CAPITAL MARKET IN NIGERIA, ITS EVOLUTION, FUNCTION AND IMPACT ON THE ECONOMY

CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND TO THE STUDY
The rate of economic development of any nation is inextricably liked to the sophistication of its financial markets. Financial markets assist the nation of the world to give the needed financial resources and skills for growth and development. Apart from promoting a sound and efficient payments mechanism, the financial intimidation. The financial market is an institutional arrangement that facilities the inter-mediation of funds in an economy. By financial inter-mediation, it means mobilization of financial resources from surplus spending units and the channeling of such to deficit spending units and the channeling of such funds to deficit spending units for production investment and the generation of assets or securities in the process. Thus the financial system generates a wide range of financial instruments (assets), which are means of transferring purchasing power and are tailored to suit the time preferences of both lenders and borrowers. The financial market performs an economic function by facilitating the transfer of real economic resources from the lenders to the borrowers. By the inducement of interest income, the market facilitates the transference of purchasing power from the lender to the investor who wishes to exercise demand over resources. When the financial market is efficient, funds flow freely and rapidly among its various sources and uses. As long as financial instrument remains substitutable for each other, changes in supply and demand in the money market have a rapid over effect into the capital market. Financial markets are therefore constitutional whenever participants with aid of infrastructure technology and over devises facilitates the mobilization and channeling of funds into productive investments. The importance of the financial market lies in financial intermediation to link the deficit sector with the surplus of the economy. In the intermediation process, financial intermediaries engage principally in matching lenders and borrowers. They bring savers and borrowers together by selling debt instruments or securities and deposits

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