The capital market in Nigeria had been influenced by various factors which are associated with the level of development of the Nigerian economy The paper discusses the development of the capital market with emphasis on the period since
deregulation in 1986. The institutions that are crucial for the delivery of financial services in the market were analysed with focus on their evolution, performance and prospects. The. market in Nigeria was compared with other emerging markets with the conclusion that the market, remains shallow and without the expected variety that characterised markets in countries at similar level of development. The prospects of the market appear to be bright considering the current posture of the government in the areas of privatization and commercialisation of government enterprises. Also, with appropriate regulatory framework that would guide the operators more effectively, the market could assume the expected role of providing
long-term financing for the development of the economy.
INTRODUCTION
The role of capital in the production process and economic performance of a nation has long been recognised. Capital provides the impetus for the effective and eficient combination of factors of production to ensure sustainable economic
growth. Moreover, the effective utilization of productive resources accumulated over time would determine the pace of growth of an economy. Growth in productive activities and its distribution determines the social well being ofthe population. Capital formation, however, can only be achieved through conscious efforts at savings
mobilization and accumulation of resources by both the public and private sectors of an economy. The unique position of the capital market could, therefore, be appreciated fiom this perspective. Financial markets generally provide avenue for savings of various tenors that are made available for utilization by various economic agents. The capital market, which is a major segment of financial markets, provides a setting through which medium to long-term resources are provided for productive utilization.
The objective of the paper is to appraise the Nigerian Capital Market since 1986 when the liberalisation policy was introduced. The introduction of the Structural Adjustment Programme (SAP) in 1986 put pressure on the Nigerian capital
market. This was in response to the high interest rates in the money market, which led enterprises in the private sector to patronize the capital market for equity capital.
As a result, greater opportunities for private investors who wanted to borrow from the capital market were created.
The response of the Nigerian capital market to these developments is therefore the thrust of this paper.
Accordingly, the rest of the paper is structured into five parts. The theoretical and conceptual issues are treated in part 2, performance appraisal of the market using some of the market indicators is done in part 3, and problems and prospects are discussed in part 4. The last part contains the summary, conclusion and recommendations