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This study is on the impact of capital investment on the Nigeria economy. The total population for the study is 200 staff of CBN, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, account officers, customer care officers and economists were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies



1.1      Background of the study

The lack of proper institutional from work to absorb saving could result in saving being channeled into unprofitable ventures.  However, as the guest for economic development becomes urgent, the need for an organized and well developed capital market arise to encourage savings and investment and to provide opportunity for saves to participate in the ownership and / or returns of business enterprises which will encourage more capital investment. The capital market is the segment of the financial system which facilitates the channeling of long-term funds from surplus to deficit economic units thereby stimulating capital formation and socio-economic development. The capital market does not only serve as a source of finance for the government and industries, but provide a wide range of socio-economic benefits to any country. By mobilizing funds for channeling into productive investments, the market brings together those who have and those who need funds at usually competitive prices and conditions acceptable to both parties, thereby ensuring efficient resource allocation while promoting economic growth (Okereke-Onyiuke,2008). In the absence of capital market, industrial growth would be hampered, as the money market is not designed to provide such funds. The availability of the secondary market such as the stock market for instance is an important aspect of the capital market, as investors are much more disposed to placing funds in such primary market if their holdings are easily convertible into cash. Hence, the stock exchange is the core of capital market development in any society (Okereke-Onyiuke, 2008). Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over the counter, or elsewhere. Generally, the performance of any economy is dependent largely to the efficient performance of its financial markets (Capital market and Money market), since they enhance the financing of productive activity and hence, national output and economic growth. The financial system or market is basically a linkage of various entities for effective and efficient identification, collation, transmission, transfer and utilization of financial resources. An important aspect of the market’s function is the efficient allocation of these resources to form surplus economic units to deserving areas of needs in a manner that boosts or support economic development (Onosode, 1998). The financial market broadly consists of the short term end, the money market and the relatively medium to long term spectrum, the capital market. The Capital market does not only serve as a source of finance for industries and government, but equally provide a wide range of socio-economic benefit to any country. Perhaps, the single most important social benefit of the capital market (specifically the equity market) is the opportunity it affords a wide spectrum of the populace to participate in the ownership of corporate establishment (Patrick, 2005). Thus, lack of adequate financial resources in an economy could affect every economic segment- the government, business and household sectors- and may invariably impact negatively on the political and social stability of any country. It is obvious therefore that finance is an essential ingredient in the stimulation of economic growth and development.


The linkage between capital market performance and economic growth has often generated strong controversy among analysts based on their study of developed and emerging markets (Onosode; 1998 and Osinubi; 1998). The determination of the growth of an economy depends on how efficiently the capital market performs its allocative function of capital. As the stock market mobilizes savings, concurrently it allocates a larger proportion of it to the firms with relatively high prospects as indicated by its rate of returns and level of risks (Alile, 1997). Previous research conducted by researchers’ shows that the capital formation through the instrumentality of the capital market is germane to the growth and survival of any economy; therefore it is of utmost importance to examine the impact of the Nigerian capital market on the economic development of Nigeria (Alile, 1997). In light of the above mentioned facts, the question now is, to what extent Nigerian capital market has fulfilled the above developmental objectives. The broad objective of this study is to therefore examine the impact of capital market on the Nigerian economy and specifically, to: show the trend of capital market over the years, determine the relationships between capital market and economic growth (GDP as proxy) and proffer recommendations based on the research findings


The objectives of the study are;

1.   To ascertain the impact of capital investment on the Nigeria economy

2.   To ascertain the relationship between capital investment and the growth of Nigeria economy

3.   To ascertain if there are challenges of the Nigerian stock exchange in developing the capital market

4.   To establish the effect of the Nigerian stock exchange crisis on Nigerian capital market


Hypothesis One

HO: there is no relationship between capital investment and the growth of Nigeria economy

HI:    there is relationship between capital investment and the growth of Nigeria economy

Hypothesis Two

HO:  there is no effect of the Nigerian stock exchange crisis on Nigerian capital market

HI:  there is effect of the Nigerian stock exchange crisis on Nigerian capital market


The significance of this study will therefore be of benefit to the government and the central bank for them to plan, initiate programme and actions and a sound frame work on government monetary policies to sustain the economy.   This institutional operators of the money and capital markets, to other financial institution like commercial banks, non – banking financial societies like cooperative societies, insurance and reinsurance companies, business communities, government companies and parastatals, including future researchers in the academic filed who will like to share this world of experience will find this project work beneficial.


The scope of the study covers the impact of capital investment on the Nigeria economy. The researcher encounters some constrain which limited the scope of the study;

 a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study     

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.


 CAPITAL INVESTMENT: Capital investment refers to funds invested in a firm or enterprise for the purpose of furthering its business objectives. Capital investment may also refer to a firm's acquisition of capital assets or fixed assets such as manufacturing plants and machinery that is expected to be productive over many years

NIGERIA ECONOMY: An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study 

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