An Examination of the Effectiveness of Financial Regulations in Preventing Fraud in Nigerian Capital Markets: A Case Study of NSE
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Background of the Study
Fraud in capital markets poses significant risks to investors, financial institutions, and the economy at large. In Nigeria, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) have established financial regulations aimed at protecting investors and ensuring market integrity (Ajayi & Olayemi, 2023). Despite these efforts, cases of fraud, including market manipulation, insider trading, and Ponzi schemes, continue to be reported in the Nigerian capital market.
This study examines the effectiveness of financial regulations in preventing fraud within the Nigerian capital market, using the NSE as a case study. It explores the challenges in enforcement, the role of regulatory bodies, and the gaps in the current regulatory framework (Oluwaseun, 2024).
Statement of the Problem
The persistence of fraudulent activities in the Nigerian capital markets undermines investor confidence, reduces market liquidity, and damages the reputation of the financial system. Although regulatory frameworks are in place, their effectiveness in curbing fraud remains questionable due to weak enforcement, insufficient monitoring, and limited resources (Adetola, 2023).
This study investigates the effectiveness of financial regulations in preventing fraud in Nigerian capital markets, providing insights into potential reforms to improve market integrity.
Objectives of the Study
- To evaluate the effectiveness of financial regulations in preventing fraud in the Nigerian capital market.
- To examine the challenges in the enforcement of financial regulations at the NSE.
- To propose recommendations for strengthening financial regulations and reducing fraud in the Nigerian capital market.
Research Questions
- How effective are financial regulations in preventing fraud in the Nigerian capital market?
- What challenges hinder the enforcement of financial regulations at the NSE?
- What strategies can be adopted to improve the prevention of fraud in the Nigerian capital market?
Research Hypotheses
- Financial regulations have a significant impact on reducing fraud in the Nigerian capital market.
- Weak enforcement of financial regulations contributes to the persistence of fraud in the NSE.
- Strengthening financial regulations can improve market integrity and reduce fraudulent activities.
Scope and Limitations of the Study
The study focuses on financial regulations in the Nigerian capital market between 2023 and 2025, specifically at the NSE. Limitations include access to sensitive regulatory data and the evolving nature of financial crimes.
Definitions of Terms
- Financial Regulations: Rules and guidelines designed to ensure the integrity and stability of financial markets.
- Fraud: Deliberate deception or misrepresentation for financial gain.
- Capital Market: A financial market where long-term debt or equity-backed securities are bought and sold.
