Capital market is the long term end of the financial market where financial market is the mechanism whereby the exchange of values take place through the state and purchase of financial investment .The capital market involves the existence of investment instrument that have a maturity lifetime of above one year. Every country’s economy has a short and long term end. The short term constitutes the money market while the long term end, above one year constitutes the capital market. The mechanism by which capital market transactions take place is the stock exchange. The instruments of the capital market include stocks, shares and bonds.
While the money market ensures trading in securities within a short term period which is often necessary for the management of liquidity of the economy, the capital market involves the trading in financial assets on a long term basis geared towards the growth and development of Nigeria’s economy. While the money market is under the supervision of the central bank of Nigeria (CBN), the capital market is under the Securities and Exchange Commission (SEC) .So, it is necessary that for the capital market of Nigeria to exist, the regulatory framework should be in place, the financial assets or instruments should also be available.
Economic growth can be measured in the national income of the country whereas economic development is measured by the per capita income of the country which indicates the standard of living. A country can have economic growth without economic development but it cannot have economic development without economic growth because the country has to have an established growth economy for it to be developed.
There should also be a clear distinction between the money market instrument and the capital market instrument and the conditions under which they operate should be distinct. For the capital market to be developed and sustained overtime, the government of Nigeria must be development oriented. The participants in the market should have a sophisticated level of awareness and the instruments traded on should have depth.
The development of the capital market of Nigeria is still at its lowest ebb. Corruption in the business of operators in the Nigerian system of operation needs to give way for transparent, purposeful, and focused management so as to ensure the promotion of economic growth of Nigeria. When all efforts are in place to genuinely manifest the benefits of a developed capital market, this market in the Nigerian economy will be a facilitator to the economic growth.
No country of the world can be developed when its capital market is undeveloped and therefore there will be no economic growth .This leads us to conclude that the capital market of Nigeria plays an important role in facilitating economic growth. The capital market is like a backbone in keeping rigid the economic growth of Nigeria. So, the level of the capital market of Nigeria is an indicator of the stage of sustained development that the country has achieved.
OSARENNOMA OGBEIDE, Secondary School Leaver
