An Impact Assessment Of The Capital Market To Economic Growth: A Study Of The Nigerian Stock Exchange [NSE]

The Nigerian Stock Exchange

The capital market is the aspect of the financial system which mobilizes and channels long-term funds for economic development. The capital market embraces trading in both new issues (primary) and old issues of stocks (secondary). Securities are primarily of two types: debt and equity. The types of debt securities available on the Nigerian Stock Exchange (NSE) include Federal Government Development Stock (GDS), Industrial Loans, Preference, Stocks, Bonds etc, while equity securities mainly concern ordinary stocks which impose higher liabilities on the holders. Portfolio investment in the capital market deals with an institutional arrangement involving Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), the operators and the investors.

Effective developments of the capital market are necessary for the following reasons;

The mobilization of savings from surplus economic units for channeling into national economic growth and development, the broadening of the ownership base of assets and thus, the creation of a healthy private sector through the empowerment of asset ownership. The promotion of rapid capital formation and real investment culture as against hot, short-term portfolio adjustments, the encouragement of a more efficient allocation of tangible wealth through changes in ownership and composition.


Capital market activities in Nigeria commenced with the establishment of the Lagos State Exchange in 1960, which was backed by law in 1961. The Lagos Stock Exchange was renamed the Nigerian Stock Exchange (NSE) in 1977, it began with nine (9) trading floors, located in Lagos established in 1961; Kaduna (1978); Port Harcourt (1980); Onitsha (1990); Ibadan (1990); Abuja (1999); Yola (2002) and Benin (2005). The Exchange started operations in Lagos in 1961 with 19 securities listed for trading. The NSE currently has 27b listed Securities Comprising 17 Government Stock, 50 Industrial Loans (Debentures/Preference) Stocks and 209 Equity/Ordinary Shares of Companies, with a total market capitalization of N2.23 trillion. The Nigerian capital market has grown tremendously since the establishment of the Nigerian Stock Exchange (formerly the Lagos Stock Exchange) in 1961.


The capital market is a collection of financial institutions set up for the granting of medium and long-term loans. It is a market for government securities and corporate bonds. In sum, the capital market is a market for mobilization and utilization of long-term funds for economic development as the key aspiration of sovereign nations. The capital market comprises three sub-markets the new issues (primary) market, the secondary market, and derivatives market. The instruments traded in the capital market can be raised in an organized market like the stock exchange. Whenever there are buyers and sellers of these instruments willing to do business, new issue (primary) market takes place while secondary market or the stock exchange functions when shareholders of existing securities want to sell these securities. The derivatives market is the trading on the securities providing payoffs that depend on or are contingent on the values of other assets.

With reference to Nigeria, the players in the capital market include the Nigerian Stock-Exchange, Discount Houses, Development Banks, Investment Banks, Building Societies, Stock-Broking Firms, Insurance, and Pension Organizations, quoted companies, the government, individuals and the Securities and Exchange Commission. The capital market provides simultaneously the divergent preferences for portfolio managers and financial institutions and those savers through long-term fund mobilization for corporate investors (portfolio managers) and financial institutions while creating mechanisms for savers to invest when the occasion arises without disrupting the running of the firm, which their savings had earlier financed. Central to the Nigeria Capital Market (NCM) in the Nigerian Stock Exchange. The establishment of the Lagos Stock Exchange, But it became operational a year later. This exchange was later given a national status by renaming it Nigerian Stock Exchange in 1977 following the recommendation of the government financial review committee of 1976. The Nigerian Stock Exchange is subordinate to the Securities and Exchange Commission who acts as the regulating body of the Capital Market.


As indicated earlier, the Nigerian Stock Exchange (NSE) evolved from the Lagos Stock Exchange (LSE). It has since 1977 increased its trading floors to nine (9), namely Lagos established in 1961; Kaduna (1978), Port Harcourt (1980), Kano (1989), Onitsha (1990), Ibadan (1990), Abuja (1999), Yola (2002) and Benin (2005). The Exchange started operations in Lagos in 1961 with 19 securities listed for trading. The NSE currently has 276 listed securities, comprising 17 government stocks, 50 industrial loans (Debentures/preference) stocks and 209 equity/ordinary shares of companies, with a total market capitalization of N2.23 trillion. Some of the listed companies have foreign/multinational affiliations and represent various sectors, ranging from agriculture through manufacturing to services. Also in recognition of the crucial role of small and medium scale enterprises in the overall industrial development of the country, the NSE introduced the Second-Tier Security Market (SSM) for the listing of small and medium scale enterprises that are unable to meet the stringent requirements of the main market.

The Nigerian Stock Exchange
The Nigerian Stock Exchange

The exchange maintains an All-Share Index formulated in January 1984 (1984 = 100). Only common stocks (ordinary shares) are included in the computation of the index. The index is value – weighed and is computed daily. Clearing, settlement, and delivery of transactions on the exchange are done electronically by the central securities clearing system limited (CSCS), a subsidiary of the Stock Exchange. The CSCS Ltd (“the Clearing House”) was incorporated in 1992 as a part of the efforts to make the Nigerian Stock Market more efficient and investor-friendly. Apart from main services, the CSCS Ltd offers custodian services.

Since 1993 when the Nigerian capital market was deregulated, prices of new issues were determined by issuing houses/stockbrokers in the primary market, while only stockbrokers determine prices on the secondary market.

On March 1, 2000, the NSE launched and commenced operation on its Trade Guarantee Fund (TGF) scheme, aimed at arresting the risk of failed trade that may arise from the inability of a stockbroker to cover his/her purchase. In addition, the Exchange Commenced settlement cycles in 2000 and launched its e-Business platform/internet portal in July 2002. These reforms were aimed at improving the efficiency of the Nigerian capital market and encouraging greater foreign capital inflow into the economy. The NSE made remarkable progress in the internationalization of the market in 1999 with the cross-border listing of “M-net/Supersports” on the exchange. The company was also concurrently listed on the Johannesburg Stock Exchange (JSE). In furtherance of its efforts at internationalization of the capital market, the Exchange signed memoranda of understanding (MOU) with the Ghana Stock Exchange and the Nairobi Stock Exchange to facilitate the cross-border listing of securities. A Nigerian company, Oando Plc was granted secondary listing on the JSE Securities and Exchange of South Africa in 2005. The listing widens the corporate financing options for Nigerian companies with the potential of reducing the domestic cost of capital.

The (NSE) Nigerian Stock Exchange/Central Securities Clearing System (CSCS), Trade Alert was launched in March 2005 to further secure the market against unethical conducts, especially unauthorized sale of client’s shares. The device also functions as a medium for communicating market-related information to subscribers. These developments have enhanced market liquidity; offered opportunities for price recovery; improved market efficiency in service delivery, and above all resulted in unprecedented growth in both the new issues and secondary markets.

The NSE operates two markets as follows:

The Primary Market

This is the market for new issues of securities. The mode of an offer for the securities traded in this market includes the offer for subscription, rights issue, offers for sale and private placements. The fund raised through this primary segment of the capital market goes to companies as equity capital. Following CBN’s directive to the bank’s on recapitalization; the tempo of activities in the new issues market was very high in 2005, as many banks approached the stock market to raise additional funds. Consequently, the exchange considered and approved 57 applications for new issues, valued at N552.8 billion in that year, compared with 37 applications valued at N235.50 billion in 2004. Analysis of the approvals in 2005 indicated that the sum of N305.22 billion was raised through offers for subscription supplementary issues amounted to N11.20 billion, rights issues stood at N50.14 billion; while N39.28 billion, N6.94 billion and N140 billion were from private placements, debt stocks and FGN (bond in 7-series), respectively. Two (2) offers for sale involving 280.0 million ordinary shares worth N1.11 billion and two (2) unit trusts valued at N1.75 billion were also approved during the year. In addition, five merger applications valued at N95.5 billion were approved and concluded during the year.

The Secondary Market

This is the market for trading in existing securities. It consists of the stock exchange and over-the-counter markets. Money raised through this segment of the market goes to the investors. Activities in the secondary market have increased substantially over the years. This has been facilitated by the opening of trading floors in other parts of the country by the NSE.

Transactions in the secondary market were vibrant in 2005 as the market witnessed substantial growth in turnover. This development followed the automation of processes, increased local awareness of opportunities on the Nigerian Stock Exchange as well as the continued effort of internationalization of the market. The volume of transactions rose by 10.0 percent from 19.2 billion in 2004 to 26.7 billion shares, while the value stood at N262.9 billion, up by 16.4 percent from N225.8 billion in 2004. Transactions in equities accounted for N254.7 billion or 96.9 percent turnover value. The Federal Government Development Stock sub-sector recorded a turnover of N7.3 billion, compared with N300 million in 2004, while the State Government Bonds and the Industrial Loans/Preference Stocks sub-sectors recorded turnover of N728.0 million and N165.0 million respectively.


The Nigerian capital market consists of the following institutions: Securities and Exchange Commission (SEC) – the apex regulator, Nigerian Stock Exchange (NSE); Abuja Commodity Exchange (ACE); Stock Broking Firms, Issuing Houses, Investment and Securities Tribunal (IST); as well as the registers. There are two main segments of the market, namely, primary and secondary markets. The major instruments used to raise funds at the Nigerian capital market included: equities (ordinary shares and preference shares); government bonds (federal States and Local Government) and Industrial Loans or Debenture Stocks and Loans.


The function of the stock exchange includes the following:

i. To facilitate the purchase and sale of securities, thereby reducing the risk of liquidity.

ii. To act as a channel for indigenization decree, by providing facilities to foreign business to offer the shares to the Nigerian public for subscriptions.

iii. The stock exchange market provides the opportunity for raising new capital and also serves as a central meeting place for members to buy and sell existing stocks.

iv. It provides machinery for mobilizing private and public savings and making them available for productive investment through stocks and shares.

v. The market also serves as a vehicle for broadening the ownership base of companies. It is a measure of confidence in the economy and provides an indicator for the level of economic activities.

In the words of Bakare (2000), the stock exchange market provides a place or an arrangement where funds can be raised by government and companies, which enables them to produce goods and services that people need.

According to Magaji (2005), the following are the functions of the stock exchange:

i. To provide facilities for companies and government to raise funds for business expansion, increase its capital base and development projects, through investors who own shares in corporations, for the ultimate benefit of the economy.

ii. The stock exchange serves as an allocator of funds from surplus sector to the deficit sector. Prices of securities are determined by the market forces of demand and supply. The stock exchange has been recognized as an efficient processor of buy and sells orders. In performing these functions, the exchange provides the intermediary mechanism whereby, buyers and sellers of securities are brought together.

The Nigerian Stock Exchange expanded its Branch Network; the exchange now has 13 branches across Nigeria other than its world-class trading floor in Lagos. These are Abuja, Kaduna, Port-Harcourt, Kano, Onitsha, Ibadan, Yola, Benin, Uyo, Ilorin, Abeokuta, Owerri, and Bauchi.

The Exchange commissioned the Owerri Branch and its electronic trading floor on Friday, February 6, 2009, then on Thursday, March 19, 2009, the Bauchi Branch and its electronic trading floor were commissioned.


The Nigerian Stock Exchange provides quoted companies and government tale, levels, a more effective way of financing various projects. For example, the internationalization of the capital market by daily beaming worldwide via link-up of the stock exchange computer to the renter’s international communication network of the names of shares prices and other financial information of all quoted companies on the exchange. This encourages the foreign inflow of capital via inquiries (Alile, 1992).

There are many advantages that accrue to state and local governments that patronize the market as experience has shown that internally generated revenues and statutory allocation are not sufficient to finance recurrent and capital expenditures. And as such the following ensures:

i. More capital projects can be completed, as more resources are available for government capital expenditures;

ii. There will be better accountability for use of funds as financial report must be produced regularly on projects funded by the capital market.

iii. The tendency to spend money on white “elephant project” will be curtailed as only economically viable projects would be financed by the capital market.

iv. Raising fund from the capital market releases government subvention for social projects.


With respect to the government, the stock exchange provides the mechanism for capital mobilization which when invested into productive ventures will help to achieve the macroeconomic objectives of the country. The capital market constitutes the most important institution for substantial capital formation targeted towards economic development and multiplication of the ownership base of companies.

Regrettably, the Nigerian capital market as a veritable institution for capital formation and mobilization is still in its infancy when assessed in comparison with capital markets in developed countries (Akujuobi, 2005). This suggests that there exists the need for an accelerated development of the market.

The development of the Nigerian capital market dates back to 1946 when the first sets of Government Securities were floated. However, the institutional framework for the operation was completely absent and non-existed. It was to take another 15 years before these features will be put in place. This led to the establishment of the Lagos Stock Exchange (LSE). At its inception in 1961, the Exchange had a listing of 6 Government loan stocks and 3 equalities.

Central to the Nigerian capital market is the Nigerian Stock Exchange, while the Securities and Exchange Commission (SEC) acts as the apex regulatory body. The Nigerian Stock Exchange provides the mechanism for mobilizing both private and public savings and makes some available for corporate investment.

It should be mentioned that activities during the first ten years of the Stock Exchange were dull. By the end of 1971, just a paltry, 14 companies were listed whereas securities transaction by volume stood at 952, the value of this was N18.1m with respect to the value government securities dominated the market and this amounted to 90.1 percent of the total while industrial stocks accounted for 78.6 percent of trading volume. The situation changed somehow for the better. As at October 2001, the total number of securities listed on the Nigeria Stock Exchange was over 270 with the total market capitalization of more than $6 billion (1$ = N115). This market capitalization was a paltry 18 percent of the country’s Gross Domestic Product (GDP) which stood at $33 billion then.

Since June 2, 1987, the Exchange has been connected to the Reuters Electronic Contributor System for International on-line dissemination of market information. As if that was not enough the NSE instituted the internet system (CAPNET) as one of the required new technology infrastructures to enhance the challenges of internationalization and improved service delivery (Aborode, 2005). Nwezeaku (2007) has it that the high point of the NSE growth and development came in 1997 (April, 14) when its operations employed a computerized system known as the Central Securities Clearing Settlements (CSCS) depository and custodian system. According to him has drastically reduced trading and settlement period to T+3 – that is settlement and delivery of traded securities within 3days. He maintained that as a further step to internationalize the exchange, the manual call-over was replaced by the Automatic Trading System (ATS) on April 27, 1999.

Through the NSE, the Nigerian Capital Market plays a lot of roles. But, paramount among these roles is capital formation. This emphasis is hinged on the fact the economic growth and development are widely welcomed as a major national policy thrust of any country.

Before now, Nigeria has depended on international finance to complement her lean domestic capital in financing her projects for economic growth and development. She has also resorted to borrowing from banks domicile here; funds have also been mobilized through the instrument of insurance, and finally, the Stock Exchange has contributed its own quota to Capital Formation for Economic Growth and Development. The Capital Market has structures for the mobilization of savings from various surplus economic units. These savings are needed for investment purposes and consequently economic growth and development. However, Nzotta (2004) posits that this mobilization involves supplying of public and private savings into new issues through the issues of new securities.

Statistical Summary of Market Performance in 2009



% Change

Market Capitalization

N9.56 trillion

N7.03 trillion


The NSE All-Share Index




The NSE 30 Index




The NSE Food Beverage Index




The NSE Banking Index




The NSE Insurance Index




The NSE Oil/Gas Index




Total Turnover Volume

193.14bn Shares

102.85 bn Shares


Total Turnover Value

N2.4 trillion



Average-Daily Volume

775.65million units

414.73 million units


Average Daily Turnover




New Issues Approved

N2.6 trillion



Number of listed companies




Number of listed securities




Statistical Summary of Market Performance in U.S. Dollars



Market Capitalization

$80.6 billion

$47.75 billion

Total Turnover Value

$20.1 billion

$4.7 billion

Average Daily Turnover

$80.5 million

$18.8 million

Average Exchange Rate of N147.16

Source: The Nigerian Stock Exchange: A review of market performance in 2009 and the outlook by Professor Ndi Okereke – Onyinke Ph.D. OONFO – 2010.

Advantages of Nigerian Stock Market to the Nigerian Economy

The Nigerian Stock Exchange benefits the Nigerian economy the same way the London Stock Exchange adds value to the British economy.

The NSE is an institution which helps businesses raise funds for growth or expansions within their domestic, regional or international market. A strong NSE means Nigerian companies have access to capital they will need to become regional powerhouses or true multinationals.

In addition, Nigeria companies pay tax on their worldwide income. So the richer these companies get, the more revenue in tax is available to the government to spend on schools, roads or other public services.

Market Infrastructure Development and Innovations

The Automated Trading System

In 1997, the Nigerian Stock Exchange faced a great challenge of the ever-growing volume of transactions on one hand and ensuring transparency in the transactions on the other. The need for an efficient marketplace where price is effective and transparent became of increasing concern. The all-over system had by then been overstretched there was a need for an immediate transformation of the system and as a result, the Automated Trading System (ATS) was introduced.

The ATS is one of the most astounding innovations. In the securities market in Nigeria, it works on the queuing system where all brokers have equal access to information available for purchase or sale of securities.

The Central Securities Clearing System (CSCS)

To achieve the gains of the ATS, the Nigerian Stock Exchange commissioned the CSCS in 1997 as a subsidiary. It commenced full operations on 14th April 1999; the CSCS was conceived as a primary settlement arena for the achievement of the T+3 settlement cycle. It is interfaced with the ATS and automatically receives data relating to trades as they occur for settlement.

On-Line Trading

The advent of the ATS created a greater challenge to the NSE. Initially, there was the need to harmonize securities trading nationwide.

This led to the linkage of some branches of the exchange that had large daily transactions to the central server at the Customs House, Lagos, The Abuja, Kano, Yola and Port Harcourt branches are currently fully integrated to the main trading platform.

Code of Conduct for Capital Market Operators

The code is an important document for maintaining sanity in the market. It stipulates the professional conduct expected from operators in the Nigerian capital market.

The Trade Alert

In late 2004, the NSE proposed the introduction of the Trade Alert as a means of protecting the securities market against ever-increasing threats from fraudsters. It became effective in the first quarter of 2005. The Trade Alert has been commended and sanctioned by the Securities and Exchange Commission as an encouraging effort towards creating a transparent marketplace. This device is a novelty as the NSE is the first to introduce it as a checking device. The Trade Alert, when subscribed to by an investor, sends a notice to the investor’s mobile phone indicating elaborately all transactions taking place in his account at the CSCS. The objective of the trade alert, among others, is stopping unauthorized trades before they happen.


It is a truism that many authors have written extensively on the Nigerian Capital Market as it relates to Economic Growth and Development. A few of these are sampled here. Analike (2007) draws the link between Capital Market Regulation and Economic Growth and Development; in his words “Good Regulation of Capital Market operations leads to profitability, growth, and expansion which will lead to more employment with more employment opportunities, the likelihood of improved standards of living becomes certain”. All the reasons he gave for regulating the market are all “incentives” for economic growth and development.

The “wealth effect” is seen as another predictive ability of the Stock Market. Pearce (1983) maintains that the economy of any nation can be predicted from the Stock Market since fluctuations in stock prices have a direct impact on aggregate spending. This results in a chain reaction; when the stock market is improving; investors are wealthier and tend to spend more. Consequent upon this, the economy improves. The converse is also true. However, critics refute this claim pointing out that sometimes, the Stock Market generates “false signals” about the economy.

In a bid to evaluate the idea that Stock Market leads top Economic activity, Comincioli and Wesleyan (1996) employed the formal tests of causality formulated by Granger (1969). They used the US data from 1970-1994 as a case study. Among other things, the study showed a “causal” relationship between the Capital Market and the Economy. Adding weight to the school of thought that holds that the Capital Markets’ activity and growth have been relatively limited, Osaze (1991) asserts that in the case of less developing nations, the Capital Market may not be a reliable Economic “touchstone” since a large proportion of the nation’s wealth is not held in the market. Contributing to the issue of Capital Market activities and Economic Growth and Development, Alile and Anao (1983) held that various factors affect share prices. They enumerated the factors to include-forces of demand and supply, changes in dividend payout practices and changes in top management of a company, amount of funds available from public savings, the expected level of earnings of a firm and lastly Government fiscal policies. As pointed out earlier, much literature is replete with issues on Capital Market performance on the Nigerian Economy. Overall, the results of these studies are mixed.

While several studies revealed that the Stock Market activities lead Economic activities, others blatantly refute these findings. On the strength of the inconclusive nature of these research findings, this research will further explore the performance of the Nigerian Capital Market in promoting Economic growth and development of Nigeria during the period under review. Coupled with this, it will also examine the effect performance indicators of the Capital Market as a whole and individually on the economic growth of Nigeria. This paper will attempt to fill this gap.


In this study, we intend to investigate empirically “The Impact of Capital Market on the Nigerian Economy”, a case study of the Nigeria Stock Exchange. The study establishes a relationship between Gross Domestic Product and some capital market indicators. This term paper will use secondary data. The secondary data was based on the Central Bank of Nigeria (CBN) Statistical Bulletin and National Bureau of Statistics (NBS) Publication. The technique used in estimating the parameters of the specified model is the Ordinary Least Squares (OLS) estimation method.

Model Specification

To study the impact of the capital market on the Nigerian economy, important capital market variables were considered in the model. The data were analyzed using multiple linear regression models of the form:

GDP = β + β1LSC + β2VIN + β3LSS + β4MTR + β5NIS + µ ………… (i)


GDP = Gross Domestic Product as a proxy to the economic growth

LSC = Number of listed companies

VIN = Volume of Shares Traded

LSS = Number of listed security

MTR = Market turnover

NIS = New Issues

β = Intercept

β1 = Slopes of the parameter estimates

µ = Stochastic error term

The estimated regression model is given as follows;

GDP = 45763000 – 57405.21LSC + 470.2112VIN – 124680.0LSS – 4.208497MTR + 17.10372NIS

S.E = (25966600) (231322.2) (194.0652) (189787.6) (14.92128) (7.317971)

t = (1.762376) (-0.248161) (2.422954) (-0.656945) (-0.282047) (2.337222)

R2 = 0.85 Adjusted R2 = 0.76

F = 10.08175 D.W (d) = 2.56007


The slope parameter of the explanatory variables (LSC, VIN, LSS, MTR, NIS) was found to be statistically insignificant. This is based on the decision rule which states that when the probability value (p) associated with a parameter is greater than 0.005 (i.e., p>0.005), the parameter is said to be statistically insignificant otherwise it is statistically significant. From the regression result obtained, we observed that the probability (p) values of the explanatory variables were greater than 0.005 probability value. Thus, indicating that the explanatory variables of the estimated models had an insignificant impact on the country’s GDP.

Thus, we can reject the null hypothesis (H) and conclude that the capital market has a significant impact on the Nigerian economy.


The Nigerian capital market today faces enormous challenges in providing development capital for an economy that has lately taken-off. Recent robust economic growth, spurred by extensive reforms, will require increased long-term funds to sustain it and the capital market is expected to rise to the occasion and mobilize the needed capital. In particular, the on-going consideration in various sector of the economy (banking, insurance, aviation etc) will require more recourse to the market for funding. Also, the massive re-tooling needed to refurbish the ailing manufacturing sector, emergence of commercial forms continuing explosion of the telecom sector and massive rebuilding of economic infrastructure through PPP will all required funding which will exert enormous pressure on the capital market. There is also the need to promote the listing of the small and medium enterprises on the market, to make them grow and acquire best practices. The cost and not the least of the challenges is to further internationalize the capital market to promote the inflow of foreign capital and encourage the listing of Nigerian firms on foreign stock exchanges.

In spite of these enormous opportunities, the capital market in Nigeria has performed below its potentials, owing to a number of factors. These included the low level of awareness on the operations of the market, poor dissemination of information stocks, the high cost of operations, stringent regulatory, tax disclosure requirements and the relative uncertainty of yields on stocks. These are problems the Nigerian capital market must overcome in order to become a market to reckon with in the 21st century.


i. There is need to open up the capital market and promote the free flow of information in its operations as it is the case in other countries.

ii. The regulatory and supervisory framework of SEC should be strengthened so that it will have the capacity to review regularly the reports of listed companies and disseminate its view on same to the investing public. This will involve training personnel to enforce financial regulations, perform market surveillance, analytical and investigate assignments. To generate confidence, reduce investment risks and attract investors to the market.

iii. Firms listed on the NSE should publish quarterly, half-yearly and annual reports on their operations, with detailed explanations on the divers of the performance.

iv. He markets infrastructural, especially information and technology facilities should be upgraded to enable it to capture massive data on the operations of the market and disseminate same to all stakeholders.

v. Value of issues, in the period under review, has a positive effect on the Economic Growth of Nigeria, though not significant.

vi. The pursuit of privatization through the Nigerian Stock Exchange should be greatly encouraged. Not only will this deepen the market, it will help Nigerians to imbibe the culture of investing in the Capital Market. With an estimated 3 million shareholders, less than 3% of Nigerians participate in the Stock Market activities. This is a far cry when compared with America, Britain, Japan, Germany and France where the proportion is put at 50%, 25%, 24%, 20% and 20% respectively.

vii. The relevant capital market authorities should expedite action to introduce new Capital Market instruments including warrants and options to take care of varying attitude to risks of various investors.

viii. In keeping fate with their market development mandate, SEC and NSE should engage in intensive campaigns to educate prospective investors on the beneficial effects of going to the Stock Market. This campaign should not just be restricted to the cities.

ix. The Federal Government of Nigeria should revive its development loan stocks while more State Governments should be encouraged to source capital from the Capital Market through revenue bonds and judiciously use this fund so as to impact on the Economy.

x. Finally, the SEC and NSE should consummate their intention to substantially reduce the Stock Exchange transaction cost.


  • Aborode, R. (2005) “Strategic Financial Management”, Lagos, El-toda Ventures Limited.
  • Akamiokhor, G.A. (1990), “The Nigerian Capital Market and the Regulatory Environment Text of Seminar Paper Presented at the National Seminar on Finance, Abeokuta, 1990.
  • Akujuobi, A.B.C. and Akujuobi, L.E. (2007), The Nigerian Capital Market and Economic Development – A Prediction Model. Nigeria Journal of Economic and Financial Research, Vol. 1, No. 3, July, pp. 16-29.
  • Analike, C.E. (2007), “Impact of Capital Market Regulation on Nigerian Economy”, A Paper Presented on Course BAF 503 (Management Finance) May, pg. 2.
  • Aryeetey, E. (1994), “Financial Integration and Development in Sub-Saharan Africa. A Study of Informal Finance in Ghana”. Working paper 78, Overseas Development Institute, London, Processed.
  • Fama, E.F., and French, K. R. (1993), “Common risk factors in the Returns on Stock and Bonds”, Journal of Financial Economics 33(1), 3-31.
  • Feldman, R.A. and S. Kumar (1995) Emerging Equity Markets. Growth, Benefits and Policy Concerns”. The World Bank Research Observer, Vol. 2, August 1995, pp. 181-200.
  • IMF (1996), “Role of Stock Markets in Economic Growth”, Business Times, June 24, 1996, pg. 19.
  • Levy, B. (1992) “Obstacles to Developing Small and Medium-Sized Enterprises: An Empirical Assessment” The World Bank Economic Review, 7(1): 68 – 83.
  • Liedholm, C. (1991) “Dynamics of Small-and-Macro-Scale Enterprises and Evolving Role of Finance” GEMINI Working Paper, 26. U.S. Agency for International Development, Washington, D.C. Processed.
  • Nwezeaku, N.C. (2007), “Theories and Practice of Financial Management”, Owerri, Springfield, Publishers Ltd.
  • Onwumere, J.U.J. and Modebe, N.J. (2007), The Capital Market and Nigeria’s Quest for Economic Self-Reliance. Nigeria Journal of Economic and Financial Research, Vol. 1, No. 3, July, pp. 1-15.
  • Parker, Rolland L.; Randall, Riopelle; and William, F. Steel (1995), Small Enterprises Adjusting to Liberalization in Five African Countries. World Bank Discussion Paper, 271. Washington, D.C. World Bank.
  • Steel, W.F. and Leila M. Webster (1992) “How Small Enterprises in Ghana have responded to Adjustment” The World Bank Economic Review 6(3): 423-38.
READ:  Globalization And The Challenges Of National Development: The Case Of Post Debt Relief In Nigeria

Leave a Reply

Notify of

Question Categories