Content area
Full Text
Introduction
The Nigerian Stock Market, though relatively young, has achieved appreciable growth especially in the period 1970-1996. In recognition ofthis, the International Finance Corporation in 1991 listed Nigeria as one of the emerging capital markets in the world. The stock market is a proxy for capital market, were individuals and institutions invest in long-term financial assets such as equities, industrial debentures, industrial preference stocks and government stocks (Odife1). The market is a veritable channel through which savings are transformed into investment and economic growth. Hicks2 argues that savings is not an end in itself but a means to facilitate economic growth. This can be effectively realized with the existence of a viable stock market. The Nigerian Stock Market is relatively young but it has achieved some growth beginning from 1970. What is not clear is the extent of growth and the factors that have contributed to the growth. It is argued that government has contributed to the growth by providing the enabling environment (Alile and and Anao3, Odife1). One remarkable feature in the growth process of the stock market is its urban orientation (Nwankwo4,). In 1970, the market operated only in Lagos and since then it has expanded to five more urban locations namely Kano, Kaduna, Port Harcourt, Onitsha and Ibadan.
The Nigerian Stock Market commenced operations in 1961 but its growth became noticeable in early 1970s with the promulgation of Nigerian Enterprises Promotion Decrees (1972 and 1977). These decrees prescribed rules and regulations on the ownership of equity in Nigeria as well as the permissible pattern of foreign participation in industries. The implementation of the decrees enabled Nigerians to acquire shares in enterprises wholly owned by foreigners. The transfer of shares was done in the stock market which led to substantial growth in the volume of transactions. This growth was sustained in the 1980s through the Privatisation and Commercialisation Decree (1988),. which was aimed at divesting government interest in some enterprises that could better be run by the private sector. The transfer of government shares under this decree also took place in the stock market. In the 1990s, growth of the market was further enhanced by Federal Government Recapitalisation Policy (1996), which mandated all financial institutions to raise their capital base to contain...