(Banking and Finance)




This project seeks to examine the impact of the Nigerian capital market on economic growth from the period of 2002-2010. this study investigate the techniques of bench marking of Nigeria capital market toward economic development of the nation and discuss the importance of bench marking to over come perceived weaknesses within the process. This study intended to find out the operations of the Nigerian capital market and evaluate the performance of the capital market in relation to the economic growth in Nigeria. The literature review describes the various instrument of capital market and the role it has played to towards economic development. All aspect of this work is very relevant in one way or the other to Nigeria as a whole and for those who may be interested in carrying out further study in this topic. Also, data were collected through primary and secondary source. The primary of source consist distributed questionnaire while the secondary source are mainly textbooks, internet articles and journals. The methods of statistic analysis include the use of tables, percentage analysis while hypotheses formulated were tested using chi-square mathematical techniques. The study observed that the problems that drags the Nigerian capital market is clued lack of interest in securities, Nigerians prefer to in vest in real assets against investment in financial assets should be curbed by deregulation of security pricing. The evidence from this study also reveals that the activities in the capital market tend to impact positively on the economy.  It is recommended therefore that the regulatory authority should initiate policies that would encourage more companies to access the market and also be more proactive in their surveillance role in order to check sharp practices which undermine market integrity and erode investors’ confidence. The study further recommended that, to promote the capital market and stimulate economic growth and development great emphasis should be made on those things that will help in booting the market.



1.0     Introduction                                                          

1.1         Background of the study                                         

1.2         Statement of the study                                                     

1.3         Objective of the study                                                      

1.4         Research questions                                                 

1.5         Research hypothesis                                                         

1.6         Significance of the study                                

1.7         Scope and limitation of the study                             

1.8         Definition of terms                              



2.0     Review of related literature                                               

2.1         Overview of capital market                                      

2.2         Empirical review                                                     

2.3         Theoretical framework                                            

2.4         Roles of the capital market                            

2.5         Contribution of the capital market to socio-economic development of Nigeria                                            

2.6         Analysis of the Nigerian capital market performance

2.7         Problems of the Nigerian capital market                    



3.0     Research design and methodology                                     

3.1         Research design                                                                         

3.2         Sources of data                                                                

3.3         Population of the study                                                    

3.4         Sample and sampling procedure                               

3.5         Validity and reliability of measuring instrument          

3.6         Instrument/tools of data collection                                    

3.7         Methods of data analysis                                         



4.0     Data presentation and analysis                                          

4.1     Data presentation, analysis and interpretation           

4.2     Test of hypothesis                                                  


5.0     Summary of findings, recommendation and conclusion

5.1     Summary of findings                                                        

5.2     Recommendation                                                             

5.3     Conclusion                                                             







The Nigerian capital market which commenced operation formally in 1962 was established in 1960 when the Lagos stock exchange were incorporated up-to-date, the capital market exerts tremendous effect on Nigeria economic growth and development. The Nigerian capital market instruments are: debt instruments, preference shares, ordinary shares and derivatives etc. So in absence of capital market, industrial or economic growth would be hampered.

The Nigerian capital market is the market for sourcing medium term and long term funds which is used for economic development and growth. It is also the financial market which trades in medium and long term financial instruments (stocks and bonds) with maturity in excess of one year. It is a network of participants, instruments and facilities which functions basically to facilitate efficiently the flow of savings into long term investment for socio economic development.

The Nigerian capital market is also a network of institutions that perform functions that are described as a capital market activities, it facilitates the issuance and secondary trading of long term financial instruments, unlike the money market which functions basically to provides funds to the governments and industries to meet their long term capital requirement. Oyiuke (2008) therefore, the capital market plays a vital role in stimulating industrial as well as economic growth and development.

The Nigerian capital market provides the necessary lubricant that keeps turning the wheel of the economy, it not only provides the funds required for investment but also efficiently allocates there funds to projects of best returns to fund owners. This allocative function is critical in determining the overall growth of the economy. A developed capital market like the one we have encourages economic growth. It does the various institutions which operate in the market by giving quantitative and qualitative direction to flow of funds and bringing about rational allocation of resources Shingad (2004). And by converting financial assets into productive physical asserts and thus lead to development of commerce and industry through the private and public sector, thereby inducing economic growth.

The Nigerian capital market has opened the flood gate of relatively inexpensive fund thereby eliminating the possibility of self financing by indigenous entrepreneur. Such funds may usually be required for expansion or to cushion of effects of inflation so that business may stay alive, for research and development of a new product, Nwude (2008). It provides the government with more effective means of financing its projects in area of infrastructural development. It has continued to play an important role on production process and economic performance of Nigeria nation. Nigerian capital market is to ensure the steady development of the economy, at the apex of the capital market is the security and exchange commission (SEC) so the capital market functions through the stock market. A stock market is a market which facilitates the buying and selling of share stocks, bonds, securities and debentures Shingan (2004). Perhaps the easiest way to think of capital market activities is to think in terms of those financial claims that will remain in existence for about five(5) years or indefinite time, Onyiuke (2008). This work will cover all the important roles of capital market for a period of 2002 to 2011 on economic growth of Nigeria nation.            


There is abundant evidence that most Nigerian business lack long term capital. The business sector has depended mainly on short term financing such as overdrafts to finance even long term capital. Based on the maturity matching concept such financing is risky, all such firms need to raise an appropriate mix of short and long term capital Demirguc-Kunt and Levine (1996).

Most recent literatures on the Nigeria capital market have recognized tremendous performance the market has recorded in recent times. However the vital role of the capital market in economic growth and development has not been empirically investigated thereby creating a research gap in this area. This study is undertaken to examine the contribution of the capital market in the Nigerian economic growth and development. Aside the social and institutional factors inhibiting the process of economic development in Nigeria, the bottleneck created by the dearth of finance to the economy constitutes setback to its development as a result, it is necessary to evaluate the Nigerian capital market.

Then an efficient and effective capital market tends to mobilize savings and allocates a greater proportion to those private sector of the economy like companies giving due allowance for risk. The allocative function of Nigeria capital market is critical in determining the overall growth of the economy. For instance if capital resources are not provided to those economic units especially industries where demand is growing and which are capable of increasing production and productivity, the rate of expansion of the economy will suffer, Onyiuke (2008). 


The general objective of this work is to examine the impact made by Nigeria capital market on the economic growth of Nigerian nation (2002-2011). This study will attempt to specifically:

i.             Find out how much money had been mobilized from the Nigerian capital market (NCM) into different sectors of the Nigeria economy.

ii.            To find out the proportion of the mobilized fund to the gross domestic product (GDP).

iii.           To find out the sectors that benefited most from the market.


In this study, the following research questions will be used to determine whether Nigeria capital market has really made some impact on the economic growth of the nation since (2002-2011).

i.             Do you think that Nigerian capital market had be mobilized from 2002-2011?

ii.            What is the proportion of the total financing from the Nigeria capital market (NCM) to the gross domestic product?

iii.           Have other sectors of the economy benefited from the Nigerian capital market (2002-2011)?


For the purposes of getting a useful response for this study, the following hypotheses are drawn. A hypothesis is a tentative statement about phenomena whose validity is usually unknown. It’s a statement, but so far is not supported by relevant information or data. It is often stated to highlight the perceived relationship between a dependent and an independent variable, Onwumere (2005).

The followings are thereby formulated;

Ho:    That the amount mobilized from the Nigeria capital market is not significant.

Hi:     That the amount mobilized from the Nigeria capital market is significant.

Ho:    The proportion of the mobilized fund to gross domestic product is not significant.

Hi:     The proportion of the mobilized fund to gross domestic product is significant.

Ho:    Nigeria capital market has not made a significant impact on economic growth of the nation.

Hi:     Nigeria capital market has made a significant impact on economic growth of the nation.


This study would try to identify the need for an efficient capital market in the economy, knowing its immense importance and contribution to the growth and development of the economy.

The outcome of the study will help:

a.            The government in planning and execution of polices.

b.            Capital market operators in relating their efforts towards guiding the market.

c.            Regulators of the market in adhering strictly to all its regulator roles.

d.            The students of finance and the larger public will be making use of any aspect of information thereof.

This research work will serve as a stepping stone to other works to be carried out in this aspect.



This refers to all man-made productive assets i.e. all man-made wealth or goods used to produce other goods and services.  They are goods, which assist in the production of consumer goods, services and other capital goods examples raw materials, machines, factory buildings.



This is a financial market for long term capital.  It is a complex institution and also the mechanism through which intermediate and long term funds are pooled and made available to business, government and individuals.  The capital market can be grouped into two namely the primary and the secondary market.  The primary market is that for new issues of share and stocks for the purpose of pooling funds from the investing public excess unto.  While the secondary market are mainly for existing stock that is stocks whose bearers went to re-coup the funds invested in acquiring such stock or securities found in the capital market are the stock brokers, Jobbers, dealing clerk, merchant banks.



According to Sudden, economic development is the process, which foster the transformation of a subsistence economy to one, which is modernized and integrated, with high degree of specialization and exchange. It is also the process of increasing real per capital income and engineering substantial positive transformation at the various levels of the economy.

The positive signals which take place improve the general will being of the people and ensure sustained or raise the standard of living of the masses.


          Equity capital of a company which includes all funds contributed by the owners as evidence of this ownership consist of stock certificate that, among other things, show the names, type of shares and type of stock.


Participants in the stock exchange who execute the clients orders to buy and sell shares and other instruments on their behalf usually on commission basis.


These are participants in the stock exchange who buy and sell second hand securities in secondary markets and make their gains from such transaction. They do not operate on commission basis but they buy up the securities of companies that were first issued for sales at a later data.


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