CHAPTER ONE
Introduction
1.1 Background of the study
Stock markets may affect economic
activity through the creation of liquidity. It contributes to economic
development by enhancing the liquidity of capital investments. Many profitable
investments require a long-term commitment of capital, but investors are often
reluctant to relinquish control of their savings for long periods. Liquid
equity markets make investment less risky--and more attractive--because they
allow savers to acquire an asset--equity--and to sell it quickly and cheaply if
they need access to their savings or want to alter their portfolios. At the
same time, companies enjoy permanent access to capital raised through equity
issues. The Nigerian capital market needs to play the role of an enabler for
the transformation of the Nigerian economy, by becoming the first port of call
for domestic savings and for international investors (Oteh, 2010).
Until recently, the literature has focused mainly on the role
of financial intermediation in the process of economic growth and capital
accumulation.
1.2 STATEMENT OF THE PROBLEM
The role of the stock
market to mobilize longterm fund to be channeled manufacturing industrial development. Despite the relative
dynamism and
vitality observed in the evolution of the Nigerian capital
market, empirical literature however suggests that the efficiency at
effectiveness of the market in
promoting industrial development may be greatly limited as
evidenced by the low level of the contribution of the industrial sector to
overall market capitalization. The problem of this study is to ascertain the
correlation between stock market and industrial development in Nigeria.
1.3 Objective of the study
This research
work titled “Stock market growth of manufacturing sector 1999-2013†is aimed
at:
1. Evaluating the
role of Nigerian stock market on the development of Nigerian manufacturing
industry from 1999 to 2013.
2. To examine the
impact of Nigerian stock market on the development of Nigerian economy.
3. To determine
the relationship between the stock market and Nigerian manufacturing industry.
4. To examine the
various problems associated with Nigerian stock market.
5. To also
proffer possible solutions to the problems identified.
1.4 Research question
The researcher
formulated the following research questions:
1. What are the
roles of Nigerian stock market on the development of Nigerian manufacturing
industry
2. What are the
impacts of Nigerian stock market on the development of Nigerian economy.
3. Is there any
relationship between the stock market and Nigerian manufacturing industry.
4. What are
problems of Nigerian stock market.
1.5 Research Hypothesis
For the
researcher to carryout extensive study on the subject matter, the following
research hypothesis were formulated:
Ho: The
Nigerian stock market has not played any role in the development of Nigerian
manufacturing industry from 1999 to 2013.
H1: The
Nigerian stock market has played significant role in the development of
Nigerian manufacturing industry from 1999 to 2013.
Ho: Nigerian stock
market has no impact on the development of Nigerian economy.
Ho: Nigerian
stock market has significant impact on the development of Nigerian economy.
Ho: There is
no relationship between the stock market and Nigerian manufacturing industry.
Ho: There is
significant relationship between the stock market and Nigerian manufacturing
industry.
1.6 SIGNIFICANCE OF THE STUDY
This research
work will be of immense help to:
The Researcher: it will help the researcher
to know more on the impact/role of the stock market on the manufacturing industry.
It will also
be of great importance to stake holders as it will enrich their knowledge on
the relevance of the stock market in the development of the manufacturing
industry.
This will
equally be of help to companies and banks, when they abide by the
recommendations provided by the researcher it will help them in time of
decision making.
This study
will be of great importance to the country Nigeria as it will help the policy
makers in terms of enacting law.
1.7 Scope
and Limitations of the Study
The study shall focus on stock market growth of the manufacturing
sector 1999-2013.
The researcher
in carrying out this study encountered numerous problems, which includes:
FUND – This included lack of enough fund
to move around and visit the organizations, the researcher has to visit the
organizations more than two times, the researcher equally needed enough money
to source material which constitutes an impediment. High cost of transportation
in the city due to long distance also imposed its own limitation on the
researcher.
LACK OF RESEARCH MATERIALS: lack of
research materials was also one of the problems faced by the researcher in the
cause of this research work.
RESPONDS OF THE RESPONDENTS: Another
constraint to the researcher is that some of the respondents found it difficult
to express their view with regards to the subject matter.
From the above
points the researcher tried her best to bring out in detailed study on stock market growth of the manufacturing sector 1999-2013 but the above
constraints have limited the researcher to only Enugu state.
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