Abstract
This study attempts to investigate the performance of the Nigeria capital market and the growth of Nigerian economy from 1986-2005. Data on stocks were modeled to test for the relationship between market capitalization, the number of stock traded in the capital market and development in the economy (GDP). A multiple regression analysis involving the ordinary least squares estimation technique was employed to discover the composite effect of capital market indices such as government stocks, industrial stocks and equities on the development of the economy during the twenty years in review. The multiple correlation coefficients which measured the strength of association between the economic development and capital market performance was positive, indicating that there was a direct perfect relationship among the variables. The result also indicates that none of the variables (predictors) individually predicted GDP. In spite of the enormous opportunities provided by the on-going reforms and the booming economy, the capital market in Nigeria has performed below its potentials owing to a number of factors. Accordingly, it was recommended that there should be a strong need to put in place policy measures that would guarantee competitive participation and cause investors to stop the attitude of "buy and hold" of securities which will delay rapid development of Nigerian economy
Highlights
Abstract!This! study! attempts! to! investigate! the! performance! of! the! Nigeria! capital!.
Value index of Listed securities equitiesSources:(International(Journal(of(Business(studies,(2000.(CBN(Annual(Report(and(Statement(of(Accounts(for( The! growth! of! the! economy! was! not! steady! as! revealed! in! the! analysis.! Market! capitalization! was! noticed! to! pick! up! from! 1998! to! 2005! with! the! following! differential! increases! of! 860.30,! 959.20,! o107.50,! 161.30,! 191.00,! 1,674.11! and! 120.89.! Value! of! stocks! record! a! little! increases! of! 3.98,! 0.87,! 0.15,! 0.00,! 2.00,! 6.02,! 0.00,! 1.83,! 8.00,! 0.12,! 0.00,! 0.00,! 5.38,! 3.90,! 0.00,! 61.00,! Value! index! of! equities! was! not! stable! as! it! rises! and! falls,! the! table! revealed! that! early! 1990,! 1993,!1995,!1998o1999!and!2005!maintained!a!reasonable!figures!of!138.50!respectively.!The! listed!securities!in!the!capital!market!keeps!on!a!little!steady!increases!from!1986!to!1997.!An! improved! increase! of! 102.19,! 16.98,! 38.98,! 6.98,! 11.98! and! 10.99! was! noticed! from! the! year! Table!4.3!revealed!the!relationship!between!capital!market!performance!and!stock!traded.!The! table!revealed!a!steady!growth!differential!of!2.10,!1.00,!3.00,!11.90,!5.60,!14.40!and!17.60!for! 1986!to!1993.!While!1994!to!2005!stood!at!106.60,!114.50,!6.40,!o28.70,!o!63.40,!42.80!and!7.20! respectively.! The! vas! (Volume! of! Stock)! recorded! a! rise! from! 1986! to! 1991,! failed! 1992! to! 1993;! and! gotten! a! steady! figures! of! 49,560,000! to! 49,515,000! respectively.! A! tremendous! 2005! recorded! the! greatest! differential! increase! of! 3.003,! 113.00! naira.! The! VAS! (Value! of! Stocks)!stood!at!382.859.3,!610.3,!225.4,!242.1,!491.7,!804.4,!985.0,!1,838.8,!and!6,979.6!for!the! year! 1986! to! 1995.! 1996! to! 2005! recorded! 10,330.5,! 13,571.1,! 14,072.0,! 28,153.1,! 57,683.8,! 58,406.7,! 120,402.6,! 225,820.0,! 262,935.8,! and! 454,262! and! 839.33.! It! shows! a! great! improvement! in! the! capital! market,! due! to! policies! and! programme! in! the! stock! exchange! market.!The!LNR!rate!stood!at!a!rise!and!fall!rate!of!14.0!18.3,!25.5,!26.0,!20.2,!31.2,!36.1!20.2,! 19.6,!19.5,!17.8!and!17.3!presents!for!the!year!1987!to!2006.!The!unsteadiness!of!the!LNR!was! due! to! the! prices! of! demand! and! supply! of! stocks! traded! in! the! capital! market! that! implies! a! stormy!relationship!in!the!consideration!of!the!various!variables!under!review.!! Table! 4.5! revealed! the! Nigerian! stock! exchange! all! share! price! index,! covering! the! month! by! month! and! values! from! 1986! to! 2005,! December,! 31st.! The! table! 4.4! revealed! a! great! improvement! in! the! Nigerian! stock! exchanges! all! price! index! in! January! of! 1986! to! 2005! with! the! index! positions! of! 168.90,! 190.80,! 239.00,! 343.00,! 528.70,! 794.00,! 1,113.40,! 1,666.30,! 2,285.33,! 5,135.07,! 7,668.28,! 6,435.53,! 5,495.00,! 5752.90,! 9,54.39,! 1,031.95,! 1,3210.11,! 22,712.26,! 22,775.10,! and! 23,679.40.! While! in! December,! 1986! to! 2005! all! index! stood! at! 190.90,! 233.6,! 325.30,! 513.80,! 783.00,! 1,107.60,! 1,543.80,! 2,205,! 5,092.00,! 6,992.00,! 6,440.51,! 5,672.70,! 5,266.40,! 8,11.00,! 10,693.10,! 10,663.10,! 19,942.84,! 23,844.9,! 24,085.76! and! 33,189.30.! in! comparing! the! all! share! price! index! of! 161.17,! 210.75,! 273.81,! 465.55,! 671.45,! 930.88,! 1,229.68,! 17,144.16,! 364,422.75,! 5,481.46,! 7,838.58,! ! 5,960.16,! 5,225.87,! 6,090.93,! 10,390.38,!9,634.02,!15,639.14,!25,005.10,!22,866.43!and!28,101.58!for!the!year!1986!to!2005.! The!analyzed!means!introduction!of!new!shares!in!the!capital!market,!that!such!increases!bring! growth!and!development!of!the!Nigerian!capital!market.!It!also!means!that!Nigerian!companies! are! utilizing! the! capital! market! functions! and! investors! and! the! general! public! are! now! investing! in! Nigeria! companies.! The! performances! are! also! encoining! and! attracting! foreign! investor.!! ! Table!4.6!revealed!the!aggregate!financial!indicator!for!listed!companies!in!the!Nigerian!capital! market.! The! financial! indicators! identified! in! the! table! are! the! turnover,! profit! before! tax,! and! profit!after!tax,!total!dividend,!average!earning!per!share,!and!average!dividend!per!share.!The! turnover! was! in! the! increase! of! 1,605.60,! 1,308.80,! o! 2,392.90,! 1,181.60,! 317.00,! 1,161.50,! 2,093.50,!4,350.80,!8757.70,!9,127.10,!9,127.20,!17,934.40,!37,309.90,!56,773.60,!100,!245.40,! 30,946.90,! 87,821.80,! 125,908.20,! 81,175.30,! 69,391.30,! 91,664.60,! 93,706.70,! 90,271.20,! 283,400.00,! 1,131,345.00! and! o425,250.00! from! 1986o2006.! The! turnover! was! greatly! encouraging! while! from! 2003! to! 2004! brought! a! sharp! draw! of! o425,250.00.! Profit! before! tax! rises!from!637.9!to!33,946.0!in!the!year!1979!to!1994!and!show!to!32,098.0!in,!1995.!The!profit! before!tax!picked!up!again!to!34,034.5!to!110,890.0!in!the!year!1996!to!2004!under!reviewed.! Meaning! a! favourable! growth,! and! development! in! the! operations! of! quoted! companies! in! Nigeria.! ! TABLE*4.5:*The*Nigerian*stock*exchange*allMshare*index*(month*end*values*(1986M2005))*
Before taxThe! various! listed! companies! do! not! record! any! losses! as! indicated! in! the! table.! Profit! after!.
Summary
This! study! attempts! to! investigate! the! performance! of! the! Nigeria! capital!.
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