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The capital market is a highly specialized organized market for long term funds and securities. It provides services that are essential to the modern economy through its ability to facilitate trade and therefore production which offers access to a variety of financial instruments that enable economic agent to pull, price and exchange risk. This market which is used for raising and investing long term funds with its maturity fperiod ranging from 10 years and above have financial instruments such as equity securities, preference shares and loan stocks.

To an extent, a positive relationship between capital accumulation and real economic growth, has long been affirmed in the accumulation and mobilization for developed varies among nations but it is largely dependent on domestic savings and in flow of foreign capital. Therefore, to arrest the menace of current economic predicaments, efforts must be geared towards effective resources allocation. It is in the realization of this, that consideration is given to measure for the development of the capital market as a source of finance for economic development.

The development of the capital market in Nigeria has been fostered and indirect by the government, as in some other developing countries. Though prior to the establishment of a stock exchange market in Nigerian, there existed some less formal market arrangement of the operation of a capital market which was not provided until in 1959, Mr. J.B Loynesion at the invitation of federal government to give advice on what role the Central Bank would play in the development of a local money and capital market.

With the establishment of the Central Bank of Nigeria in 1959, the Lagos Stock Exchange in 1961 and subsequently, the Nigerian Stock Exchange commission by an act in 1979, a solid foundation has been laid for the operations of the Nigerian capital market for trading securities of long term nature needed for the financing of the industrial sector and the economy at large.

Undoubtedly, there are potential investible funds abound in Nigeria, but the overriding consideration in the essays will be to examine the capital market and the market mobilizes all the resources to generate economic development. Some other operations in the Nigerian financial system consists of the following:

  1. Insurance companies and providents funds (Trust fund)
  2. The Central Bank of Nigeria and the commercial bank under the banking system.
  3. The savings institutions e.g. federal savings bank and People Bank of Nigeria.
  4. The public sector etc.

The above mentioned are some of the sectors that comprise of the financial markets. The purpose of studying the capital market basically has to do with the need of appreciation the growth necessity to stimulate industrial development through finances provided for long-term instruments by an organized capital market and to mobilize the investible financial resources for this purpose.

Furthermore, the study will attempt to appraise the role of the capital market in order to ameliorate some problems, like the Nigerian investor seeking financial assistance for industrial project from the short term liquidity procured from the money market. This undermines the development of the industrial sector since considerable investible funds are unexploited. The study is also necessary so as to investigate the efforts being made to increase the capital market.


To a considerable amount, aside the social and institutional factors inability the economic development process in Nigeria, the bottleneck created by the death of finance to the economy constitutes yet a major set back to its development.

It is also possible to recognize that the market institutions and instruments comprising the system seldom facilitate the efficient production of goals and services for the well being of the society as well as perform an economic function of facilitating the transfer of real economic resources for lenders (savers) to the borrowers (investors).

To this end, the study will attempt the examination of various instruments, which have been employed to help solve the problem of liquidity in the economy, the tractable problem of capital formation and that of funds mobilization for investments.

Therefore, we shall examines:

  1. If the federation of international stock exchange recommendations of clearing and settlement is being implements?
  2. How effective will the Central Securities Clearing System (SCE) boost its market capitalization?
  • Whether the master policy issues and approaches of the various institutions constituting the capital market, fostering a well developed capital market.


  1. Ascertain whether market capitalization has a significant effect on the economic growth.
  2. Ascertain whether development stock have significant effect of the economic growth.


  1. To what extent will market capitalization have a significant impact on the economic growth.
  2. Is development stock significant effect on the economic growth.


        The following are our hypotheses for the study

HoIMarket capitalization does not have a significant positive impact on the economic growth.

Ho2: Development stock do not have a significant positive impact of the economic growth.


The scope of this study is strictly restricted to the Lagos and Onitsha offices of the Nigeria Stock exchange and the Nigerian Securities and Exchange Commission respectively. A broad view of the role of Nigerian stock exchange will be given in relation to its role as a cornerstone of the nation’s capital market. Reference will also be given to the exchange role economic institution in the on going development process in Nigeria.

A lot of difficulties were encountered in obtaining the information needed for this study. The limitations of the study includes unavailability of materials and hoarding of information by some members of staff of some companies. It should also be noted that this study will not deal with any thing that lies within the boundaries of traditional investment analysis.


The significance of the study to accounting cannot be over-emphasized. This study will seek to access the level of subscription to public issues, review the performance of government enterprise and private enterprise and private enterprise through public offerings and examine the performance of equities in the Nigerian stock exchange.

It will contribute to the knowledge of these seeking to invest in the capital market. It is hoped that this work will make reasonable contributions to the stocks of literature

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