THE NIGERIAN CAPITAL MARKET AND INVESTMENT (THE GAP PROBLEM)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Capital market is a market for trading medium to long term financial instruments such as shares and bonds with a maturity in excess of one year. It can be grouped into two categories namely; primary capital market and secondary capital market.

Primary capital market is a market for the sale and purchase of newly issued securities of a company or government; it is also called new issue market. The proceeds realized go to the issuer, that is, the entities selling the securities.

Secondary capital market on the other hand is a market such as securities exchange and over the counter market where existing securities of companies and government are bought and sold through the services of a broker. Examples are Stock Exchange, over the counter and Commodity Exchange.

The capital market is the bedrock of development in the socio-economic growth and development of developed economies, given its role as a platform for mobilizing long-term capital needed for productive investment. Capital market plays some vital roles such as channeling long-term resources to organizations with relatively high increasing productivity, thus enhancing economic expansion and growth (Allied, 1997).

Ekundayo (2002) posit that a nation requires a lot of local and foreign investments to attain sustainable economic growth and development. The capital market provides a means through which this is made possible.

The Nigerian capital market has continued to mature and has interestingly remained in the top bracket of global exchanges in terms of return on investment to stock investors.

To invest successfully, you need to understand the market and the key parameters that shape the stock performance. You also need to learn the basics of investment in the capital market and the tools to leverage for top results and safety.

PROBLEM OF THE STUDY

Over the years, the Nigerian capital market has grown tremendously and it is listed among the top most traded capital market in the world.

Irrespective of this, most stakeholders and individuals in Nigeria have neglected the benefits of capital market and they are notin the know of how to invest in capital market.

OBJECTIVES OF THE STUDY

The following would the aims and objectives of embarking on this research work.

1. Empirically analyze the effect of the Nigerian capital market operations on local investment.
2. Determine the influence of Nigeria capital market on investment.
3. Evaluate the Nigerian Capital Market and investment.
4. Enlighten stakeholders and non-stakeholders on capital market and investment.

RESEARCH QUESTIONS

Based on the problems of the study stated above, the study seeks to answer the following questions;

1. Does the Nigerian capital market influence the investment decisions of stakeholders?
2. Can this study enlighten stakeholders and non-stakeholders on capital market and investment?

RESEARCH HYPOTHESES

H0    The Nigerian capital market performance has no significant influence on investment decision of stakeholders.

H1    The Nigerian capital market performance has a significant influence on investment decision of stakeholders.

SIGNIFICANCE OF THE STUDY

This study will be of immense benefit to other researchers who intend to know more this study and can also be used by non-researchers to build more on related fields of study.

This study contributes to knowledge and could serve as a bench mark or guide for other work or study. It avails individuals and stakeholders with necessary information about capital market and investment in Nigeria.

SCOPE OF THE STUDY

The study seeks to find the gap problem in the Nigerian capital market and investment.

LIMITATIONS OF THE STUDY

This study was limited by some factors and they are;

1. Financial Factor: During the study, the researcher was faced with insufficient fund which tends to impede the efficiency of the researcher in sourcing for materials used for the research. Gathering of data through the use of questionnaire, interview and the internet was also impeded financially.
2. Time Factor: The researcher simultaneously engaged in this study with other academic work, this consequently reduced the time devoted for this study.
3. Proximity of Study Area to the Researcher: The researcher was also limited by the distance between the researcher and the study area.

DEFINITION OF TERMS

Capital Market: This is thebuying and selling of euity and debt instruments. It is a fraction of the financial system that is concerned with shares, bonds and other long term investments.

Investment: This is an asset or an item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.

Nigeria GAAP. This is the Generally Accepted Accounting Principle. It is a method of providing financial information to outside parties such as investors, auditors or creditors.