THE ROLE OF INFORMATION TECHNOLOGY IN ENHANCING THE PERFORMANCE OF NIGERIA CAPITAL MARKET. (A CASE STUDY OF NIGERIAN STOCK EXCHANGE (KANO BRANCH)

THE ROLE OF INFORMATION TECHNOLOGY IN ENHANCING THE PERFORMANCE OF NIGERIA CAPITAL MARKET. (A CASE STUDY OF NIGERIAN STOCK EXCHANGE (KANO BRANCH)

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CHAPTER ONE:    INTRODUCTION


BACKGROUND TO THE STUDY

Companies and government (local, state, and federal) are continuously facing financial problem not only to meet their short term needs, but also to meet their long term capital requirement for fixed investment like factories, plant and machinery, housing estate, road electricity etc for the execution of such long term project are produced by the capital market. It is a market that mobilized saving from surplus units for long term investment Yusuf (2004). It is the arm of the financial market which is designed to facilitate the efficient flow of long term capital Ekineh (2001).

More elaborately, the capital market is an interconnectivity of financial and government institution, facilities arrangement and individual that interacts in ways approved by law to mobilize and allocate long term funds in the economy through the exchange of fund for debt or equity instruments.



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For the market to prepare itself in thus present millennium there is need for information technology. Major forces that will drive economics and business in the third millennium are increasingly becoming evidence. These include democratization globalization and information technology. Advance information technology have thrown up new challenge that must be taken into consideration thus could be illustrated with the ties in the service sector, where the emphasis is now on customers and service delivery, consequently, effective communication links and computerized system are essential for high quality service delivery.

However, thus research project is set out to examine how modern information technology can be used to enhance the efficiency of the capital market by finding ways to provide information to the investors as required by the earlier mentioned efficient capital market participants and contribute positively to development of the national economy. In addition, an empty shall be made to examine the change that has taken place in the
 




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market with emphasis on those changes occasioned by information technology.

Capital market activities in Nigeria started in 1946 when the colonial government issued a $ 300, 000 local developments stocks. At that time, there was no formal market structure for long term securities.

In 1958, the government set up the R.H Bar back committee to consider and advice it on ways and means of setting up a stock market in Nigeria.

Following the Bar back committee recommendation the

Lagos  stock  exchange  was  establish  in  1959  and  commence

business in June 1961 after the enactment of the Lagos stock

exchange Act of 1961. It was later renamed the Nigerian stock

exchange (NSE) in 1977 and later open several branches in the

country  Kaduna  (1978),  Kano  (1989),  Onitsa  (1990),  Ibadan

(1990),  Abuja  (1999),  and  Yola  (2002),  Benin  (2005),  Uyo

(2007), Ilorin (2008), Abeokuta (2008), Owerri (2009), Bauchi

(2009). Lagos is the head office of the exchange.
 






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Kano which was established in (1989) as one of the branch of Nigeria stock exchange each of these branches has a trading floor.

STATEMENT OF PROBLEM

There is no doubt that information technology is the key to business growth and performance in the 21st Century.

But before the introduction of Information Technology, the capital market service was different and monotonous to perform. This is as a result of its inability to provide investment to public with accurate and required information, which is then characterized by low growth due to low awareness and enlightenment among the investing public during that period investor would rather hold on their fund in cash because there is no ingredient of confidence.

Mean while, with the advance of I.T in which tools are being provided in re- engineering its operation the investing public are partially informed, you will find out that investors are more active and involve in the activities of the Nigeria capital market.
 

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RESEACH QUESTIONS

If all investors have the knowledge of the relevant information at the same time, if all agreed of the implication of at the same time, and if there were no advantages in term of transaction cost determined by the sign of the trading, the market would be perfect in economic sense.

Based on the premise, the following questions come to mind:

What is the relationship that exists between the growth of information technology and capital market efficiency?

What are the forms of information technology tools in re-engineering capital market operation?

What are the modern ways of obtaining technology by investors about market information?

What are the ways of improving information technology in the Nigerian capital market?

What is the correlation between information technology and service delivery?
 

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RESEARCH HYPOTHESIS

Hypothesis is generally statement describing a phenomenon in which the statement might either be true or false. In any research especially in the management science, there is always the need to develop hypothesis that will guide and provide the limits to the research investigation to be carried out the following hypothesis are provided for testing the research finding.

H0- Information technology has significant impact on the performance of Nigeria capital market.

H1- Information technology has no significant impact on the performance of Nigeria capital market.

OBJECTIVE OF THE STUDY

The main objective of this study is to examine the role of information technology in enhancing the performance of Nigeria capital market. However, the study will be guided by the following specific objectives:

To examine the relationship between the growth of information technology and capital market efficiency.
 
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Identify the form of information technology tools in re-engineering of the capital markets operations.

To investigate a correlation between information technology and service delivery ability of stock broker.

To proffer ways of improving information technology in the capital market.

SIGNIFICANCE OF THE STUDY

This study will aid capital market operate on how to use information technology to accelerate the market efficiency.

To provide adequate information which will contribute to the existing fact for use by potential research?

It will be used as material to be kept for use in libraries for reference purpose.

SCOPE AND LIMITATION OF THE STUDY

The study is aimed at assessing the impact of information technology on the efficiency on the capital market in Nigeria with particular reference to Nigerian Stock Exchange Kano Branch. This study shall consider
 

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efficiency in Nigeria. Attempts shall also be made to evaluate the level of information available to Nigeria investors and what is their understanding of the information provided. Also, we shall Endeavor to know how investor prefer to receive capital market in formation. The study will strive to establish (if any) the relationship between information technology and capital market development or efficiency.

A study of this nature which encompasses the Nigerians stock exchange is band to have certain invitation the work performed is united to Nigeria stock exchange Kano branch. It shows that central part for the operation of the Nigeria capital market.

The finding and coalition of requisite information and material for this research work is limited to those obtained from the Nigeria capital market Kano branch.

Distance: The distance between the place of residual of the researches and the case study may not allow for full information because the researchers are under going
 

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double process, they are currently having lectures on campus and secondly undergoing research. The only available time created to gather information from the case study may not yield the required target.

The deposition of the respondent to provide answer to all question throw to them regarding the project matter may not allow for full information and there may not be chance probity of the respondent as a result of tight schedule.

1.7 DEFINITION OF TERMS

In the financial environment certain words refers the meanings as applicable to day to day communication while others have been given specialized meaning, some of the words as used in the context of this research works are defined as follows:

A STOCK: This is a representation of an equity interest in company usually in denomination of N 100 etc.

THE STOCK EXCHANGE: This is physical place where the market is located. It is the place where sellers
 
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and buyers  of  quoted  investment  come    to  transact

business.

CAPITAL: The stock of goods used in the creation of other goods productive resources used in the advancement of further wealth.

CAPITAL MARKET: This is a market that deals in long-term financing (fund and securities).

FINANCIAL SYSTEM: This is framework within which capital formation take place.

MONEY MARKET: This is the market where lending and borrowing of short term loan can be obtained.

CAPITAL FORMATION: The investment process that increase the production capacity of the economy.

Equity (ies): This is a share of quoted companies.



A Share: This is a representation of an equity interest in a company; it is a unit of a share in a company.
 





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Right price: This is the price at which rights shares are issued to existing shareholder

Conversion price: This is the price at which shares are exchange for convertible security.

Debenture: This is a loan obtained by a company from investors through the capital market.

Securities: Relates to all types of share and debenture which may be issued by a company.

Primary Market - A medium through which new financial asset (stocks, bonds, shares etc) are issued or generated.

Secondary Market – A medium through which existing financial assets are traded from old to new ones. Economics Growth – A situation whereby a country raise the per capital income by properly harnessing it national and material resources in such a way as to obtain maximum output.





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