STOCK MARKET DEVELOPMENT INDICATORS AND ECONOMIC GROWTH IN NIGERIA

CHAPTER ONE

Introduction

1.1      Background of the study

Stock markets may affect economic activity through the creation of liquidity. It contributes to economic development by enhancing the liquidity of capital investments. Many profitable investments require a long-term commitment of capital, but investors are often reluctant to relinquish control of their savings for long periods. Liquid equity markets make investment less risky–and more attractive–because they allow savers to acquire an asset–equity–and to sell it quickly and cheaply if they need access to their savings or want to alter their portfolios. At the same time, companies enjoy permanent access to capital raised through equity issues. The Nigerian capital market needs to play the role of an enabler for the transformation of the Nigerian economy, by becoming the first port of call for domestic savings and for international investors (Oteh, 2010).

Until recently, the literature has focused mainly on the role of financial intermediation in the process of economic growth and capital accumulation.

1.2 STATEMENT OF THE PROBLEM

The role of the stock  market to mobilize longterm fund to be channeled manufacturing  industrial development. Despite the relative dynamism and

vitality observed in the evolution of the Nigerian capital market, empirical literature however suggests that the efficiency at effectiveness of the market in

promoting industrial development may be greatly limited as evidenced by the low level of the contribution of the industrial sector to overall market capitalization. The problem of this study is to ascertain the correlation between stock market and industrial development in Nigeria.

1.3 Objective of the study

This research work titled “Stock market growth of manufacturing sector 1999-2013” is aimed at:

1.  Evaluating the role of Nigerian stock market on the development of Nigerian manufacturing industry from 1999 to 2013.

2.  To examine the impact of Nigerian stock market on the development of Nigerian economy.

3.  To determine the relationship between the stock market and Nigerian manufacturing industry.

4.  To examine the various problems associated with Nigerian stock market.

5.  To also proffer possible solutions to the problems identified.

1.4 Research question

The researcher formulated the following research questions:

1.  What are the roles of Nigerian stock market on the development of Nigerian manufacturing industry

2.  What are the impacts of Nigerian stock market on the development of Nigerian economy.

3.  Is there any relationship between the stock market and Nigerian manufacturing industry.

4.  What are problems of Nigerian stock market.

1.5 Research Hypothesis

For the researcher to carryout extensive study on the subject matter, the following research hypothesis were formulated:

Ho: The Nigerian stock market has not played any role in the development of Nigerian manufacturing industry from 1999 to 2013.

H1: The Nigerian stock market has played significant role in the development of Nigerian manufacturing industry from 1999 to 2013.

Ho: Nigerian stock market has no impact on the development of Nigerian economy.

Ho: Nigerian stock market has significant impact on the development of Nigerian economy.

Ho: There is no relationship between the stock market and Nigerian manufacturing industry.

Ho: There is significant relationship between the stock market and Nigerian manufacturing industry.

1.6 SIGNIFICANCE OF THE STUDY

This research work will be of immense help to:

The Researcher: it will help the researcher to know more on the impact/role of the stock market on the manufacturing industry.

It will also be of great importance to stake holders as it will enrich their knowledge on the relevance of the stock market in the development of the manufacturing industry.

This will equally be of help to companies and banks, when they abide by the recommendations provided by the researcher it will help them in time of decision making.

This study will be of great importance to the country Nigeria as it will help the policy makers in terms of enacting law.

1.7   Scope and Limitations of the Study

The study shall focus on stock market growth of the manufacturing sector 1999-2013.

The researcher in carrying out this study encountered numerous problems, which includes:

FUND – This included lack of enough fund to move around and visit the organizations, the researcher has to visit the organizations more than two times, the researcher equally needed enough money to source material which constitutes an impediment. High cost of transportation in the city due to long distance also imposed its own limitation on the researcher.

LACK OF RESEARCH MATERIALS: lack of research materials was also one of the problems faced by the researcher in the cause of this research work.

RESPONDS OF THE RESPONDENTS: Another constraint to the researcher is that some of the respondents found it difficult to express their view with regards to the subject matter.

From the above points the researcher tried her best to bring out in detailed study on stock market growth of the manufacturing sector 1999-2013 but the above constraints have limited the researcher to only Enugu state.