ATTENTION:
BEFORE
YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE
INFORMATION BELOW.THANK YOU!
INFORMATION:
YOU CAN
GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL PROJECT COSTS N5,000
ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT IS AT THE
BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420
FINANCIAL
SECTOR LIBERALIZATION AND CAPITAL MARKET DEVELOPMENT IN NIGERIA
ABSTRACT
This
Research study was carried out to find the link between financial sector
liberalization and capital market Development. As part of the Structural
Adjustment Programme (SAP) of 1986, the Nigerian Government initiated a large
scale restructuring
Of the
financial sector and the liberalization of the regulations concerning financial
institutions and markets. This was justified on the basis of existing market
failures which
arose from
externalities and lack of information
Using the econometric techniques, we found,
that financial liberalization increased the real deposit ratio and also will
lead to a substitution into financial asset resulting in a greater supply
credit to finance real investment for capital market development and economic
growth. Consequently, we recommend that for macroeconomic stability, efficiency
and proper development of the financial system, direct control should be
discouraged while indirect control should be encouraged through the market
mechanism.
CHAPTER
ONE
1.0 INTRODUCTION
1.1
BACKGROUND TO THE STUDY
Just like other African Economies, Nigeria’s
financial sector is underdeveloped and unorganized. It is characterized by
dualism, market segmentation and spatial fragmentation [Iyoha, 2002]. Financial
sector facilitates the conduct of trade transactions, the efficient use of
financial resources, mobilization of savings and risk taking which are central
to sustained Economic Growth and Development.
According to
T.W. Oshikoya and Osita Ogbu [1995], financial liberalization in several
African countries has been implemented largely through Structural Adjustment
Programs. In Nigeria, until the adoption of structural adjustment program in
1986, financial repression and bureaucratic control of interest rates were the
order of the day.
Economic
Development creates demands for particular types of financial arrangements and
the financial system responds automatically to these demands. Finance, is
argued to act as a catalyst in the process of Development but if repressed
could become fetters or obstacles to the Growth process [Ikhide, 1997].
Even though the money and capital markets in
Nigeria are not as deep as desirable, a start seems to have been made in the
late 1980s and early 1990s to develop a more robust and balanced financial structure
that would improve the ability of the domestic financial system to mobilize
savings and contribute to self sustained Economic Growth [Iyoha, 2002].
The
objectives of the liberalization are to build more efficient, robust and deeper
financial systems, which can support the growth of private sector enterprise.
Efficiency entails two components; which are improved credit allocation and
more or higher quality financial services for a given level of inputs [Brown
Bridge and Gayi, 2001].
The role
played by the financial sector is an Economy can be important in determining
Economic Growth. A growing empirical literature demonstrates that the
Development of the financial system has positive effects on the long run rate
of Economic Growth and the volume and efficiency of investment [Fry, 1995
Philip Arestis et al, 2002], through the removal of the elements of financial
repression, particularly controlled interest rates, financial sector
liberalization is expected to lead to higher nominal and real interest rate
[Emenuga, 2001].
The capital market is divided into two
segments: the primary market where companies’ shares are issued for the first
time before being quoted on the stock exchange and secondary market where is
trading is done in existing stocks. The capital market has served as a source
of long- term fund to finance investment in the private sector of the Nigerian
Economy.
The liberalization of the financial sector
involved liberalization of interest rates, promotion of market based system of
credit allocation and enhancing completion and efficiency of the regulatory and
supervisory framework [Ikhide, 1997]
1.2
STATEMENT OF PROBLEM
This study
attempts to examine the extent to which the liberalization policy has resolve
the problems existing in the system which are direct controls, the pervasive
Government intervention in the financial system and the resultant stifling of
competition and resource misallocation.
This study attempts to find out the extent to
which the liberalization policy has resolve the problem of externalities, which
relates to the distortions caused by high and volatile inflation.
This study is concerned with the impact of the
liberalization policy on the information problems, which is in the form of
informational asymmetries between the suppliers and uses of financial services.
1.3 SCOPE OF
THE STUDY
This study
will undertake an analysis of the financial liberalization policy with a view
to identifying the reason that led to the adoption of the policy. The focus
will be on measuring the influence and effects of financial sector
liberalization on some capital market Development indicators as far as the
availability of Data permits. The period of the study is from 1970- 2004 in
order to carry out a trend analysis on the before the liberalization period
[1970 – 1985] and after the liberalization [1986 – 2004].
1.4
JUSTIFICATION OF THE STUDY
Financial
sector reforms in Nigeria has embraced a number of policies designed to
increase the size, improve the efficiency and raised the diversity of the
financial system. This goal is achieved through financial liberalization which
is viewed as the process of moving towards market- determined prices on all
classes of financial products, characterized by symmetric entry and exit
conditions to all participants increasing internationalization as represented
by the opening up of domestic markets to international competition [Ikhide,
Yinusa, 1998].
The liberalization of financial institutions
and markets is an improvement in financial intermediation, which is considered
a necessary condition for stimulating investment, raising productive capacity
and fostering Economic Growth and Development.
1.5 OBJECTIVES OF THE STUDY
The general objective of this study is to
determine the extent to which financial liberalization have led to the
development of the capital market in Nigeria. To achieve this general
objective, the following specific objectives will be examined.
1. To
provide a comprehensive insight into the structure of the capital market in
Nigeria.
2. To
examine the impacts of liberalization on the Development of the capital market.
3. To access
the impact of reform policies like debt conversion programs.
1.6 RESEARCH
QUESTIONS
This study
will be based on the following Research Questions:
1. Has the
financial sector liberalization measures been effective in achieveing its
stated objectives?
2. Has the
financial sector liberalization measures been able to solve the repressed
nature of the Nigerian capital market?
3. Has
financial sector liberalization measures improved the efficiency in resource
allocation and quality of investment in Nigeria?
1.7 RESEARCH
HYPOTHESIS
Ho:
financial sector liberalization does not have a positive impact on capital
market
Development.
Hi: financial sector liberalization does have a
positive impact on capital market Development.
Ho: capital
market development does not have a positive impact on Economic Growth.
Hi: capital market developments do have a
positive impact on Economic Growth.
1.8
METHODOLOGY OF THE STUDY
The study
will adopt Econometrics techniques to estimate the Models. We will use the
Ordinary Least Squares (OLS) method of estimation and the Cochrane- orcutt
correction method.
1.9 SOURCES
OF DATA
The Data
used for this study are obtained essentially from the publication Central Bank
of Nigeria statistical bulletin and Central Bank of Nigeria Annual Statement of
Accounts. Others may be obtained from Nigeria Stock Exchange and other
International Economic Journals.
1.10.
OUTLINE OF PROPOSED CHAPTERS
The final
report will be organized into five chapters.
Chapter 1 Introduction.
Chapter
2 Literature Review
Chapter
3. Theoretical framework and Research
Methodology for the Study.
Chapter
4. Data Analysis and Interpretation
Empirical Result.
Chapter
5. Summary, Policy Recommendation and
Conclusion.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following
instructions and information if you will like to order/buy our complete written
material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount
(#5,000) into our bank Account below, send the following information to
08068231953 or 08168759420
(1) Your project
topics
(2) Email
Address
(3) Payment
Name
(4) Teller Number
We will send your material(s) after
we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE
Comments
Post a Comment