The Nigeria Capital Market has witnessed obvious level of participation of private and public investors at the floor of stock exchange and in public offers of quoted companies. The emerging market has also attracted and embraced the attention and the interest of international investors, thus increasing capital inflows.
Capital market is a network of specialized financial institutors series of mechanisms process and infrastructure that in various ways, facilitate the bringing together of suppliers and users of medium to long term capital investment in developmental projects.
The main function of capital market therefore, is to raise medium and long term capital and allocate such fund to productive users for a sustainable economic growth and development.
*The capital market is expected to accelerate economic growth, by providing a boost to domestic savings and increase the quantity and quality of goods and services.
*The capital market is expected to encourage savings by providing individuals with an additional financial instrument that may better meet their risk preferences and liquidity needs. Companies in courtiers with well development capital market are less dependent on bank financing which are mostly short and medium term financing thereby reducing the risk of credit crunch.
*The capital market therefore is able to positively influence economic growth through encouraging savings among individuals and providing avenues for corporate fund mobilization(kizito,2012).
The inability of capital market to perform this functions deprives the economy of much needed financial resources for investment and production of goods and services.
The growth and development of the capital market in Nigeria can be traced to 1946 with the floating of #600 000 (more than 300 000 pounds sterling) worth of government stocks.
However, an organized market for the secondary trading of issued stocked was lacking. In 1957, following the establishment of Central Bank of Nigerian (CBN) a year earlier, a #4 million (2 million pounds sterling). Federal Government of Nigeria development loan stock was issued in line with its role of fostering economic and financial development in 1986, Nigeria embraced the International Monetary Fund (IMF) Structural Adjustment Programme (SAP) which influenced the economic policies of the Nigerian Government and led to reforms in the late 1980s and early 1990s. The programme was proposed as an economy within two years (Yesufu,1996) government to judiciously implement some of its policy measures (Oyewusi and Mogbolu, 2003).
Long term capital for financing new projects, and expanding and modernizing industrial/commercial concern (Nwankwo, 1991).