1.1 BACKGROUND OF THE STUDY
Prior to 1977, there was no stock exchange in Nigeria apart from the Lagos stock exchange which was not centralized. Also, before the Lagos stock exchange cam into being (existence), Nigeria was not having any such market before independence in 1960. Rather, like many developing countries in the 1950s and 1960s, the financial system comprised foreign owned commercial banks which provided mainly short-term loans, commercial and trade credit.
As stated above, the Nigeria stock exchange did not just come into existence, but with gradual process (development) of the Nigerian financial system which has been one of the greatest achievements of the Central Bank of Nigeria (CBN) since its establishment on July 2nd, 1959.
This system consists primarily of the money market (for short-term loans) and the capital market (for long-term loans) and (medium-term loans). The Nigerian stock exchange (previously known as the Lagos stock exchange) is the pivot or the fulcrum around which the entire capital market operates or rotates. It is the market for the sale and purchase of securities (that is stocks and shares). A market in which individuals and institutions (firms) who have surplus funds to their immediate requirement cam employ them profitably.
As this study is geared towards the Nigeria Stock Exchange (NSE) market. The problems militating against it will be highlightened and solution being sourced for, to curtain these problems. Mean by which this market can prosper will be looked into as well and recommendations being made to look at the various problems militating against the market.
As mentioned earlier that the study is geared towards the problems and prospects of Nigeria stock exchange, the emphasis of the study will be laid on Nigeria Capital Market (NCM). As advocated earlier on the establishment of the Nigeria stock exchange, it can then be said that the Nigeria Capital Market (NCM) has been in existence before the establishment of the Nigeria Stock Exchange (NSE). This is so because, prior to 1977, there was no market of such rather, there was Lagos stock exchange that controls the money and capital market.