ProjectClue.com We're Ready, Call Us

(+234) 07030248044

Project Topic:

THE ROLE OF CAPITAL MARKET IN PROMOTING ECONOMIC GROWTH IN NIGERIA (A CASE STUDY OF NIGERIAN STOCK EXCHANGE, BENUE STATE)

Project Information:

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 115 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   35 people found this useful

Project Department:

ECONOMICS UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

In the last two decades, studies on the capital market have received considerable attention from contemporary finance and economics literature resulting from its role in the provision of long-term, non-debt financial capital which enables companies to avoid over-reliance on debt financing, thus improving corporate debt-to-equity ratio and also in the mobilization of resources for national growth. According to Ndako (2010), the capital market is viewed as a complex institution imbued with inherent mechanism through which long-term funds of the major sectors of the economy comprising households, firms, and government are mobilized, harnessed and made available to various sectors of the economy. For sustainable economic growth, funds must be effectively mobilized and allocated to enable businesses and the economies harness their human, material, and management resources for optimal output. Hence, the capital market is an economic institution, which promotes efficiency in capital formation and allocation. The capital market contributes to economic growth through the specific services it performs either directly or indirectly. Notable among the functions of the capital market are mobilization of savings, creation of liquidity, risk diversification, improved dissemination and acquisition of information, and enhanced incentive for corporate control. Improving the efficiency and effectiveness of these functions, through prompt delivery of their services can augment the rate of economic growth (Okereke-Onyiuke, 2012; Levine and Servos, 2012; Obadan, 1995; McKinnon, 2014). The importance of the capital market as an efficient channel of financial intermediation has been well recognized by the researchers, academicians, and policy makers as a primary determinant of the economic growth of a country, both developed and developing. Economic growth in a modern economy hinges on an efficient financial sector that pools domestic savings and mobilizes foreign capital for productive investments. Underdeveloped or poorly functioning capital markets typically are illiquid and expensive which deters foreign investors. Furthermore, illiquid and high transactions costs also hinder the capital raising efforts of lager domestic enterprises and may push them to foreign markets (Mishra, et al., 2010). Theoretical literature on financial development and growth identifies three fundamental channels through which capital markets and economic growth may be linked (Pagano, 2015). First, capital market development increases the proportion of savings that is funnelled to investments. Second, capital market development may change the savings rate and hence, affect investments. Third, capital market development increases the efficiency of capital allocation. According to Riman, et al., (2008), the Nigerian capital market has witnessed obvious transformation over the years, evident by the increased level of participation of the private and public investors at the floor of the stock exchange and in various public offers of quoted companies. The emerging market has also attracted and embraced the attention and the interest of international investors, thus increasing capital inflow. For example, the overall market capitalisation had risen from 1,698.1 million naira in 1980 to 7030.8 billion naira in 2009, thus signifying an increase within the period. Transaction at the floor of NSE has risen to a total of 685716.2 million naira in 2009 from a previous value of 16.6m recorded in 1970. The number of deals from all market participants at the floor which recorded a mere 634 deals in 1970 had also witnessed a remarkable increase to 1739365 million naira in 2009. The total number of listed companies had also increased from 91 as was listed in 1980 to 213 listed in 2008 (CBN, 2009). Following from this therefore, efficiently functioning capital market affects liquidity, acquisition of information about firms, risk diversification, savings mobilization and corporate control (Anyanwu, 1998). Hence, by altering the quality of these services, the functioning of stock markets can alter the rate of economic growth (Equakun, 2014).

1.2 STATEMENT OF PROBLEM

For a country to attain a sustainable economic growth and development, it requires both local and foreign capitals made available by the opportunities provided by the capital market (Ekundayo, 2002). However, non-availability of long-term funds for investment financing has constituted a barrier to the development and growth of most African countries, particularly in many developing countries such as Nigeria, wherein capital has become a major constraint to economic development. Despite the significant financial reforms experienced in the financial sector over the years, there has been an underdevelopment of the real sector as a result of lack of funds from the financial sector (Oluwole, 2014). 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. However, how these reforms have influenced economic growth over the years still remains unexplored by previous studies. Any economy that is financially underdeveloped is usually characterized by under-employment of resources. Zuvekas (1978) puts it that development is a progress towards the reduction of the incidence of poverty, unemployment and income inequalities (cited in Oluwole, 2014) but these incidences are still evident in the Nigerian economy. It is with this backdrop that this research study is undertaken to examine the role of capital market on economic growth in Nigeria.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the role of capital market in promoting economic growth in Nigeria. Other general objectives of the study are:

  1. To examine the operations of the Nigerian capital market.
  2. To determine to what extent the capital market has contributed to economic growth of Nigeria.
  3. To examine the impact of capital market on the economic growth of Nigeria.
  4. To examine the role of capital market on economic growth of Nigeria.
  5. To examine the relationship between capital market and economic growth of Nigeria.
  6. To examine whether capital market enhance and promote investment in Nigerian economy.
  7. To make recommendations as to how the operations of the market could be improve to boost economic growth and development of Nigeria.

1.4 RESEARCH QUESTIONS

  1. How does the Nigerian capital market operate?
  2. To what extent has the capital market contributed to economic growth of Nigeria?
  3. What are the impacts of capital market on the economic growth of Nigeria?
  4. What are the roles of capital market on economic growth of Nigeria?
  5. What is the relationship between capital market and economic growth of Nigeria?
  6. How does the capital market enhance and promote investment in Nigerian economy?
  7. Can the operations of the market be improved to boost economic growth and development of Nigeria?

1.5 RESEARCH HYPOTHESES

H01: There is no significant impact of capital market on the economic growth of Nigeria.

H02: There is no significant relationship between capital market and economic growth of Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

The study will explore the impact or effectiveness of capital market instruments on Nigerian economic growth. Though the scope of study will be limited to the capital market, it is hoped that the exploration of this market will provide a broad view of the operations of the capital market. It will contribute to existing literature on the subject matter by investigating empirically the role, which the capital market plays in the economic growth and development of the country. The main importance of this study is that it will provide policy recommendations to policy-makers on ways to improve operations and activities of the capital market.

1.7    SCOPE OF THE STUDY 

 

The study is based on the role of capital market in promoting economic growth in Nigeria, a case study of Nigerian stock Exchange, Benue state.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Economic Growth: Is the increase in the goods and services produced by an economy, typically a nation, over a long period of time. It is measured as percentage increase in real gross domestic product (GDP) which is gross domestic product (GDP) adjusted for inflation. GDP is the market value of all final goods and services produced in an economy or nation.

Capital Market: Is a market in which long term capital is raised by industry and commerce, the government and local authorities. Simply, it is that part of the financial market that provides facilities for the transfer of medium and long-term funds to various economic units.

Nigerian Stock Exchange: Are a market where securities (bonds, stocks and shares of varying types) are traded openly and where one can purchase or sell any of such securities with relative ease.

Financial Institutions: These are institutions that use their funds chiefly to purchase financial assets, deposits, bonds, loans and so on.

Get the complete project »

Instant Share On Social Media:

OTHER SIMILAR ECONOMICS PROJECTS AND MATERIALS

IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA CHAPTER ONE

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 71 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   5801 engagements

CHAPTER ONE INTRODUCTION 1.1. Background of the study Government Expenditure no doubt is an important instrument for a government to control the economy of a nation. Economists have been well aware...Continue reading »

IMPACT OF MACROECONOMICS VARIABLES ON FIRMS’ PERFORMANCE IN NIGERIA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 59 ::   Attributes: Secondary data, Data Analysis, Abstract  ::   3012 engagements

CHAPTER ONE INTRODUCTION 1.1. Background of the study Every company operates within the internal and external environments of business. The internal environments are within a firm such that the pre...Continue reading »

IMPLICATION OF TREASURY SINGLE ACCOUNT ON BANKING SECTOR OF NIGERIA AND THE ECONOMY AS A WHOLE

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 76 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   5654 engagements

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY Treasury Single Account is a public accounting system under which all government revenue, receipts and income and collected into one single acco...Continue reading »

TAXATION AS A TOOL FOR ECONOMIC DEVELOPMENT OF NIGERIA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 71 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   2858 engagements

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Nigeria as a nation has the vision of becoming one among the world’s 20 largest economies in the year 2020; this obviously is the brain beh...Continue reading »

THE IMPACT OF COMPANY INCOME TAX REVENUE ON THE DEVELOPING ECONOMIES: THE NIGERIA EXPERIENCE

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 67 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1584 engagements

The article on this topic (impact of company income tax revenue on the developing economies) is an extract from literature review of the project material. The complete project work would be made avail...Continue reading »

THE IMPACT OF TAX ON GOVERNMENT CAPITAL EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 65 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   2444 engagements

The article on this topic (impact of tax on government capital expenditure and economic growth in Nigeria) is an extract from literature review of the project material. The complete project work would...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Ibrahim from BUK said "very nice".
    Rating: Excellent
  • 2. Vitar from University of Port Harcourt said "I had a wonderful experience using ProjectClue, they delivered not only on time, but the content had good qualty. I recommend ProjectClue for any project research work.".
    Rating: Very Good
  • 3. Faraz Hussain from University of Abuja said "This is a great help for those who seek education. May our Lord Almighty ALLAH bless you projectclue.com who brought this wonderful page and may he bless us (education seekers) too.".
    Rating: Excellent
  • 4. Melkamu from D /Markos said "very good".
    Rating: Good
  • 5. Gabriel Etim from Unical said "Tnks to u guys(projectclue.com) for initiating trust bond with ur clients, especially me. Project clue is an epitome of trust, integrity, sincerity and class. God bless you all.".
    Rating: Very Good
  • 6. Shadack Kiilu Wambua from the kenya insititute of management said "this site was so much helpful since i have acquired alot of experience and exposure at the same time. thanks alot to this site anyway".
    Rating: Very Good

Leave a comment: