Capital Market and Industrial Sector Development in Nigeria: A Theoretical Analysis

Reforms had always been an integral part of Nigerian's political economy depending on the exigencies of the local and international economic environment. In this regard the financial market in Nigeria has witnessed tremendous growth and transformation over the years. Some notable reforms in the sector included deregulation, liberalization, reform of regulatory frame work and globalization and the wave of consolidation programme in the sector. This paper examined whether the growth of the Nigerian capital market has impacted in any significant way to the growth and development of the industrial sector and hence the economic development of the country in general. To achieve this objective; the study examines a number of relationships between the capital market and the industrial sector, such as the proportion of the manufacturing sector in the total market capitalization, or the relationship between the GDP and market capitalization, manufacturing index, New issues, market access to credit, trading values etc to determine the types of influence exerted on the industrial sector by the capital market. The significance of this study is that it well help the policy makers to really know the relationship between capital market and industrial sector. The review of available literature indicates that the capital market is a common feature in any modern economy and is reported to promote the growth and development of the real sector in our case there are indication of positive links between the stock market and industrial sector development but the impact has been severely limited by adverse economic environment such as poor economic infrastructures, bureauatic bottlenecks corruption and poor corporate governance, regulatory and supervisory frameworks. To improve the situation this paper suggest the following recommendations. Removal of impediments to capital market development such as Improvement of the financial systems infrastructures and the general economic infrastructures to reduce stress in the system. Sound economic policies to stabilize the economy and improve the savings and investment culture of the people. Further liberalization of access to the capital market by indigenous small scale enterprises.