ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
The Role of Capital Market on Economic Growth in Nigeria (19802008) Usman Owolabi Akeem, Phd
Faculty of ManagementScience,PMB4000, LAUTECH,Ogbomoso,Nigeria firstname.lastname@example.org, Tel:+2348036675099
The capital markets play important roles in the economy growth of the market. A well functioning market insures that both corporation and investors get or receive fair prices for their securities. It examine the impact of capital market on the Nigeria economy and also examine how stock exchange market has contributed to the economic growth which aims at studying the second tier securities market. The secondary data employed for thi s research work were sourced from the statistical bulletin of the Central Bank of Nigeria (CBN) 2008. The ordinary least square is used for all variables in order to determine the linear relationship between the independent and independent variable. Using Statistical Package for Social Sciences (SPSS). Multiple regression models were adopted in this research work with the result from this regression model show that the R 2 for model one and two are 0.840, 0.888, which implies that 84% and 88% variation in the dependent variable can be attributed to the variation in the independent variable, Also R2 – ADJUSTED OF 0.799 and 0.874 implies that 79% and 87% show a minimize error from the coefficient of determinant (R2). In conclusion, it has been observed that this ensures that valuable projects will be financed and negative value project will be rejected. Most importantly will argue that integration into the world capital market will accelerate the growth process.
Keywords: Market Capitalization, Inflation rate, T urnover and Real Output.
Securities were first floated in Nigeria early as 1946, although there was no systematic and organized capital market with all the attendant institution until the establishment of the Central Bank of Nigeria (CBN) in 1959 and the launching of the Lagos stock exchange in 1961. Before this event, it was difficult for the government to raise fund locally for the sale of stocks. It was difficult to mobilize adequate local savings even though the volume of such savings was increasing. It was still more difficult to provide facilities for the government to sell part of the increasing volume of industrial shares that it was holding through its participation in joint ventures. As a result of the establishment of the Central Bank of Nigeria, there came into existence a wide variety of domestic securities such as Bonds, Shares, Development stocks and premium Bonds. These were issued and offered for sale to the public. The central Bank played a vital role in the managemen t and marketing of government securities, sometimes indeed the central bank act as the main holder of such securities when the market become saturated until such securities were sold to the public mostly to those who saves the institution like the persona l fund and insurance company.
In floating the first federation of Nigeria development stock in 1959, The Central Bank attempted to introduce arrangement for the growth of market in securities. Commercials Banks were requested to accept potential buyers and sellers whose names where then transferred to the central Bank where central register was maintained. The commercial Banks thus serve as a link between potential buyers and sellers. The central played the roles of establishing price for stock sold in the market.
The Lagos stock exchange market (L SM E) was established in 1961 and since that time government stocks started being traded on the capital market even though the central Bank started to manage the issue of government securities. There were only nine issues of development stock between the year of 1962 and 1972 in an attempt to increase the volume of funds available to governments in...