Role Of Stock Exchange In Industrial Development
The stock exchange plays a crucial role in fostering industrial development by providing a platform for companies to raise capital for expansion, innovation, and investment in new projects. Through the issuance of stocks and bonds, companies can access funds from a wide range of investors, including institutional investors and the general public, thereby facilitating the growth and development of industries. Additionally, the stock exchange enhances liquidity by enabling investors to buy and sell securities easily, which encourages investment in companies and stimulates economic activity. Moreover, the stock market serves as a barometer of economic health, reflecting investor confidence and market sentiment, which can influence investment decisions and economic policies. Overall, the stock exchange acts as a catalyst for industrial development by facilitating capital formation, liquidity, and investor participation in the economy.
This project research study whose subject matter is on the role of Nigerian stock exchange in industrial development is stated to be presented in the normal fine chapter of a project work.
For a general insight and a fair understanding of the intended course of action and various form of presentation evaluation and analysis of data collection from successive interview questionnaires administration as well as other source of data collection like news letters, security market journal and business times. It is proposed to briefly run of short preview of the expected contents of each chapter and preliminary pages of the enter work.
The work started with the preliminary page which include the title page approval page, proposal, dedication, acknowledgment and table of content.
The first chapter which fellows the preliminary page starts with the general introduction. This means paging attention to the exposure of the topic under research. Therefore a background of the study and statement of problem will be use to achieve this aim. Also the objective and significance of the study will be revealed along side with hypothetical statement and research question. The chapter finally ends up with the disclosure of the scope and limitation of the study.
Chapter two carries a general review of available relevant literature hence books text book are the expected literature re-reviewed for general searching and support of existing information about the stocks exchanges .
Chapter there covers the research design and methodology. Here the general features of the research procedure, development of research material and treatment of data will be given therefore the modes and series of tasks under taken to ensure a successful research and data collection will form the basic discussion under this chapter.
The preservation and analysis of data from the main subject matter of chapter four the data collected therefore are presented analyzed and concluded upon.
The last chapter which is chapter fine will discuss the findings of the research works. This will be followed by necessary conclusion and recommendation. Also this project work will end with the information which includes definition of terms. Bibliography, appendix and questionnaires.
Finally, therefore the research have decided to take up this study on the role of Nigerian stock exchange in industrial development just because of her interest on the benefit of the stock exchange and the effects it has on the industry development.
The Nigerian stock exchange (NSE) has been created to serve various function such as often of business guideline to top business management concerning cost of capital for the Nigerian stock exchange provides avenues for long term investment. These function credited to the stock exchange is expected to create positive effect on the general business and industrial growth of the country.
However, this research work is determined to evaluate the effect of the stock. Exchange on the general business growth especially in recent years. In carrying out the research work with the above aim in mind efforts will be made to disclose relevant findings thus drawing necessary solutions and recommendations to alleviate some anticipated problem on the Nigerian stock exchange to be disclosed during the research work.
Title page
Approval page
Dedication
Acknowledgment
Proposal
Abstract
Table of content
CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of study
1.3 Objective of study
1.4 Research question’
1.5 Hypothesis formulation
1.6 Significance of the study
1.7 Scope of the study
1.8 Limitation of
1.9 Definition of term
1.10 Reference
CHAPTER TWO
2.0 Literature review
2.1 Evolution of the stock exchange
2.2 Historical development of the Nigerian stock
2.3 General relationship of the stock exchange and the economy
2.4 Advantage of the stock exchange as a source fund to the industry
2.5 Functions of the stock exchange in influencing the development parameters
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.0 Introduction to the study
3.1 Research design
3.2 Area of study
3.3 Population of the study
3.4 Sample size determination
3.5 Instrument for data collection
3.6 Validation of instrument
3.7 Reliability of the instrument
3.8 Method of data collection
3.9 Method of data analysis
3.10 Reference
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Presentation and analysis of data
4.2 Testing of hypothesis
4.3 Summary of result.
CHAPTER FIVE
DISCUSSION RECOMMENDATION AND CONCLUSION
5.1 Discussion of result findings
5.2 Conclusion
5.3 Recommendation
5.4 Suggestion for further study
5.5 Bibliography
5.6 Appendix.
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Industrial growth forms the basis for industrial development is not only needed for its ability to improve living standard. It also acts as a weapon for building national strength and prestige. Therefore industrial development implies the increase of industrial, expansion of quality and quality of output and the institutionalization of industrial growth process. It also involve technical activities of a own routine nature concerned with translating research findings or other with translating research findings or other scientific knowledge into products or process.
With the concept of investment as a central factor in the acceleration of industrial growth and development and the prominence given to industrialization, steps have the establishment of the Nigerian stock exchange (NSE) the evolution of continued existence of the Nigeria stock exchange has always been small lots of shares to e parceled into lumbs large enough to be bought by institutions provide vast numbers of different shares to be trades and providing a broad market in government securities its economic significance depends on its ability to mop up financial capital for investment purpose these include providing liquidity and enhancing these marketability of new issues of stock thus reducing the real costs to business firm by expanding the scope for obtaining fund.
Other functions of the stock exchange include the offer of guidance to the business management in relation to the present cost of capital so that the business man can determine his level of investment appropriate to the firm. Access to the vast number of capital that are in very small amount of money that in their aggregate have s commend over vast quantities of wealth. It also make it possible for the transfer of funds that imposes only a minimum of administrative efforts he lender. By this activity the stock exchange is able to provide an avenue for long term investment to be financed by funds provided by individuals many of whom to make it available for a short term or with draw it at will.
The competitive nature of the stock exchange makes it possible to allocate funds efficiently which is achieved by the market ability to available companies securities in a manner based on the capitalized value of the company’s expected future earnings.
Apparently, only if stock are valued in this way will funds be provided most abundantly and at most reasonable terms to the most promising innovation who accounting to the classical economic theory has the greatest use for them and who is the one that can obtain the profits which will serve as the investors rewards. And it in when shares are valued in relation to the expected capitalized value of the firm that effective disciplinary advice which punishes management whose operation are inefficient or unprofitable.
Therefore a reliable rate which results from investment in new factories, machinery, equipment and material to increase the physical capital stock of the nation. The stock exchange market plays an important role in propping up financial capital and provision of market for quoted stock so as to chance the fulfillment of these economic growth parameters. This investing so as to actualize the economic growth.
1.2 STATEMENT OF PROBLEM
The ignorance of the stock exchange has brought about how participation of firm and individual engaging in the stock exchange and this has also limited the availability of stocks and shares that could be traded on the stock market. The stock market is faced with the problem of valley in delivering and settlement of stock transaction.
For the fact that the number of quoted security is small and the total capitalization is about 335 billion which is nothing when compared with some companies abroad that have more than that amount of money as its capital is not encouraging. And for the fact that the government is get to privatize most of the companies in making the stock market not to have financial strength.
Also affecting the market is the fact that most of the operators ie the issuing, the stock brokers auditors etc. are not connected on line and as a result of this information does not come handy. The worst of it all is the political climate, which will not allow foreigners to invest in our securities because of unforeseen circumstances.
1.3 OBJECTIVE OF THE STUDY
1. One of the objectives is to examine the extent to which the Nigerian stock exchange has helped in the growth and development of the industrial sector.
2. The stock exchange has contributed positively to the industrial development of the economy in providing market for quoted securities.
3. The role of stock exchange to industrial development encourage firms and individuals to invest in the stock exchange venture, the recommendations from this write up can also help to as large extent to improve stock exchange and it show the important of the stock market.
4. This research work could also be guide to subsequent research work similar to this.
1.4 RESEARCH QUESTION
1. Why are stock market facing the problem of delay in delivering and settlement of stock transaction?
2. What cause low participation in firm and individual engaging in the stock exchange?
3. How can our political climate not allow foreigners to invest in our country?
4. Why do government delay to privatize most of the companies in order to have financial strength in the stock market?
1.5 HYPOTHESIS FORMULATION
To facilitate the expansion of the claims on the stock exchange role in industrial development these hypothesis have been formulated to know if the Nigeria stock exchange has made positive contribution to the industrial growth and development in Nigeria.
1. H0: Quoted firm do not perform significantly better then they did prior to such quotation
H0: Quoted firm do not perform significantly better then they did prior to such quotation
2. H0: There is no positive relationship between operational efficiency and pricing of securities.
H0: There is no positive relationship between operational efficiency and pricing of securities.
3. H0: Increase in quotation does not lead to increase in the investible fund.
H0: Increase in quotation does not lead to increase in the investible fund.
1.6 SIGNIFICANCE OF THE STUDY
The role of stock exchange and a catalyst in the development of the economy has not been a question of debtor. The stock exchange exist as a sources of fund to the industrial development and also for the channeling of personal savings stock into industrial place for trading company’s stock. It also creates room for capital widening stock rather than deeping it. The benefit of stock exchange quotation is the result of lower cost of capital when raising fund through the market as stock exchange helps to allocate funds between industries and also makes funds available to the most productive industries which hence develop the nation.
1.7 SCOPE OF THE STUDY
The scope of this study covers only the role the stock exchange as a marketing floor for quoted share and stock thereby providing liquidity for the shares and stock helps in the moping of units of inevitable funds which on the aggregate dorm large enough capital.
1.8 LIMITATION
These proposition are not easily established with out some constraints here and there. Some of the problems associated with the study is the lack of data and stick confidence exclusive to the market. Problem into salient areas were not allowed rather an exclusive reservation of the market and all information relating to such area were preserved for the market use only.
Although some members of the exchange assisted with some data information and oral explanation but not without restriction and limitations.
Another problem is the time allocation in this research work which is not enough to make a thorough investigation which the topic deservers. The financial restrictions cannot be left out which also made it impossible to visit the exchange regularly.
1.9 DEFINITION OF TERM
INDUSTRIAL DEVELOPMENT: The increase of industrial expansion of quantity and quality of output in industrial growth process.
STOCK: The ability to mop-up financial capital for investment purpose.
SHARE PROJECT MATERIALS ON:
Role Of Stock Exchange In Industrial Development:
Stock exchanges play a crucial role in the industrial development of a country by serving as a vital financial infrastructure. Their role is multifaceted and can be summarized as follows:
Capital Formation: Stock exchanges provide a platform for companies to raise capital by issuing stocks and bonds to the public. This infusion of capital helps businesses expand, invest in new projects, research and development, and modernize their operations. As a result, it fosters industrial growth and innovation.
Liquidity: Stock exchanges provide liquidity to the securities market, allowing investors to buy and sell shares of companies easily. This liquidity attracts both domestic and foreign investors, as they can easily enter and exit investments, which, in turn, encourages more capital to flow into the industrial sector.
Valuation and Pricing: Publicly traded companies are subject to continuous market valuation. This transparent pricing mechanism ensures that companies are held accountable for their performance and management decisions. Efficient pricing encourages companies to adopt more responsible and competitive strategies, ultimately driving industrial growth.
Corporate Governance: To be listed on a stock exchange, companies must adhere to regulatory and disclosure requirements. This includes regularly publishing financial reports, providing information on corporate governance practices, and ensuring transparency. These measures promote good corporate governance, which, in turn, enhances investor confidence and attracts more investment.
Mergers and Acquisitions: Stock exchanges facilitate mergers and acquisitions (M&A) by providing a platform for companies to acquire or be acquired. M&A activities often result in the consolidation and growth of industries, leading to economies of scale and increased competitiveness.
Risk Mitigation: Stock exchanges offer various financial instruments, such as derivatives and options, that allow companies to hedge against financial risks, including currency fluctuations and commodity price volatility. This risk management enables businesses to focus on their core operations without being unduly exposed to external economic uncertainties.
Economic Indicators: Stock market indices and trading volumes serve as economic indicators. The performance of the stock market is often viewed as a barometer of a country’s economic health. A thriving stock market can boost investor and consumer confidence, attracting investment not only into stocks but also into various sectors of the economy, including industrial development.
Job Creation: As companies grow and expand due to access to capital from the stock market, they often need to hire more employees. This job creation is a direct contributor to the industrial development of a region or country, as it leads to increased economic activity and income distribution.
Innovation: Companies listed on stock exchanges are under pressure to innovate and remain competitive. They are more likely to invest in research and development, technology, and infrastructure to stay relevant in the market. This innovation can drive industrial growth and improve productivity.
In conclusion, stock exchanges play a pivotal role in industrial development by providing a platform for capital formation, fostering transparency and accountability, enabling risk management, and promoting economic growth and innovation. Their influence extends beyond the financial sector, impacting various industries and contributing significantly to a nation’s economic development.