ABSTRACT
Chapter 3 outlines the roles of capital markets. The capital market is essential to the functioning and sustainable development of a modern economy, providing opportunities for funding riskier projects on long-term maturities. The capital market is a source for long-term capital formation and economic growth while providing a hedge against inflation. The chapter reviews and analyses the history, development and structure of Nigeria’s capital markets and compares them with global markets in terms of size, value, volume and turnover. The primary market is an important source of capital for companies by way of issuing securities. The secondary market provides a channel for speculators to trade securities and for investors to make a long‐term investment. The roles of the Nigerian Stock Exchange and other capital market operators are discussed. The efficiency of the capital market in Nigeria is analysed from three different, interdependent perspectives – informational efficiency, transactional efficiency and allocational efficiency.
