The Impact Of Capital Market Economics Essay

Al-faki ( 2006 ) , states that capital market is a web of specialise fiscal establishments, series of mechanism, procedures and substructure that in assorted ways facilitate the conveying together of providers and users of medium to long term capital for investing in economic development undertaking.

Pedro and Erwan ( 2004 ) assert that fiscal market development raises end product by increasing the capital used in production and by guaranting the capital is put into best utilizations. Abdullahi ( 2005 ) ; Adam and Sanni ( 2005 ) besides stress the importance of capital market in economic development in Nigeria.

Rousseau and Sylla ( 2001 ) ; Calderon and Liu ( 2002 ) , supports that fiscal system development promotes economic growing of Chile. Similarly, Bolbol et Al ( 2005 ) , indicates that capital market has contributes to the market development growing of Egypt. Tharavaniji ( 2007 ) , observe that states with deeper capital market face less terrible concern rhythm end product contraction and lower opportunities of an economic downswing compared to those with less developed capital market. On their ain portion, Ben and Ghazuoani ( 2007 ) , reports that fiscal system development could hold inauspicious consequence on economic growing in a sample of 11 states they studied and hence advocated for a vivacious fiscal sector.

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In Belgium, Nieuwer et Al ( 2005 ) , investigates the long term relationship between economic growing and fiscal market development. The writers use a new set of stock market indexs to reason that fiscal market development well affects economic growing. They find out strong grounds that stock market development leads to economic growing in Belgium particularly in the period of 1973 and 1993. Chee et Al ( 2003 ) indicates that stock market development has a important positive impact on economic growing in Malaysia.

The writer besides reports that stock market development granger- causes economic growing. The survey by Muhammed et Al ( 2008 ) , suggests that there is a long-term relationship between stock m market development and economic growing. Liu and Hsu ( 2006 ) , reports that a positive impact on economic growing of stock market development in Taiwan, Korea and Japan. The work of Francia et Al ( 2007 ) , shows that stockholder protection causes stock market development and finally economic growing.

In Nigeria, some writers have besides examined the relationship between stock market development and economic growing. For case, Adam and Sanni ( 2005 ) examine the function of stock market on Nigeria 's economic growing utilizing granger-causality trial and arrested development analysis. The writers discovered causality between GDP growing and market turnover. They besides observed a positive and important relationship between GDP growing turnover ratios. They besides advice that authorities should promote the development of the capital market since it has a positive consequence on economic growing. Abu N ( 2009 ) , examine that the stock market development raises economic growing in Nigeria, by using the mistake rectification attack. The econometric growing consequences indicate that stock market development ( market capitalisation GDP ratio ) increases economic growing. He, nevertheless, recommends the remotion of hindrance to stock market development which include revenue enhancement, legal and regulative barriers, development of the state 's substructure to make environment where concern can endeavor, employment policies that will increase the productiveness and efficiency of houses every bit good as encouragement of the Nigeria Securities and Exchange Commission to ease the growing of the market which will reconstruct the assurance of stock market participants and safe guard the involvement of stockholders by look intoing crisp patterns of market operators. Osinubi and Amaghionyeodiwe ( 2003 ) , besides examine the relationship between Nigeria stock market and economic growing during the period of 1980 - 2000 utilizing ordinary least squares arrested development ( OLS ) . The consequence indicates that there is a positive relationship between the stock market and economic growing. They suggest the chase of policies geared towards rapid development of the stock market.

Ezeoha et Al ( 2009 ) , investigate the nature of the relationship that exists between stock market development and the degree of investing ( domestic private investing and foreign private investing ) flows in Nigeria. The writers discovered that stock market development promotes domestic private investing flows more than that of foreign private investing. They suggest the sweetening of the economic system 's production capacity every bit good as publicity of the growing of national end product. However, the consequences show that stock market development has non been able to promote the flow of foreign private investing in Nigeria. Obamiro ( 2005 ) , investigates the function of the Nigeria stock market in the visible radiation of economic growing. The writer reports the important positive consequence of stock market on economic growing. He suggests that authorities should make more enabling environment so as to increase the efficiency of the stock market to achieve higher economic growing. On their ain portion, Ted et Al ( 2005 ) besides examine the empirical association between stock market development and economic growing in India. Whereas the writers find support for the relevancy stock market development to economic development during pre - release, they discovered a negative relationship between stock market development and economic development for the station liberalisation period.

CONCLUSION AND RECOMMENDATION ;

Based on the treatment of findings of the survey, the undermentioned recommendations are highlighted ; 1: Encouraging more private limited liability companies and informal sector operators to entree the market for fresh capital.

2: Trading hindrances such as high dealing costs should be reviewed to promote more active trading in stocks.

3: Stock Exchange Commissions should be more proactive in its surveillance function in order to look into crisp patterns which undermine the capital market unity and erode investors ' assurance.