THE STOCK EXCHANGE AND THE NIGERIAN ECONOMY, 1995 TO 2008

Abstract

The economic growth or otherwise of a country’s economy cannot entirely be pinned to a single sector; rather, the success or failure recorded in a vital sector over a given period is a strong indication of the upward or downward movement of such an economy. Stock market is known to contribute to economic growth through functions such as mobilisation of savings for the private sector and government use, creation of liquidity, risk diversification, and improved dissemination of information. An efficient and effective delivery of these services can indeed augment the rate of economic growth. The stock exchange in modern economy plays a vital role in both developed and developing countries. To this end, the impact it makes, which could be positive or negative, can hardly be underestimated. In Nigeria, for instance, the stock exchange has always played a vital role in the growth of the economy through raising of funds for capital projects for individuals, governments and corporate institutions. Undeniably, its relevance has never been in doubt until the stock market crash of 2008, when there was a drastic fall in the prices of stocks in most sectors of the economy. Following the crash of 2008, a great number of investors have since developed wrong perceptions about the stock exchange business. Henceforth, they now see it as a fraudulent institution and to a large extent, the cause of their funds’ devaluation. For the present study, this work seeks to examine the role of the Nigerian Stock Exchange (NSE) in the country’s economy between 1995 and 2008. In doing this, it intends to ascertain the true position of things as it happened in the Nigerian capital market over the period in review. The choice of dates is due to the fact that the NSE was integrated into the world financial market in 1995 and the crash of 2008 marks another water-shed in the history of Stock Exchange and stock market investment in Nigeria. The facts for this research will be generated from oral interviews, important NSE documents such as the NSE yearly fact-book, newspapers, articles, journals, internet publications, among other sources.