An Analysis of the Nigerian Capital Market Performance and Economic Growth in Nigeria

Abstract

The Nigerian capital market has performed fairly despite the numerous challenges and problems some of which include: the buy and hold attitude of Nigerians, massive ignorance of a large population of the Nigerian public of the nature and benefits of the capital market, few investment outlets in the market, lack of capital market friendly economic policies and political instability, private sector led economy and less than full operation of recent developments like the Automated Trading System (ATS), Central Securities Clearing System (CSC), On-line and Remote Trading, Trade Alerts and Capital Trade Points of the Nigerian Stock Exchange. From the result obtained, the following policy recommendations are made: There is need for the government through the central bank to implement policy that will increase the level and size of market capitalization in the capital market. Such increase in market capital will provide the needed funds for investors for further investments and hence increased productivity in Nigeria. The positive impact of number of deals also calls for proper policies to be implemented so as to attract more investors to invest in the market. There is also need to relax some stringent registration and operating procedures to enable more people and organizations to participate in the market. There is also need to institute policies that will further increase the value of market transaction in the market. As stated earlier there is need to remove hindrances on the part of prospective investors so as to increase both the volume and value of transactions in the market. An increase in the value of transaction will in turn lead to economic growth in Nigeria. It is important that interest rate should be lowered so as to increase the level of investment. An increase in investment will lead to an increase in economic growth in Nigeria.

Keywords: capital market, Automated Trading System, Economic growth, private sector.