltv, islamic finance, the market opening gong. Securities and exchange commission nigeria wikipedia. However, this contrasts with robinson 1952, who argued that financial markets. Wide consultation with a range of stakeholders was also critical for considering the implementation strategies for the report. Domestic macroeconomic highlights the year 2017, in many. Both private placement sources and organized market like securities exchange are included in it. Indeed, the nigerian capital market has helped promotes and facilitates the process of development in nigeria. Capital structure, capital raising, and capital alternatives financial structuring complex accounting and reporting issues ipos, 144a debt offerings, divestitures, and carve outs our capital market professionals sit at all corners of the globe so no matter where you need to access capital, we can help to make it happen. Hence, the significance of the nigerian capital market cannot be underestimated, and in this article, we are going to discuss some of the functions of the nigerian capital market that have helped makes nigerian economy a viable economy.
Capital markets, consumption, investment and economic growth. Nigeria is the 50thlargest export market for us goods and the 14thlargest exporter of goods to the us. A company that issues a round of stock or a new bond places it in the primary market for sale directly to. O 2009, improving the efficiency of the nigeria capital market in the countries okaro, s.
The programme, tagged finance act 2019, was held in. Impact of foreign direct investment on nigerian capital market development adaramola anthony olugbenga1 obisesan oluwaseun grace2 1,2department of banking and finance, faculty of management sciences, ekiti state university, ado ekiti, nigeria 1email. Nigerias other sectors like infrastructure, oil, gas, mining, and telecommunications. The capital market is roughly divided into a primary market and a secondary market. Capital market activities in nigeria can be said to have commenced in 1946 with the issuance of the first development stock of.
With the establishment of the central bank of nigeria in 1959 and the coming into existence of the lagos stock exchange in 1961 and subsequently, the nigeria stock exchange by an act in 1979, a sound foundation was laid for the operation of the nigerian capital market for trading in securities of long term nature needed for the financing of the. Capital market may 11th, 2020 stock investors gain n110bn as royal exchange leads johnson okafor there was an upswing in trading activities on the floor of. The nigerian capital market is still gaining depth and so that it was a bit risky for the banks to take the decision but they took the risk and the results are very positive. The buyingselling is undertaken by participants such as individuals and institutions. Capital market nigeria list of nigeria capital market companies. Contributions of the nigeria capital market towards. The study made use of secondary data which were sourced from central bank. The capital market in nigeria in historical perspective journal of. Percentage shares of oil and nonoil federal government revenue. Emerging capital markets all over the world have a history and nigeria is not in any way different.
The nigerian experience 63 drive the market price back to its intrinsic value. The decline was mainly related to activity in africa, where the total ecm activity dropped by 69% in terms of value and 46% in terms of volume compared to 2018, and where the johannesburg stock exchange jse, africas largest bourse, saw no capital raised via ipos. Economic growth is proxied by gross domestic product gdp while capital market performance is measured by market capitalization, total new issues, volume of transaction and listed equities. Though nigeria market capitalization fluctuated substantially in recent years, it tended to increase through 1996 2018 period ending at 31,520 million us dollars in 2018. Number of listed securities in nigeria 19801992 16 3. This study investigated the efficiency of the nigerian capital market from 1986 to 2009 through the random walk theory, the rate at which stock information is reflected in stock price and its impact on nigerias economic development. Despite the renewed activity in the primary equity market, the. Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. Again, the capital market was instrumental to the initial 25banks that were able to meet the minimum capital requirement of n25 billion during the banking sector consolidation in 2005. Capital markets help channelise surplus funds from savers to institutions which then invest them into productive use. The result reveals that there is a bidirectional causality between growth in capital market activities and economic growth in nigeria. The market is the long term end for financial market. It also comes with reference and data for your reference. It looks at initiatives that have been introduced in order to stimulate the market, develop it and restore investor confidence in the market in general.
The nigeria capital market is a critical part of the financial system which performs this allocative role. It is supervised by the federal ministry of finance. The chief executive officer of the nigerian stock exchange nse, mr. Our understanding has always been that the nigerian economy needs such a worldclass capital market that is fair and efficient to fully actualize its potential. C 2003 the nigeria stock exchange and challenge of economic growth and development in nigeria. The project work contain chapter one to five for free.
It is against this background that this paper considers the establishment and operation of the securities and exchange commission. A number of nigerian banks are investing in the nigerian stock market so that they can roll the money and can earn some good profit from the market the recently introduced minimum capital requirements for the bank have encouraged the banks to choose the stock markets. Capital market and economic growth in nigeria covenant. The first is the primary capital market, for new capital issues by firms and other institutions, including governments. Part of the terms of reference of this committee included the possibility of establishing a capital market in nigeria. List of capital market companies and services in nigeria. Historically, the nigeria stock market nse reached an all time high of 66371. Functions of federal mortgage bank of nigeria as we already stated above, the capital market plays a huge part in the economy of any country, and nigeria isnt an exception. This study on the development of the capital market institution in an emerging economy like nigeria seeks to examine not only how it came to be established but also how this institution has evolved. The concept market is one of the compartments of financial system that promotes harm and investment in an economy.
The stock exchange market is one of the key institutions of the capital market, a network or. Oscar onyema, has advised investors to exploit the opportunities of the current situation in the stock market and invest more. Nigeria is not left out in the desire to maximize the gains of the capital market to boost its economy. In addition, the study provides evidence from nigeria beyond anecdotal assertions on the relationship between accounting information and stock volatility. The effectiveness and growth of capital market in nigeria economy is a problem that has assumed of recent an intractable dimension. Annual time series data were obtained from the central bank of nigeria statistical bulletin and securities and exchange commission statistical bulletin for the. Stock market volatility and economic growth in nigeria 1980. The nigeria capital market has more influence in sectors of the economy than others. Nigerian capital market, external reserves, growth, country. In the capital market, banks are the major valuable assets for investors. In 2018, market capitalization for nigeria was 31,520 million us dollars.
How finance act will impact nigerias capital market. Market capitalization also known as market value is the share price times the number of shares outstanding. Pdf this paper examines how the nigerian capital market affects unemployment in nigeria with a view to identifying how the market has been able to. Phd department of banking and finance faculty of management sciences ekiti state university, ado ekiti, nigeria pmb 5363, ado ekiti, nigeria email. The paper concludes by pointing out some unresolved issues, undiscovered territory and the future of capital markets in africa. The capital market in nigeria in historical perspective. Capital market theory the development of the nigerian capital market has some other reasons too. Thus, the study posits that capital market is a strong driver of economic growth in nigeria for both public and private entities for medium and long.
It also conducts a comparative analysis of the movement of stocks and transactions traded in the nigerian capital market. Investors trade n99bn shares on nigerian bourse in two months. The number and branches of financial institutions increased significantly since its inception in. Overall ecm activity in 2019 declined in value and volume by 44% and 29% respectively, compared to 2018. The second is the secondary market, for the exchange of existing securities. As such, redressing these problems along the lines of the recommendations contained in this thesis would prove to be a crucial step. Sec urge workers to invest in capital market nigerian workers have been urged to invest in the nigerian capital market in a bid to create wealth and save towards. Similarities and differences in money and capital markets 157 84. A welloiled cm can significantly increase the rate of economic development. The article is a general overview of the nigerian capital market. Mr obayomi spoke at the capital market stakeholders symposium hosted by the nigerian stock exchange nse at the exchange in lagos.
The nsec purses its objectives by registering all market operators based on capital adequacy. The capital market is a highly specialized and organized financial market and indeed essential agent of economic growth and development because of its ability to facilitate and mobilize saving and investment. This was done because the capital market has been proven to be a hub and catalyst for economic. Capital market may 11th, 2020 stock investors gain n110bn as royal exchange leads johnson okafor there was an upswing in trading activities on the floor of the nigerian stock exchange on thursday. However, there are a number of large commercial players in the sector most of whom are located in southwestern nigeria, in close proximity to lagos and its large market of 17. The united states is the countrys largest foreign investor. Nigeria capital market operation and economic growth. It is a market that is regulated by the securities and exchange commission sec, which is the apex regulatory body of the nigerian capital market. Pdf this study conducts an empirical appraisal of the performance of the capital market in nigeria. The nigerian stock exchange powers the growth of africas largest economy and offers a comprehensive range of products which includes shares equities, exchange traded funds etfs and bonds, all of which can be bought and sold on the nse. The nigerian financial system central bank of nigeria. Venuelagos, nigeria preserving our success and enabling our potential through managing emerging risks.
The federal government domestic debt activities are presented in chapter five. Capital market is composed of those institutions and mechanisms with the help of which medium and long term funds are combined and made available to individuals, businesses and government. New rule on registration of fixed income existing securities major. Capital market performance and economic growth in nigeria. Pdf deepening the nigerian capital market anaba sylvester. Pdf impact of capital market on the economic growth in. It not only encouraged the individual investors but at the same time provided some good support to the growth of the nigerian capital market. The nigerian capital market represents a small but growing proportion of the nations economy. The structure of a global capital market has three components, as shown in figure 1. It provides a brief background of how the market has evolved over the years.
Accounting information and stock volatility in the nigerian. Pdf this paper examined capital market and performance of nigeria economy. The study investigated the impact of capital market on the economic growth in nigeria. The impact of capital market on economic growth of nigeria investigates the activities of the capital market in accelerating a stable economic growth in nigeria. Exploit the opportunities of bearish market nse boss. Few sectors in addition like consumer and industrial goods. Research objectives the research objectives are to. It is made up of the market and institutions, which facilitate the issuance and secondary trading of long term financial instruments. N 2008 nigeria, financial system, london longman pandey, i. The nigerian poultry sector is extremely fragmented with most of the chicken raised in backyards or on poultry farms with less than 1,000 birds. Percentage contributions of direct tax, indirect tax and nontax revenue to the total federal government revenue, 1961 1992 21 5. Get the latest capital market news on global market in nigeria and across the world, including daily news on equity capital market from guardian nigeria. Impact of capital market on economic growth of nigeria.
The historical evolution of the nigerian capital market. Camcan limited capital market association of nigeria camcan. The committee recommended, among others, the creation of facilities for dealing in shares, the establishment of rules regulating share transfer and measures for encouraging savings and issues of securities of government and. However, this contrasts with robinson 1952, who argued that financial markets are essentially hand maidens to domestic industry, and respond passively to other factors.
Central bank of nigeria financial markets department half. This project has coincided with the publication by the securities and exchange commission. The nigerian capital market is principally a market for longterm investments where corporate equities and longterm debt securities are issued and traded. Asset and fund managers that operate within the nigerian capital markets, as well as other persons who carry on investment and securities business in nigeria, must be licensed by the sec. Following the introduction of green bond frameworks in nigeria and kenya, and the launch of a market development programme by kenyas capital markets authority in 2018, corporate green bonds the proceeds of which are used to finance eligible projects aimed at reducing companies environmental footprint have since been issued in both.