International Journal of Economics and Finance
Vol. 4, No. 1; January 2012
Adopting Strategic Management Approach in the Capital Market Development: The Nigerian Case Augustine, UJUNWA, Ph.D (Corresponding author) Department of Banking and Finance, University of Nigeria, Enugu Campus Tel: 234-803-501-0116 E-mail: email@example.com
Nwanneka Judith, MODEBE Department of Banking and Finance, University of Nigeria, Enugu Campus Tel: 234-703-066-2470 Received: July 25, 2011 doi:10.5539/ijef.v4n1p223 Abstract
Accepted: September 6, 2011
Published: January 1, 2012
This paper examines the roles and channels through which the capital market promotes economic development. The paper documents extensive evidence to show the adverse effects of the recent global financial crisis on the Nigerian capital market. Given the pivotal role of the capital market in economic development, the study advocates for the adoption of strategic management approach in ensuring capital market efficiency. These strategic management measure ranges from effective regulation to achieving favourable macroeconomic environment. These strategies will not only promote the efficiency of the capital market, but will leverage the role of the capital market in promoting economic growth. Keywords: Capital Market, Economic development, Strategic management 1. Introduction
Improving the efficiency of the capital market has become a recognized means of meeting national objectives such as enhancing productivity and competitiveness, reducing local environmental costs associated with capital market transactions, promoting savings and investment on economic wide basis (Mark, 2011). At international level, it is considered a key element of strategy to mitigate the risk of capital flight associated with lack of international investors’ confidence in the market. In this context, improving capital market efficiency in the developing and transitioning countries is particularly important because these countries exhibit considerable potential for such improvement and, in the case of the developing countries, since they will contribute increasingly to the future of the capital market as their economies grow (Ujunwa and Salami, 2010). In Nigeria, the strategies for improving capital market efficiency, given the recent scandals in the entire corporate governance spectrum has elicited serious interest among scholars and practitioners. Practitioners have advocated for capital market transformation programme. Definitions of what constitutes capital market transformation programme vary somewhat, but the general consensus is that such programme “explicitly seek to cause changes in the structure of the market for product or service, or in the behavior of some group of market actors, in such a way that market efficiency is improved and the changes remain after the programme has ended” (Momoh, 2007). The key element of the capital market transformation is the application of strategic management in capital market theories. Integrating the links between strategic management and capital market has received little attention among practitioners and scholars. This might be based on the myth that strategic management and capital market theories belong to two different disciplines. Strategic management belongs to the field of business management, while capital market theories belong to the field of traditional finance. Strategic management is an important aspect of management that elicits research interest among scholars and practitioners. This can be attributed to the universal application of this aspect of management discipline. Strategic management is generally seen as the art and science of formulating, implementing, and evaluating cross-functional decisions that enables an organization to achieve its objectives (David, 2008). Essentially, it focuses on integrating management, marketing, finance and...