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THE ROLE OF STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIA. USING THE NIGERIA STOCK EXCHANGE MARKET BENIN
A stock exchange is an organized auction market with physical location and facilities for trading in stocks and shares through professional Intermediaries known as stockbrokers. It also co-ordinates the activities of other capital market operators to raise funds from the public or institutional Investors for companies and government for development purpose.
It is also Intermediary between Investors who wish to Invest in projects and companies who are in need of investors. It is an original market where large and small Investors alike buy and sell through stock brokers.
The stock exchange provides the essential facilities for companies and government to raise money. It can also be seen as a place where companies can raise funds for expansion to make their business bigger and better.
1.1 GENERAL OVERVIEW OF THE STUDY
TheNigeriastock exchange is the only stock exchange inNigeria. It is owned by its members, most of its members operate inNigeriacities and town. There are also some market operators that work within theNigeriastock exchange. The exchange is directed by the council. The council has an upper limit of 25 members comprising Individuals who by their track record can make valuable contribution to the exchange.
From its establishment in 1960, theNigeriastock exchange (NSE) has served as an engine of growth for theNigeriaeconomy. As at 1961, the stock exchange market operated as theLagosstock exchange trading with only 19 securities. It was later change toNigeriastock exchange and it established branches inKaduna,Port Harcourt,Onitsha,IbadanandLagoswhich is called trading floor.
1.2 STATEMENT OF THE PROBLEMS
This research work is carried out to know the role of stock exchange in economy development ofNigeria. Emphasis is hard on the issue, problem and prospects of stock exchange market. The important step is the need for continuous information to explain the benefit of the stock exchange to theNigeriapublic and also give them access to continuous information. Some of the problems are discussed below:
1. Low rate of capital accumulation and formation: The capital used for setting up the stock exchange is too small; enough capital should be made available so as to upgrade their technology for them to be able to complete with the outside countries and also to attract foreign Investors.
2. Poorly developed communication facilities: Information is power, the moment the Investors get Information about the market early. It will be easier and the economy will develop.
3. Lack of confidence: Most Nigeria have no confidence on the brokers, they labour so hard to set up companies but do not know the importance of quoting them in the stock exchange to include them in the listing of stock exchange.
4. Poor education of Investors: Most Investors are uneducated thereby reducing the level of economic growth. Seminar should be organized for them so as for them to Invest their money rather than spend it impulsely.
The management of stock exchange is not relenting in its effort of technology that will move the market forward so as to enable it compete favourably. Its objective lies on the role which is listed below:
1. Control of quotation prices on the stock exchange in respect of stock and shares of government.
2. Regulating of dealing activities of members and clients Investors.
3. To liaise with the stock exchange of other nation in updating their information and management of information facilities.
4. To co-ordinate stock broking activities of dealing members and facilitate the management and exchange.
5. To review and when necessary increase or decrease the fees and services charged by members from their clients.
1.4 RESEARCH QUESTION
1. What contribution has stock exchange made in the development ofNigeriaeconomy?
2. Is there any relationship between theNigeriastock exchange and the economy?
3. What are the likely facilities provided by the stock exchange to the companies and government in raising money in their business and development project?
4. What are the roles performed by the stock exchange inNigeriaeconomy.
5. Does lack of confidence on brokers affect the development ofNigeriastock exchange?
1.5 SIGNIFICANCE OF THE STUDY
The significance of the exchange as a way forward in any economic growth and development as well as mobilization of long term fund for corporate growth in Investment.
1. It is a place where funds are raised from investor to users.
2. They help in capital formation.
3. They regulate dealings of members.
4. They help in the expansion of industry and commerce through discovery of new source.
5. The stock exchange review, standardize, increase or decrease fees charged to customers by members.
1.6 SCOPE AND LIMITATION OF THE STUDY
This study is about the development of the economy inNigeriaby the stock exchange and how it has been a helping hand to its development of the economy.
It covers all factors that can be perceived reasonably as the role policies and its operation that are geared towards the development ofNigeriaeconomy.
The researcher came in contact with lot constraints in the process of carrying the study. Some of these are respondent attitude to both questionnaire and interview and as such the research had to be based on limited primary data. However such problems did not affect the validity of this research.
1.7 DEFINITION OF TERMS
1. Market: Is a place where buyers and sellers meet to exchange goods and services.
2. Stock: The value of the shares in a company that has been sold.
3. Stockbrokers: A person or organization who sells and buys stock and shares to other people.
4. Securities: Is a documentary evidence that somebody is the owner of the share.
5. Shares: Is a unit of equal value into which a company is divided and sold to raise money.
6. Sec: Securities and Exchange Commission that is responsible for regulating and supervising the activities of members in the stock exchange.
7. Trade alert: A message sent to potential Investors on business made or to be made.
8. Issuing house: A stockbroking firm that specializes in buying and selling of securities on behalf of other company.
9. E-business: Business done with the use of advance electronic equipment.