CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A buoyant and dynamic economy is the one built upon a sound financial system. Such finical system should be stimulated and maintained by the effective activities of an efficient capital market, which is the head of the “Stock Exchange”. The stock exchange therefore is the market where companies, raise capital on a short term and long term basis. This role of mobilization and allocation of funds to every sector of the economy which made it (Stock Exchange), the toast of investors has given it a pride of plan in every economy. There is no doubt, that the success or failure of every sector in the economy rests to every large extent on its stock exchange market.
This is because for any sector in the economy to grow an efficient means of capital formation must not be ignored considering the importance of capital in any organization setting. Since the establishment of the Nigerian stock exchange (NSE) some forty two years back (42) elements of stagnation, dormancy and unproductiveness in the economy is being experienced despite the tremendous development in the exchange systems. This situation has taken a worrisome dimension in which many questions are being raised on the relevance of the Nigerian stock exchange in facilitating investments in the Nigerian economy.
1.2 STATEMENT OF THE PROBLEM
It is widely reported that the Nigerian Stock Exchange (NSE) has not contributed adequately as desired to the development of the economy especially with regard to investment in Nigeria this is due to certain reasons:
1. Low public awareness of finance possibilities of the Nigerian stock exchange market.
2. Inadequate trading floor to meet the demand of the public.
3. Poor infrastructure such as telecommunication, electricity etc to facilitate its activities
4. High cost of transaction.
5. Lack of venture capital and weak savings mechanism. It is along these that efforts will be made in this study to bring to notice the validity of these and other allegations leveled against the Nigerian Stock Exchange over the years.