An evaluation of the role of the Nigerian Stock Exchange in capital market development: Evidence from Abuja
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Background of the study :
The Nigerian Stock Exchange (NSE) plays a fundamental role in mobilizing savings and facilitating capital formation, essential components for capital market development. In Abuja, where the financial ecosystem is evolving, the NSE serves as a critical platform for investment and economic diversification (Ibrahim, 2023). The capital market provides avenues for businesses to raise funds, thereby contributing to overall economic growth and investor confidence. Recent research highlights the potential of the NSE to stimulate economic activities by providing transparency, liquidity, and risk-sharing mechanisms (Adeyemi, 2024). However, challenges such as market volatility, regulatory constraints, and limited investor participation persist (Olaoye, 2025). These issues are particularly significant in a developing financial market like Nigeria’s, where institutional frameworks and investor education are still evolving. The study examines how the NSE’s operations and policies in Abuja influence capital market development, exploring the balance between regulatory oversight and market innovation. A comprehensive review of market dynamics and empirical analysis of trading data provide insights into the success factors and constraints affecting market performance (Ibrahim, 2023; Adeyemi, 2024). This investigation is crucial for policymakers and market participants seeking to harness the full potential of the Nigerian capital market.
Statement of the problem
Despite the Nigerian Stock Exchange’s potential as a catalyst for economic growth, challenges such as inadequate investor participation, regulatory bottlenecks, and market volatility continue to undermine its effectiveness (Olaoye, 2025). The gap between the theoretical benefits of a developed capital market and its practical outcomes is significant. In Abuja, these challenges are compounded by a lack of sufficient market education and infrastructural support, leading to suboptimal market performance. There is an urgent need to understand the underlying factors that restrict the NSE’s role in stimulating capital market development. This study aims to address these issues by evaluating current market practices, regulatory frameworks, and investor behavior, thereby offering recommendations for enhancing market efficiency (Ibrahim, 2023).
Objectives of the study:
- To assess the role of the Nigerian Stock Exchange in fostering capital market development.
- To analyze the challenges and opportunities in market operations within Abuja.
- To propose strategies for enhancing investor participation and market efficiency.
Research questions:
- What is the role of the NSE in promoting capital market development in Abuja?
- What challenges hinder the effectiveness of the NSE?
- How can regulatory frameworks be improved to enhance market performance?
Research Hypotheses:
- A robust regulatory framework positively influences NSE performance.
- Investor participation significantly affects market development.
- Addressing infrastructural challenges improves overall market efficiency.
Significance of the study
This study offers critical insights into the Nigerian Stock Exchange’s impact on capital market development in Abuja. By identifying the key challenges and opportunities within the market, the research provides a foundation for policy reforms and improved market practices. The findings will aid regulators, investors, and market participants in enhancing transparency and liquidity, which are essential for sustainable economic growth. Overall, the study contributes to both academic research and practical policy adjustments that support a dynamic and efficient capital market (Ibrahim, 2023).
Scope and limitations of the study:
This study is limited to evaluating the role of the Nigerian Stock Exchange in capital market development in Abuja only.
Definitions of terms:
- Capital Market: A financial market in which long-term debt or equity-backed securities are bought and sold.
- Investor Participation: The level of involvement by individuals or institutions in market transactions.
- Nigerian Stock Exchange: The principal stock exchange in Nigeria facilitating capital formation and trading.
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