Importance Of The Nigerian Capital Market To Business Organizations
(A Case Study Of Portacourt Stock Exchange)
The capital market serves as a critical avenue for business organizations to raise funds necessary for growth, expansion, and innovation. By issuing stocks or bonds, companies can access capital from investors, allowing them to finance projects, invest in research and development, acquire assets, or facilitate strategic initiatives. Additionally, the capital market provides businesses with opportunities to enhance their visibility, credibility, and valuation through public offerings or trading on stock exchanges. Beyond mere fundraising, involvement in the capital market can also improve corporate governance practices and accountability, as companies are subject to regulatory scrutiny and investor expectations, fostering transparency and responsible management practices. In essence, the capital market plays a pivotal role in facilitating the flow of funds between investors and businesses, enabling economic growth, job creation, and innovation.
The Nigerian capital market was established to perform certain functions, which are paramount to the development and growth of the economy. This includes the accumulation of capital from diveresed fund serves and make such available to users of funds.
The purpose of this study was to determine the extent to which the development of business organization, to establish the importance of the capital market in servicing the banking and manufacturing sector of business.
Hypothesis formulate in this regard are:
Ho1 The Nigerian capital market is of no importance to business organization
The Chi-square was used to test the hypothesis.
Questionnaire were distributed.
The study made the following recommendation
1) Increased awareness should be create especially in rural areas.
2) Compensation of trade transactions should be encouraged.
3) More couraces taking capital market in the tartaric institution should be encouraged.
4. Investigation needs to be carried out on the influences of the Nigerian capital market on business organization.
Title page
Acknowledgement
Dedication
Abstract
Table of Content
CHAPTER ONE
1.1 PROBLEM INDETIFICATION AND PURPOSE OF STUDY
1.2 RATIONALE OF THE STUDY
1.3 SIGNIFICANCE OF THE STUDY
1.4 DEFINTION OF TERMS
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 THEORITICAL REVIEW
2.2 ENGPERICAL EVIEW
CHAPTER THREE
3.0 HYPOTHESIS, RESEARCH TOOLS AND PROCEDURE, SOURCES OF DATA, LIMITATION OF STUDY
3.1 HYPOTHESIS OF STUDY
3.2 REASEARCH TOOLS AND PROCEDURE
3.3 SAMPLING PRODCEURE
3.4 LIMITATIONS OF THE STUDY
3.5 METHODS OF DATA ANALYSIS
CHAPTER FOUR:
4.0 PRESENTATION, ANALYSIS AND DICUSSION OF DATA
4.1 PRESENTATION OF DATA
4.2 ANALYSIS OF DATA ACCORDING TO TEST OF HYPOTHESIS
4.3 DISCUSSION OF RESULTS
CHAPTER FIVE:
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY OF THE STUDY
5.3A RECOMMENDATION OF THE STUDY
BIOLOGRAPHY
APPENDIX
QUESIONAIRE
PROBLEM INDETIFICATION AND PURPOSE OF STUDY
In this research work, the researcher intends to study the importance of the Nigerian capital market to business organisatio of this country. Apart from its fund mobilization function, it thus performs intermediacy role by making it possible for those who have surplus funds to be able to loan it out to those in need of it for productive purposes (Orji, 2000)..
The purpose of the study is stated as follows:
1. To determine the extent to which the Nigerian capital market contributes to the development of business organizations
2. To establish the importance of the capital market in semicing the banking an manufacturing sectors of business.
3. to make recommendation on how to improve the operation s of the market which will aid in the development of business organizations and the economy as a whole.
1.2 RATIONALE OF THE STUDY
I decided to write on this topic because of the following reasons;
1. I have special interest in the Nigerian capital market business of its significant role in the banking industry. For example, so many banks are running to the Nigerian capital market to raise funds, so that they can meat up with the new capital base of N25 billion. As a banker, I am supposed to know how the banks raise their funds.
2. I hope that through this project work other people who ar not aware of the importance of the Nigerian capital market will get to know about it after reading my work.
1.3 SIGNIFICANCE OF THE STUDY
This study will enlighten the business proprietor on how to raise the much needed capital through the Nigerian capital market to improve his business performance.
This study will also enlighten the general public and investors on the need to invest in the Nigerian capital market.
It will also enable the students to read or study more about the Nigerian Capital market.
The study will also enable other researchers to carryout more research on the topic
Also the authorities who are already conscious of the problems of the stock exchange who benefit from the recommendations of this work for improvement.
1.4 DEFINTION OF TERMS
1. CAPITAL MARKET: It is a market where long-term goods are obtained or where long term functional assets such as debenture, stock, shares are bought and sold.
2. STOCK MARKET: is an institution in a boarding conceived capital market, consisting of arrangement of mechanisms for raising capital though the initial issue of securities.
3. PRIMARY MARKET: is a market where new securities are traded for the first time by the issuing co-operation.
4. SECOUNDARY MARKET: is a market where second hand o previously issued securities are braded.
5. PRICE EARNING RATION: This represents the current investors are willing to pay for each naira of the forms earning.
6. PRICE EARNING INDEX: Means compilation showing average current market value of common stock compared with their average market value at an earlier base period.
7. CALL OVER: is a method adopted by the Nigerian stock dealers and any interested dealer indicates his interest by going into bidding.
Importance Of The Nigerian Capital Market To Business Organizations:
The Nigerian Capital Market plays a crucial role in supporting and facilitating the growth, development, and sustainability of business organizations within the country. Here are some of the key ways in which the Nigerian Capital Market is important to business organizations:
- Capital Formation: One of the primary functions of the capital market is to provide a platform for businesses to raise capital. Through various instruments like stocks, bonds, and commercial papers, companies can raise funds for expansion, research and development, acquisitions, and other capital-intensive projects. This helps businesses to grow and seize opportunities that might not have been possible solely through internal funds.
- Diversification of Ownership: Listing on the Nigerian Stock Exchange (NSE) allows companies to sell ownership stakes in the form of shares to the public. This allows the company’s original owners to monetize a portion of their ownership while bringing in new shareholders. Diversified ownership can also provide the company with a wider pool of expertise and connections.
- Enhanced Visibility and Reputation: Being publicly listed on the capital market enhances a company’s visibility and credibility. It signifies that the company has met certain regulatory and disclosure requirements, which can attract investors, partners, and customers. A strong reputation can lead to increased business opportunities and easier access to funding in the future.
- Liquidity for Investors: The capital market provides liquidity to investors by allowing them to buy and sell shares and other securities easily. This liquidity attracts more investors, as they have the flexibility to enter or exit their investments based on market conditions, making it more appealing for them to invest in businesses.
- Mergers and Acquisitions: The capital market can facilitate mergers and acquisitions by providing a platform for companies to exchange shares, raise capital for acquisitions, or even serve as a valuation benchmark for negotiation purposes. This helps companies expand their operations and consolidate their positions in the market.
- Corporate Governance and Transparency: Companies listed on the capital market are subject to regulatory requirements that promote transparency, accountability, and good corporate governance practices. This can lead to better decision-making processes and increased investor trust, which is essential for long-term business success.
- Access to Long-Term Funding: The capital market provides businesses with access to long-term funding options, such as issuing bonds. These funds can be used for projects that have longer payback periods, allowing companies to invest in initiatives that may not yield immediate returns but have the potential for substantial growth over time.
- Benchmark for Performance: Stock prices and market capitalization serve as indicators of a company’s performance and valuation. Being listed on the capital market provides businesses with a benchmark against which they can measure their growth and progress.
- Employee Incentives: Many companies use stock options and other equity-based compensation plans to attract and retain talented employees. Being listed on the capital market can provide a tangible and tradable value to these incentives, making them more attractive to employees.
- Economic Growth and Development: A vibrant capital market contributes to the overall economic development of a country by channeling savings into productive investments. As businesses grow, they create jobs, contribute to tax revenues, and stimulate economic activities in various sectors.
In summary, the Nigerian Capital Market is essential to business organizations as it offers avenues for raising capital, enhancing visibility, facilitating mergers and acquisitions, promoting transparency, and providing various growth opportunities that contribute to the overall development of both companies and the national economy.