Importance of stock exchange market in nigeria economy

The Nigerian Stock Exchange used an open outcry system until trading was automated in The economy is driven by oil exports, as Nigeria is the largest African member of the Organization of Petroleum Exporting Countries.

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The Nigerian Stock Exchange was formed in and has made important progress in becoming a transparent and efficient market that could attract foreign investors. Stock market efficiency can be measured in different ways.

Conventionally, efficiency is measured by operational efficiency, allocation efficiency and pricing efficiency.

The presence of market makers typically adds to operational efficiency, and in early the NSE implemented 13 market making firms to boost liquidity. In the NSE updated its trading platform by licensing the Nasdaq X-Stream trading platform -- one of the largest steps taken by the NSE since the introduction of remote trading in A number of academic studies on this issue have produced mixed results.

Benchmark studies that were used in the past to analyze the American exchanges were replicated using stocks trading on the NSE; while results were mixed, the general conclusion was that the NSE was inefficient. This matches anecdotal data on Nigeria, such as the huge number of small, illegal oil refineries that operate using stolen petroleum.

Pricing efficiency is measured by how well securities prices reflect all available public information that could affect their values.

importance of stock exchange market in nigeria economy

The American exchanges are thought to be somewhere in between semi-strong- and strong-form markets with respect to efficiency, as a small number of insiders seem to be able to profit upon gaining inside information, although stock prices generally reflect most available information.

In Nigeria, research has demonstrated that the NSE is generally efficient, as it is nearly impossible to consistently outperform randomly selected stock indexes. However, the NSE is not adequately transparent, as enforcement of regulations governing insider trading, securities fraud, reissuing stock certificates and investigating excess transaction fees can still be lax. Each week, Zack's e-newsletter will address topics such as retirement, savings, loans, mortgages, tax and investment strategies, and more.

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Visit performance for information about the performance numbers displayed above. Skip to main content. More Articles The Role of the Stock Exchange in the Economy How to Invest in the JSE Oil Effect on the Stock Market in India Is the New York Stock Exchange the Largest Stock Market in the World?

How do I Invest in China? Measuring Efficiency Stock market efficiency can be measured in different ways. Pricing Efficiency Pricing efficiency is measured by how well securities prices reflect all available public information that could affect their values.

References 7 Bloomberg Businessweek: Nigeria Counts on Business in Bid for Economic Crown The African Executive: Nigerian Stock Exchange Upgrades Trading Platform Journal of Emerging Issues in Economics, Finance and Banking: Econometric Investigation of the Random Walk Hypothesis in the Nigerian Stock Market Australian Journal of Business and Management Research: Capital Market Efficiency -- A Test of the Strong Form in Nigeria This Day Live: NSE Unveils 13 Supplementary Market Makers Transnational Corporations Review: Efficiency of the Nigerian Capital Market -- Implications for Investment Analysis and Performance.

Resources 1 Nigerian Stock Exchange: Recommended Articles Is the Stock Market Closed During the Weekend? What Type of Market Is the NASDAQ? How Is the NASDAQ Calculated?

importance of stock exchange market in nigeria economy

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importance of stock exchange market in nigeria economy

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