One of the major economic objectives of every nation is to maintain a sustained increase in economic development, through a continuous rise of the economic indicators like the Gross Domestic product (GDP) and capital formation. For this to be achieved, industries must be built and adequately maintained. However, industrialization requires huge amount of fund which can be available through the pooling together of numerous savers fund. The Capital Market is the medium through which this fund can be sourced. In the light of the above, the study aimed at evaluating the role of the Nigerian Capital Market on the industrialization of the economy.  However, the objectives of the study include; examining the extent which the capital market has boosted industrialization in Nigeria; how capital market has enhanced capital formation; ascertain the rate of growth in capital market development; and to proffer recommendations. The study covered a period of seven years. Being an Expo Factor research design, Regression Analysis was used to test the hypotheses using the following variables; Gross Domestic Product (GDP), Industrial loan from the capital market, manufacturing sector Capital Utilization Rates .It was found out that the capital market had no significant positive impact on industrial development. On the other hand, it was found out that the capital market enhanced capital formation within this period. However, this was a matter of chance from the model, in that, the capital market cannot enhanced capital formation if it capital market had no significant positive impact on industrial development




        One of the cardinal economic objectives of the developing countries is to achieve high economic growth that will lead to rapid economic development and reduce poverty. Economic growth means a sustained increase in per capita national output or Net national product over a long period of time. This implies the ability of an economy to increase the production of goods and services with the stock of capital and other factors of production available within the economy. It is therefore assumed that a high level of capital accumulation, with the right combination of other factors of production will bring about higher out-put growth. Economic growth has been theoretically and empirically established to be dependent on capital accumulation or investment.

For government to achieve its desired objective of high economic growth and rapid development, it must pursue policies that will increase both the public and private investments. Such investments lead to industrialization. Industrialization is described as the methods used to increase productivity. It is a system by which a society (a nation) gets its wealth through industries and machinery. If a country industrializes, it develops a lot of industries, and this will promote economic growth and development.

The early stages of industrialization require systematic policy measures to steer resources into the productive process. It is a known fact that the investments that promote economic growth and development requires long term funding, far longer than the duration which most savers are willing to commit their funds. Hence, there is need for long term supply of fund for industrialization. This vacuum is filled by the activities in the capital market.

Capital market is a collection of financial institutions that are set up for granting medium and long-term loans. It is a market for government securities; for corporate bonds; for the mobilization and utilization of long-term funds for development. It is the long-term end of the financial system.  In this market, investors provide long term funds in exchange for long-term financial assets offered by borrowers. The market has both the new issues securities market (i.e. Primary Market) and already existing securities market (the Secondary Market). Such securities might be raised in an organized market such as the Stock Exchange. In this sense, it may involve consortium underwriting, syndicated loans and project financing. Thus, it is a mechanism whereby economic units that are desirous to invest their surplus funds, interact directly or through financial intermediaries with those who want to procure funds for their businesses.

sMore so, the capital market synchronize the divergent preferences for  portfolio managers and financial institutions while providing avenues for savers to invest when the need arises through the secondary market, without affecting the operations of the firms which their savings had earlier financed. In other words, through the secondary market, the capital market converts short term investment to long term or perpetual investments are enlarged and economic growth accelerated.

The capital market is therefore very important to any economy because, it encourages savings and real investment in any healthy economic environment. Through the market, aggregate savings are channeled into real investment that increases the capital stock and therefore the economic growth of the country.



        As already stated, the desire of every nation is to achieve economic advancement and to improve the standard of living of its citizenry. A major engine of economic growth of any nation is its capital market. It impacts positively on the economy by providing financial resources through its intermediation process, for the financing of long-term projects. The projects could be promoted by governments or private sector institutions. They are usually in such areas as infrastructure, agriculture, solid minerals, manufacturing and other real sector areas. Hence, without an efficient capital market the economy may be starved of the long term funds for sustainable growth.

Having been acquainted with the fact that the capital market of any nation is the major engine of her economic growth and development; therefore, it is pertinent to carry out a performance evaluation of such an important sector with regards to its contribution towards the nation’s industrialization which enhances economic growth.



        Since the capital market of every economy is an important sector especially as it pertains to capital formation and mobilization, it then means that any economic outcome which the growth in capital market brings should have a lasting effect on economic indicators like the Gross Domestic Product (GDP) and the National Income (NI).

Therefore, the specific objectives of this study are:

  • To examine the effort of the capital market in boosting industrialization in Nigeria.
  • To determine how the capital market is enhancing capital formation in Nigeria.
  • To ascertain the rate of growth in the development of the capital market.
  • To recommend what can be done to maintain or enhance industrialization through the contribution of the capital market.



The following research questions have been formulated to simplify the objectives of the study and to guide the researcher in finding solutions to the problem this research study intends to solve; the questions are:

  • Has the development of the Nigeria capital market aid the industrialization process of the economy?
  • How has the Nigerian capital market enhanced capital formation in the economy?
  • Is there a speedy development of the Nigeria capital market?
  • What can be done in the capital market in order to enhance industrialization?



The following hypotheses form the framework for carrying out the study.



The development of the Nigeria capital market has no significant   positive impact on industrial development in Nigeria.



The capital market has not enhanced capital formation in the economy.



The need for a study about the performance evaluation of the Nigerian capital market on the industrialization process of the nation from year 2002 to year 2008 is paramount. Within this period, many financial and economic laws and programmes were made and undertaken. These may have in one way or the other affected the performance or activities in the capital market, hence the need for this research. Some of these laws and programmes include:

  • The National Economic Empowerment and Development Strategy (NEEDS) undertaken from 2004.
  • The Pension Reform Act 2004.
  • Conversion from Dutch Auction system (DAS) to wholesale Dutch Auction system (WDAS) by the central bank in February 2006.
  • Restructuring and privatizing state-owned enterprises.

In the high of the above discussion, this research work will be beneficial to policy and law makers and administrators in assessing the effect of the policies and laws they made in the economy. It will also benefit operators in the capital market; and investors as well.

In the academia, this work will help to broaden the knowledge of students on issues concerning the capital market and other macroeconomic issues.

More so, farmers are not left out. They will benefit from this work as it will serve as a guide to them (farmers) on the choice of crop to plant, i.e. crops with higher economic values. This they may know only if they are acquainted with crops that are traded in the commodity market, a segment of the capital market.



This research work will cover all the activities in the Nigerian capital market between the period 2002 and 2008 fiscal years.



Bond:   Is a legal document that represents a promise by government to pay back a loan, plus a certain amount of interest over a definite period of time.

 Debenture:  Is a legal document that represents a promise by a company to pay back a loan, plus a certain amount of interest over a definite period of time.

Dutch Disease:  This is an economic concept which has it that, an increase in revenues from natural resources tends to reduce the industrial capacity of a nation’s economy by raising the exchange rate, which makes the manufacturing sector less competitive and the public services become entangled with business interests.

Liquidity:  Liquidity on a stock exchange is about how easily and quickly, shares can be converted to cash. If the exchange is liquid, it means that, it is easy to trade in all the shares that are listed on the exchange.

Listing:  This is the admission of a company’s shares by the Nigerian stock exchange for trading.

Portfolio:  It means a basket or a combination of securities holdings by an individual or institutional investor. It may contain different securities like various debt instruments, various preference and ordinary shares, as well as funds.

Prospectus:  This a security selling document to be made available to the public in respect of an issue being floated.

Risk: Risk is an uncertainty about future outcomes. It is the possibility that something bad, unpleasant or dangerous may happen.

Securities:  These are written or printed documents by which the claims of holders in specified property are secured. They could be shares, stocks, bond and debenture traded on the stock exchange .

Shares:  can also be referred to as stock. It is a unit of stock naming the holders and indicating ownership in a corporation/ company. It is an investor’s ownership interest (shares) in the company.

Stock Exchange: Is an arrangement whereby large and small investors alike, buy and sell securities through stockbrokers. This arrangement could be through computer, internet, telephone, fax, trading floor etc.

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