1.1. BACKGROUND TO THE PROBLEM
A stock exchange is a form of exchange which provides services for stock brokers and traders to trade in stock, bonds and other financial instruments and capital events including the payment of income and dividends by Joseph Penso a writer of stock trading. Securities traded on a stock exchange includes shares issued by companies unit trusts, derivatives, pooled investment. Usually, there is a central location at least fork record keeping, but trade is increasingly less linked to such a physical place as modern markets are electronic network, which gives them advantage of increasing speed and reduced cost of transaction. Trade on an exchange is by members only.
The Nigeria stock exchange was established in 1960 as the Lagos stock exchange. In December 1977 it became “The Nigeria Stock Exchange with branches established in some of the major commercial cities of the country. At present there are six branches of “The Nigerian, Stock Exchange, each branch has a trading floor, the branch in Lagos was opened in 1961; Kaduna 1978; Kano 1989; Onisha 1990; Ibadan 1999 and Abeokuta branch. Lagos is the head office of “The Exchange. An office has just been opened in Abuja. The exchange started operation in 1961 with 19 securities listed for trading, the stock exchange and most of the nation stock broking firms and issuing houses are staffed with creative financial engineer that can complete anywhere in the world.
Therefore, the market has in place a network of intermediating organization that can effectively and creditably meet the challenges and growing needs of invested in Nigeria. Integrity is the watch word of “The stock Exchange”. Market operators subscribe to the code; “Our word is our bond”. Thus, public trust in the Nigeria stock market has grown tremendously with about three million individuals investors, (including foreigners who own about 47%), the initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market.
A stock exchange is often the most important component of a stock market. Supply and demand in stock market are driven by various factors as obtainable in all free markets. The importance of stock exchange market in the generation of capital for commercial banks has now become very necessary and important element of every economy. They serve a vital purpose of accumulation of savings and their availability for productive purposes. Infact the rise of joint stock companies and commercial bank and the sustained performances would have been impossible in the absence of stock exchange, against this general background, the researchers will examine the impact of stock exchange market on the generation of capital for commercial banks in Abeokuta metropolis.
In recent time, the Nigeria Stock Exchange has been involved in one crisis or the other. The researchers are thus concerned if the stock exchange will be able to fulfill its roles. The questions therefore are:
This study intends to access the impact of the stock exchange market on the generation of capital for commercial banks in Abeokuta metropolis. Specifically the study will:
Determine if the stock exchange market has any significant effect on the capital base of commercial banks.