Capital Market, Private Sector Financing And Performance In Nigeria: A Case Of Selected Companies

Abstract

This study examines the impact of capital market on private sector financing and performance in Nigeria over the period of ten years (2002-2011). The capital market provides long term funds for private sector through equities and debt. Three quoted companies were selected on a cross sectional basis for 10 years. The panel model regression analysis was adopted to analyze the secondary data sourced from the financial statements of the selected companies, Nigeria Stock Exchange Fact book and the Nigeria Securities and Exchange Commission Reports. The results show that capital market positively impacts the private sector performance through equities with an estimate coefficient of 0.082107 while debt gives negative coefficient of -0.0339574 which implies that debt does not impact private sector. The coefficient of Multiple Determinations (R²) gives 0.0934016(93.4%) with an adjusted (R²) of 0.920269(92%) which means that the explanatory variables (Equities, Debt and Retained Earnings) account for 92% behavior of the dependent variable. Based on the findings, the study recommends that for the Nigeria capital market to be a vital force in the private sectorfinancingthere is need for measures to increase the capacity of the Nigerian capital market to be able to finance private sectors investment adequately. Also, debt for borrow funds to be beneficial, it must be efficiently used while  more investments opportunities like derivatives and convertibles should be encourage in the market to enhance diversification in the financial structure of firms.