CAPITAL MARKET, A TOOL FOR ECONOMIC GROWTH IN NIGERIA
ABSTRACT
The Project work studies capital market as a tool for economic growth in Nigeria and other countries. The method of data collection is the use secondary data from CBN statistical bulletin using the Multiple regression Analysis. The Major Findings of the research work is to find out the Impact of the Capital Market on the Nigerian economy. The results shows that Capital Market has Contributed Positively towards Economic Growth in Nigeria.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The capital market is a highly specialized and organized financial market and indeed essential agent for economic growth because of its ability to facilitate and mobilize savings and investment. To a great extent, the positive relationship between capital accumulation and real economic growths has long affirmed in economic theories (Anyanwu, 1993), Success in capital accumulation and mobilization for development varies among nations but it is largely dependent on domestic savings and inflow of foreign capital. Therefore, to arrest the menace of the current economic downturn, effort must be geared towards effective resources mobilization. It is in realization of this that consideration is given to measure for the development of capital market as an institution for the mobilization of finance from the surplus sectors to the deficit sectors.
The development of capital market in Nigeria, as in other developing countries has been induced by the government. However, prior to the establishment of stock market in Nigeria, there existed some less formal market arrangements for the operation of capital market. It was not prominent until the visit of Mr. J. B. Lobynesion in 1959, on the invitation of the Federal government, to advice on the role the Central Bank could play in the development of local money and capital market. As a follow-up to this, the government commissioned and set up the Barback Committee to study and make recommendations on the ways and means of establishing a stock market in Nigeria as a formal capital market. Acting on the recommendation of the committee, the Lagos Stock Exchange (as it was called then) was set-up in March 1960, and in September 1961, it was incorporated under Section 2 cap 37,through the collaborative effort of Central Bank of Nigeria, the Business Community and Industrial Development Bank (Alile&Anao, 1990). 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 securities of long term nature needed for the financing of the industrial sector and the economy at large. After the incorporation of the Lagos Stock Exchange, it was granted further protection under the law and its activities was placed under some sort of control by the government, hence the passing of the Lagos Stock Exchange Act. However, the Lagos Stock Exchange was only operational in Lagos. By the mid 70’s, the need for an efficient financial system for the whole nation was emphasized, and a review by the government of the operations of the Lagos Stock Exchange market was advocated.
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