EFFECT OF FINANCIAL MELTDOWN ON THE PERFORMANCE OF THE NIGERIAN CAPITAL MARKET

ABSTRACT
A major engine of economic growth and development of any nation is its capital market. Until quite recently, the Nigerian capital market was the toast of many enlightened Nigerians both home and abroad. This research study investigated the impact of financial meltdown on the capital market with particular reference to the Nigerian stock exchange (NSE). In carrying out the study, survey research design was adopted and observations were drawn each from the periods before the crash and after the menace. Using F- test statistical analysis, three hypotheses were tested with respect to NSE ALL Share Index (ASI), Market Capitalizations and Market Turnover were rejected implying that the tests were statistically significant. Similarly, using market model, it was discovered that there were significant changes in individual quoted securities and expected returns in the period under consideration. Above all, the findings of the study revealed that the financial meltdown impacted negatively on the operational performance and efficiency of the Nigerian stock market. It was recommended that the Nigeria government should inject physical cash into the stock market as a way of bail out in order to restore the lost confidence in the market and also the investors and stock market operators should play the games according to the rule.

CHAPTER ONE

1.1 BACKGROUND OF STUDY

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1.2     STATEMENT OF THE PROBLEM

1. The significant difference in stock index between the bubble period and crash period.
2. The statistical significant relationship between market capitalization of the Nigerian exchange in the pre and post economic meltdown.
3. The fundamental change in the total market turnover in the NSE between the bubble period and crash period.

1.3     OBJECTIVES OF STUDY
Financial meltdown refers to event like steep 4ii in stock market, decline in asset values and corporate losses that hurt the economy and investors. The main objective of this study is to provide a scientific investigating into the impact of financial meltdown on the Nigerian capital market. From the main objective we then have sub- objectives of the study this includes:

1. To identify the significant difference in stock index between the bubble period and crash period.
2. To identify the statistical relationship between total markets capitalization of the Nigerian stock Exchange in the pre and post economic meltdown.
3. To identify the fundamental change in the total market turnover in the NSE between the bubble period and crash period.

1.4     RESEARCH QUESTION
The Nigerian capital market as a segment of the financial system has evolved with the growth of the Nigerian economy. The market has been predominantly equities driven with the banking sector making up an important proportion of total market capitalization. This research shall be guided by the following research questions;
1.       Is there any significant difference in stock index between the bubble period and crash period?
2.      What is the statistical significant relationship between total market capitalization of the Nigerian stock Exchange in the pre and post economic meltdown.
3.       Is there any fundamental change in the total market turnover in the NSE between the bubble period and crash period?

1.5     RESEARCH HYPOTHESIS
The research hypothesis that would be tested in the course of this research is stated below as:
1.       Ho: There is no significant difference in stock index between the bubble   period and crash period.
2.       Ho: There is no statistical significant relationship between total market capitalizations of the Nigerian Stock Exchange in the pre and post economic meltdown.
3.       Ho: there is no fundamental market change in the total market turnover in the NSE  between the bubble period and crash period.