Thursday, 6 October 2016

6 institutions involved in the capital markets in Nigeria

6 institutions involved in the capital markets in NigeriaA capital market is a financial market for the lending and borrowing of long term loans. the money lent and borrowed in this type of market is used to finance capital project.
Institutions involved in capital markets include
  1. The central bank: the central bank involves in both the money and capital markets as lender of the last resort
  2. Development banks: these bans were established in order to facilitate the development of west Africa. they offer long term loans for development bank, Nigerian bank for commerce and industry etc, are examples of development banks
  3. Building societies: they are financial institutions that receive deposits from members of the public on interest basis and offer long term loans to depositors to enable them purchase or build their own houses. empty land owners with the required securities are offered loans by these building societies in order to enable them develop the land. if they give out loans to people to enable them purchase houses, the particulars of the houses concerned will be kept with them( building societies) to avoid default in repaying the loans. these societies also encourage people to save money by basing the amount they will give as loan on the amount saved by the customer. a good example of a building society is the federal mortgage bank of Nigeria's.
  4. National provident fund (NPF): This is a financial institution that accepts deposits from workers and makes it available to them when they retire from active service. the bulk money it saves and gives to workers enables them to establish their own business. the money contributed by workers to N.P.F as savings is made available to capital market in form of long term loans of which the greater part goes to the government
  5. Insurance companies: these are financial institutions that are involved in both financial institutions that are involved in both money and capital markets. they make the money they collected from their clients as perineum available to the capital market
  6. The stock exchange: a stock exchange may be defined as a market where shares, stocks and other securities are sold and bought. before stocks and shares which come from registered limited liability companies are sold and bought, they must be approved by the securities and exchange commission which is the governing body of the stock exchange.
it is put forward that industry and commerce use the capital provided in the capital market to establish new businesses, to finance the existing businesses and to finance the expansion of businesses

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