Because the Nigerian stock exchange has been embroiled in a series of issues in recent years, this study looked into the impact of the stock exchange on the generation of capital for commercial banks in the Abeokuta metropolitan. The sample size for this descriptive survey research design was 50 bankers crown from various commercial banks in Abeokuta metropolis using the basic random sampliy approach. The study was guided by two research questions, and the results demonstrated that the stock exchange has impacted commercial banks in the areas of recapitalization, asset acquisition, expansion, fund creation, and capital boost. The findings also revealed that the stock exchange’s operations are affected by a number of minor issues. Finally, it was suggested that all stockholders make a concerted effort.
BACKGROUND TO THE STUDY
A stock exchange is a type of exchange that allows stock brokers and dealers to trade in stocks, bonds, and other financial products, as well as capital events such as the payment of income and dividends, according to Joseph Penso, a stock trading writer. Shares issued by firms, unit trusts, derivatives, and pooled investment are examples of securities traded on a stock exchange. Typically, there is a central site for at least fork record keeping, but trade is becoming less related to such a physical location since modern markets are electronic networks, which provide the benefits of increased speed and lower transaction costs. Only members can trade on an exchange. The Lagos Stock Exchange was founded in 1960 and is now known as the Nigeria Stock Exchange. It was renamed “The Nigeria Stock Exchange” in December 1977, and branches were constructed in some of the country’s major commercial centers. The Nigerian Stock Exchange now has six branches, each with a trading floor. The Lagos branch was established in 1961; Kaduna in 1978; Kano in 1989; Onisha in 1990; Ibadan in 1999; and Abeokuta in 1999. The Exchange’s headquarters are in Lagos. In Abuja, a new office has just opened. The stock exchange, as well as most of the nation’s stock broking firms and issuing houses, began operations in 1961 with 19 securities listed for trading. The stock exchange, as well as most of the nation’s stock broking firms and issuing houses, are staffed with creative financial engineers who can complete anywhere. As a result, the market has a network of intermediary organizations in place that can efficiently and credibly address the difficulties and expanding needs of investors in Nigeria. “The stock Exchange’s” watchword is “integrity.” The code is subscribed to by market participants: “Our word is our bond.” With about three million individual investors (including foreigners who own about 47 percent), public trust in the Nigeria stock market has grown tremendously. The initial offering of stocks and bonds to investors is by definition done in the primary market, and subsequent trading is done in the secondary market. The most significant component of a stock market is frequently the stock exchange. As in all free markets, supply and demand in the stock market are influenced by a variety of factors. The stock exchange market’s relevance in the generation of capital for commercial banks has now become a highly important and vital component of any economy. They are essential for the building of savings and the availability of those savings for productive purposes. Indeed, without the stock exchange, the rise of joint stock companies and commercial banks, as well as their sustained performance, would have been impossible. Against this backdrop, the researchers will investigate the impact of the stock exchange market on the generation of capital for commercial banks in the Abeokuta metropolis.
STATEMENT OF THE PROBLEM
The Nigeria Stock Exchange has recently been involved in a number of crises. As a result, the researchers are concerned about the stock exchange’s ability to fulfill its responsibilities. As a result, the following questions arise:
How effective are business entities’ advertising efforts in raising awareness of their services in the stock exchange market?
In terms of listed commercial banks, how dynamic and effective is the stock exchange market’s pricing policy?
In terms of commercial banking, what impact do government rules have on the stock exchange market?
PURPOSE OF THE STUDY
The goal of this research is to determine the impact of the stock exchange market on commercial bank capital formation in the Abeokuta metropolitan. The research will focus on the following areas:
Identify the primary challenges that the stock exchange market faces in raising capital for commercial banks in the Abeokuta metropolis.
ii. Investigate the role of the stock exchange market in the creation of capital for commercial banks.
iii. Determine whether the stock exchange market has a major impact on commercial banks’ capital base.
To guide the research, the following questions were posed:
i. What are the key challenges that the stock exchange market has in obtaining funds from commercial banks?
Is there any evidence that the stock exchange market has a substantial impact on commercial banks’ capital base?
SCOPE OF THE STUDY
The study will investigate the stock exchange’s significance and activities. The study will also look into commercial banks’ activity on the stock exchange and how they raise money. Finally, the paper discusses the stock exchange market’s role in assisting commercial banks in raising capital.
SIGNIFICANCE OF THE STUDY
Stockbrokers will benefit from the study because the findings will enable them to identify the difficulties that the stock market faces and how to address them. Furthermore, firm executives will benefit from the study because the findings will provide techniques for enhancing company performance on the stock exchange market. The study will also benefit government agencies, as the findings will aid in the development of a criterion for evaluating the stock exchange’s performance. Finally, the study will serve business academics and future researchers by assisting in the creation of a data base for them.
DEFINITION OF TERMS
CAPITAL: Funds obtained from the stock exchange in order to launch or expand a commercial enterprise.
COMMERCIAL BANKS: Accept deposits from the public and make a lot of money when the money is loaned to the public. They also keep track of loans and overdrafts.
SHARES: A single shareholder’s individual share of a company’s capital. It is a monetary unit of capital that is measured by a certain amount of money.
STOCK: A collection of shares that can be divided into fractional amounts. Stocks are not issued but convened from shares issued and can be quoted per 100 nominal value.
STOCK EXCHANGE MARKET: A stock exchange that facilitates the trading of stocks, bonds, and other securities by stock brokers and traders.