AN EVALUATION OF THE CAPITAL MARKETS: ITS NATURE AND SIGNIFICANCE
CHAPTER ONE
1.1 INTRODUCTION
A capital market is a complex institution comprising of regulators, facilitators, issuers and investors. It is the mechanism through which long term funds for households, firms and government are polled and made available to various sectors of the economy, including transfer of instrument already outstanding. The capital market on the other hand, deals with long term financial claims and obligations. It provides the necessary facilities for users and supplier of capital (Longterm) funds to interact for their mutual benefit. Hence most financial activities which are necessary in the investment process are consummated in that market. Capital market instruments have long-term maturity. Some like equity stock have indefinite maturity dates. In general, all financial transactions which involve maturity periods of over three years could be presumed to belong to the capital market it also has no confined place for its operation however, parts of the market are concentrated in certain well-known centers. Participants in the market are businessmen, government at all levels, financial intermediaries and private investors. In this market buyers are more specific about their requirements.
1.2 STATEMENT OF PROBLEM
Capital market is a market that deals with long term funds and procedure for financing long-term investments. it is also a market where by small business cannot benefit because of its high interest rate.
I want to investigate on some of the problems that hinders the promotion of capital market in Nigeria, also the corrective measure which could be used in solving these problems.
Some of the problems the researcher intends to research are:
a. Dearth in securities
b. Lack of adequate publicity
c. Retention attitude
d. Low savings
e. Lack of interest in securities
Some of the corrective measures that could be adapted to resolve the problem are:
a. Education on the important of buying
b. Government helping to increase the standard of living in Nigeria.
c. High interest rate should be implemented
d. Establishment of more quoted companies that will participate is selling of securities.
1.3 OBJECTIVES OF THE STUDY
Financial market deals about the raising of finance by various institutions through the issue of various securities. Every business concern requires two types of finance. They are Short-term or working capital requirements and long-term or fixed capital requirements. The short-term or working capital requirements are raised or borrowed in the money market through the issue of different securities such as bills, promissory notes, etc. Government raises the short-term funds through the issue of treasury bills. Banks play a vital role in providing short-term funds. The long-term funds or fixed capital are raised by companies by the issue of shares, debentures and bonds in the capital market. The long-term funds or fixed capital are raised by companies by the issue of shares, debentures and bonds in the capital market. Lets look at some of the importance of capital market in economy.
Importance of Capital Market
1. It is only with the help of capital market, long-term funds are raised by the business community.
2. It provides opportunity for the public to invest their savings in attractive securities which provide a higher return.
3. A well developed capital market is capable of attracting funds even from foreign country. Thus, foreign capital flows into the country through foreign investments.
4. Capital market provides an opportunity for the investing public to know the trend of different securities and the conditions prevailing in the economy.
