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The impact of government bonds on capital market growth in nigeria

 

Table Of Contents


Thesis Abstract

The abstract section of the research content is as follows Abstract
Government bonds play a crucial role in the development of capital markets by providing low-risk investment opportunities for investors. This study aims to investigate the impact of government bonds on capital market growth in Nigeria. The research employs both quantitative and qualitative methods to analyze the relationship between government bond issuance and capital market development in the country. The findings suggest that government bonds have a significant positive impact on capital market growth in Nigeria. Increased government bond issuance is associated with higher levels of liquidity in the capital markets, which in turn attract more investors and stimulate market activity. Furthermore, government bonds serve as a benchmark for pricing other financial instruments, contributing to the overall efficiency and stability of the capital markets. The study also highlights the importance of government policies and regulations in promoting the development of the bond market. Effective regulatory frameworks can enhance investor confidence and encourage participation in government bond auctions. Additionally, the study emphasizes the need for transparency and accountability in the issuance and management of government bonds to ensure market integrity and sustainability. Overall, the findings suggest that government bonds play a vital role in fostering capital market growth in Nigeria. By providing a safe and reliable investment option, government bonds contribute to the expansion and deepening of the capital markets, ultimately driving economic growth and development in the country. The research underscores the importance of continued government support and intervention to strengthen the bond market and promote a vibrant and resilient capital market ecosystem in Nigeria. In conclusion, this study provides valuable insights into the impact of government bonds on capital market growth in Nigeria. The findings emphasize the positive contribution of government bonds to market development and highlight the significance of sound regulatory frameworks and transparent practices in fostering a robust and dynamic capital market environment. Further research in this area could explore the specific mechanisms through which government bonds influence capital market dynamics and investigate potential policy implications for enhancing market efficiency and resilience.

Thesis Overview

1.0. INTRODUCTION

1.1. Background of the study

The Nigerian capital market is relatively new and has many factors influencing it. The capital market is for sourcing of long term loans, while the floating of government bonds will greatly stimulate the capital market in it’s size and activities. Also, most market started with bonds that are actually floated first.

According to SEC, (2000), the bond market is preferred as the ideal mechanism for the exchange of claims among buyers. Government bonds has interest bearings securities in the capital market and also mutual relationship with itself, thus government stock as an instrument gives the capital market room to exist.

The presence of government bonds in the Nigerian capital market can be traced to the early twentieth century (20th) and also floating of a bond in 1946 by the then colonial government. The Federal government development bonds which were formally introduced in 1959 was designed to provide long term finance for government projects and later most proceeds are leased on regular basis till 1986 when deregulation of the capital market started.

The recent challenges of the capital market in Nigeria was due to economic meltdown from 2009, according to CBN (Central Bank of Nigeria) annual report on it’s fair share on government bonds. The dismal performance of the banking sector was owing to reforms, administrative charges and others of the CBN and SEC and also counter policies within and outside the market are some factors that have inhibited the capital market as well and the impact of government bonds



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