In answering the question why devaluation has not succeeded in Nigeria “DEVALUATION” Devaluation is a sudden fall in the value of a currency against other currencies. Strictly devaluation refers only a sharp fall in currency within a fixed exchange rate for instance agriculture, which used to be the pivot of the economy, showed greater decline since after independence. This was due to the discovery of crude oil and its importance to the whole world. The revenue generated from oil appeared to have made more effective impact towards the development of the Nigeria economy then agriculture. This led to the sudden neglect or agriculture, to the extent that its contribution to the Gross Domestic Product was Negligible. The contribution of agriculture to the Gross Domestic product fell 39.9 percent in 1970, 1971 and 1972 to 18 percent with occasional these was when the Nigeria devaluation was very high.

 Reasons why devaluation has not succeeded in Nigeria, is the inherited structure by the readers that is the inability of Nigeria readers to change the inherited programmed economy, which was designed to disarticulate the Nigeria economy. Balance of payment deficit, is one of the problem, consider a situation where a country is suffering from balance of payment deficit, not because she has no goods to export her products but because of their comparative high prices. The high price of her goods might have emanated from some underlying macroeconomic imbalances such as high inflation, high cost of factors and over valuation of national currency. Which a country has no equilibrium in the in the more demand than supply in the money market, if there is more supply than demand in the labour market and it there is productivity of labour lags behind wages and salaries and in the foreign exchange market, if there is less demand for domestic currency by owners of foreign currencies than supply, if this kind of situation exist in a country, then it will suffer from “fundamental disequilibrium” in her balance of payment.

       The balance of payment deficit which has rise resulted from high price of exported products and this in turn resulted from overvaluation of domestic currency for instance, a currency of trading patterns of a country suffering from balance of payment deficit. The solution is to bring down the exchange rate of a country’s currency as expressed into the currency of a trading patterns of the rest of the world is what is know as devaluation of national currencies. This act of bring down or reducing the exchange rate of a currency is usually performed by the monetary system.


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This study, “the impact of commercial Banks lending rates on inflation in Nigeria was conducted mainly to investigate the impact of changes in bank lending rates on inflation in Nigeria between 1985-2004. The study covers the Nigerian economy. A quantitative assessment of the deregulated interest rate and inflation rate during the period was undertaken using simple regression techniques. Both the descriptive and the quantitative analysis seem to indicate that changes in Bank lending rate have caused inflation in Nigeria within the period under review.  The hypothesis was tested to back up the claims that changes in bank lending rates have no significant impact in inflation in Nigeria.

To this, the null hypothesis (Ho)   was rejected and the alternate hypothesis (Hi)   was accepted that changes in bank lending rate has  significant impact in inflation from the period under review. The researcher ended up with the following findings: That there is a correlation between interest rate and inflation, That high interest rate and infact, the failure of any country to pursue an optimum interest rate policy can distort macro-economic parameters and cause serious damage to the country’s economic development, That the basic problem in Nigeria today is not the making of policies but the implementation, The researcher also reveals that with the deregulation of interest rate in the period under study, the financial system has been inefficient in the sense that funds mobilization has failed finally, it has been observed that, there are other  exo-genous factors  that can affect inflation in Nigeria other than,  interest rate.

On the strength of the above findings, the researcher puts forward the following recommendations:- That, an administrative fixed interest rates should be revitalized, that is, a strictly regulated interest rates philosophy to be reintroduced. Despite this, the monetary authorities (CBN) should also adopt more drastic punitive  measures to stem the disparity in the rates which are charged on loans within the same economic vicinity. In addition,   the guidelines of the financial system should not be left to the interplay of the market forces to determine who get what at what rate. But, if the deregulation must be retained or if it is compulsory, then deregulation should be  operating within the framework of some measures of checks and balances by the monetary authorities.  This implies that, deregulation should not be left to the inter play of the market forces alone, financial institutions must be brought back into the loop of monetary ease and restraint.




        1.1 Background of the Study

 Prior to July 3rd, 1987, interest rates in Nigeria were directly controlled by the monetary authorities. This however, was based on expert advice in the absence of a well-developed financial markets CBN (1998:2). Under this system, the government would set the deposit and lending rates of the financial intermediaries at their prevailing levels, and also the rates for lending to special and specified sector. In July 1987, all these were abolished and since the introduction of the deregulation policy in the country, inflation has been on the increase. Measures to control this always proved negative since the constitutional structures as well as theoretical frameworks borrowed from Western countries are no longer applicable in our Nigerian perspective.

The purpose for this study is to investigate the deregulated interest rate and its impact on inflation within the period under study. This is because, inflation has been recognised as a social ill that blows no one good in the society. It is a problem that has often proved difficult to tackle largely because any meaningful attempt at curing it would entail a trade-off among other important macro-economic and social objectives such as increased employment, economic growth and other social safety nets (CBN, 1998).

 It is however, noted that the price of all goods and services may not rise simultaneously or by the same proportion. Note that, an increase in the price level may not depict an inflationary phenomenon but if the situation is sustained, then inflation is implied with serious consequences for macro-economic stability, Okorie (1993:34).

The rate of price increase, that can constitute a problem is as stated by Johnson (CNB, 1978:57) “a political question determined by public opinion”. But this however, varies among countries over time within a country. As is the case of interest rates, it is said to be one of the most major economic device, which has been devised to regulate and control the volume and cost of money as well as dictate direction of credit that must be paid to get people to forego willingly the advantage of liquidity. It is also said to be the price, which must be paid for the right to borrow loanable funds. Interest rates are classified as normal (market) and real interest rate respectively. The normal interest rates are the interest rate actually paid while real interest rates are nominal minus expected rate of inflation. Hence, the nominal rates of interest refers to the real interest rates plus the rate of interest in the price level (Samuelson, 1976).

 For an economy to achieve a rapid and sustainable growth and development depend on its monetary policy  which is referred to as the combination of measures designed to regulate the value supply and cost of money in an economy. An excess supply of money for instance, would result in an excess demand for goods and services which would cause inflation and at the same time deteriorate the balance of payment position. On the other  hand, an inadequate supply  of money would induce stagnation in the economy thereby retarding growth and development. 

Economists have at various times shown the correlation between interest rate and inflation, consumption and saving, e.t.c It is generally accepted that, a high lending rate discourages investment, brings a fall in saving, fall in income and consequently will reduce corruption. Conversely, it  is also believed that, high rate of interest on savings will induce saving, fall in lending rate, induced investment, increases income, increase consumption and at the long run brings about inflation  in the economy. Thus, interest rate serves as the rationing devices that allocate scarce capital funds in an optimal manner among competing investment project (CBN, 1998). The primary roles of interest rate are to help in the mobilisation of financial resources and to ensure the efficient utilisation of such resources in the promotion of economic growth and development.

The deregulation of interest rates came into effect in August 1987 as a policy instrument of SAP. This was to enhance the development of financial system in the economy and to further accelerate the attainment of the objectives of SAP. Deregulation here can be said to be a deliberate and systematic liberalisation of the structural and operational guidelines under which the economic units has been thriving (Anyanwu, 1987). This essentially indicates that from then on, the interest rates were to be
determined by the  market forces (that is, forces of demand and supply of loanable funds).


        1.2 Statement of the Problem

 Nigerian economy recently witnessed a high degree of liberalisation which started with the foreign exchange market  under the Structural Adjustment Programme (SAP) of 1987. This was followed by the deregulation of interest rate and then the capital market. The implication is that, the forces of demand and supply (market forces) or the invisible hands of the market” according to Adam Smith, will determine  who gets what and at what rate in the foreign exchange market, money market and capital market. The deregulation exercise has witnessed  more frequent changes especially in the foreign exchange rates and interest rates than before, and thus has led to the  ever increasing rate of inflation in the  economy. The high and  unstable rates of interest have resulted to tremendous increase in the cost of production which is generally reflected in the high cost of consumers’ goods. As such, government however, put a question mark on its belief in the efficiency of the market forces as regards interest rates when in 1991 fixed minimum rate to be paid on deposits and maximum lending rate for the banks. But the big question now is, to what extent has the deregulation of interest rate affected the price of commodities in the country?  Or its impact on inflation? This research paper therefore, seek to provide answers to this important question.

In the final analysis of this research work however, one  will be able to identify why the deregulated interest rates rather than achieve growth and development has instead, brought about inflation and why our policy makers are finding it difficult to solve the crisis.





This project work evaluates and attempts to assess the contribution of capital market activities and economic growth in Nigeria. The project work has examined thoroughly on the role of capital market in economic development of Nigeria, since it contributes to the social economic growth and development of emerging and developed economics. This is made possible through some of the vital roles played, such as channeling resources, promoting reforms to modernize the financial sector, financial intermediation capacity to link deficit to the surplus sector of the economy. It provides the necessary lubricant that keeps turning the wheel of economy. It does not only provide the necessary lubricant that keeps turning the wheel of the economy. But also efficiently allocate these funds of best returns to owners. The objective of this study was Vii empirically analyzes the impacts of the Nigeria capital market on her social economic development. The social economic development was proxy by the .gross domestic product, while the capital market variables considered included market capitalization, total new issues, volume of transaction and total listed equities and government stock. The work also accommodates research methodology based on data research design, source of data collection and the presentation and analysis of data. The chi-square also helps the researcher in testing the variable gathered. It was also found that infrastructural facilities pose a major hindrance on the effectiveness of investment growth in Nigeria economy it was also recommended that infrastructural adequacy should be put in place to curb such hindrance in investing in the capital market.




1.1   Background to the Study

The capital market is highly specialized and organized financial market and indeed essential agent of economic growth and development because of its ability to facilitate and mobilize savings and investment. To a great extent, the positive relationship between capital accumulation and real economic growth has long been affirmed in economic theories (Ekundayo, 2012). Success in capital accumulation and mobilization for development varies among nations, on domestic inflows of foreign capital. Therefore, to arrest the menace of the current economic downturn, effort must be geared towards effective resources mobilization.

It is in realization of this consideration is given to measure for the development of capital market as an institution for the mobilization of finance from the surplus sectors to the deficit sectors.
The development of capital market in Nigeria, as in other developing countries, has been induced and fostered by the government. Though, prior to the establishment of stock market in Nigeria, there existed some less formal market arrangement for the operation of the capital market. It has not prominent until the visit of Mr. J.B. Lobynesion in 1959, on the invitation of the federal government, to advice on the role of Central Bank could play in the development of local money and capital market.

As a follow up to these, the government commissioned and set up the Barback committee to study and make recommendations on the ways and mean of establishing a stock market in Nigeria as a formal capital market. Stating on the recommendation of the committee, the Lagos Stock Exchange (as it was called then) was set-up in March 1960 and in September 1961, it was incorporated, through the collaborative effort of Central Bank of Nigeria, the business community and industrial development bank (Alile & Alao, 2010). Undoubtedly, potential invisible funds abound in Nigeria, but the overriding consideration in this project will be to examined the roles of the capital market in harnessing and mobilizing these sources to generate growth in the country and consequently, economic development.

1.2   Statement of Problem

There, is abundant evidence that most Nigerian businesses lack long term capital. The business sector has depended mainly on short-terms financing such as overdrafts to finance even long term capital. Based on the maturity matching concepts, such financing is risky. All such firms need to raise an appropriate mix of short and long term capital (Heff, 2009).

Most recent literatures on the Nigeria capital market have recognized the tremendous performance the market has recorded in recent times. However, the vital role of the capital market in economic growth and development has not been empirically investigated thereby creating a research gap in this area. This study is undertaken to examine the contribution of the capital market in the Nigeria economic and development. Aside the social and institutional factors inhibiting the process of economic development in Nigeria, the bottle neck created by the dearth finance to the economy constitutes a major setback to its development. As a result, it is necessary to evaluate the Nigeria market.

1.3   Research Questions

This research shall be guided by the following research questions:

  1. How does the capital market impact on the economic growth and development process in Nigeria?
  2. What is the trend of trading activities on the capital market and economic growth and development?
  3. What is the impact of Securities and Exchange Commission (SEC) as a regulatory body of the Nigeria capital market?

1.4   Objectives of the Study


The objective of this study includes:

  1. To evaluate the performance of the capital market in relation to the economic growth in Nigeria.
  2. To evaluate the operations of the Nigeria capital market.
  3. To examine the impacts of Securities and Exchange Commission (SEC) as a regulatory body of the Nigeria capital market.

1.5   Statement of Hypothesis

The hypothesis that would be tested in the course of this research is stated below as follows:

Hypothesis One

HO:   The capital market operations have not contributed to Nigeria economic growth.

HI:    The capital market operations have contributed to Nigeria economic growth.

Hypothesis Two

HO:   The operations of the capital market do not stimulate economic growth in Nigeria.

HI:    The operations of the capital market stimulate economic growth in Nigeria.

Hypothesis Three

HO:   There is no significance relationship between the Securities and Exchange Commission and the Nigeria capital market.

HI:    There is significance relationship between the Securities and Exchange Commission and the Nigeria capital market.

1.6   Significance of the Study

The study will explore the impact or effectiveness of capital market on Nigeria economic growth. It will contribute to existing literature on the subject matter by investigating empirically the role, which the capital market plays in the economic growth and development of the country.

1.7   Scope of the Study

The scope is a large component with lots of diverse and sometimes complex parts; this research work will only look at a particular part of the economy (the financial sector). This work will not cover all aspect that make up the financial sector, but shall focus only on the capital market and its activities as it impacts on the Nigeria economic growth.

1.8   Limitations of the Study

This study is limited by the following factors.

  • Access to current data: Most respondent would not want to disclose certain factors about their entity.
  • Inadequate internet facilities relating to the research work

1.9   Definition of Terms

Capital Market: This is the market for raising or investing long term funds.

Money Market: This is the market which creates opportunities for raising or investing short term funds.

Financial Intermediation: This is the process by which financial intermediaries provide a linkage between surplus units and deficits unit in the economy.

Regulatory: The amounts to the protection of the investing public from deceits, and other unscrupulous practices in the sale of activities.

Capital Market Committee: A committee set up as an advisory and consultative body to serve as forum to deliberate on matters affecting the capital market.

Investigation: Checking of all reports of violations and suspected violations of the securities law.

Investor Protection: Protection of investor’s securities against fraudulent and false claims.

Enforcement: Responsibility of ensuring that participant in the market complies with securities with securities law.

Industrial Loans: These are loan that consist of debenture stock and bonds.

External Relations: The long standing relationship with some international security market organizations.










Over the past decades, extensive research has been carried out in various countries regarding the signaling effect of dividend. Most of these studies were in support of the signaling hypothesis that corporate dividend payments play a vital role as an information transmission mechanism and can indicate the future prospect of the firm. It is an recognition of this crucial role that dividend policy of firm plays in the economic life of investors and related parties that it became necessary to examine this issue as it relates to corporate firms in the Nigerian Stock market, on the largest stock markets in Africa. The objective of this study was to determine how changes in corporate dividend policy affect the future prospect of firms in Nigeria. The sample considered ten (10) banks listed in the Nigerian Stock Exchange Market and the annual reports were observed for a five years 2007 – 2011. the study revealed that corporate dividend policy serves as a information signal to investors and related parties in Nigeria. That corporate dividend indicate future prosperity of the firm and vice versa. Lastly, that changes in dividend of corporate bodies do not affect the value of the firm.



  • Background to the Study

An important quality of financial information is what it must assist users to make meaning decision extant literature as well as accounting standard recognize that the principal objective of financial and accounting information is to aid decision making. In order to satisfy the criterion of decision usefulness accounting information must possess two broad categories of qualities these are;

  1. User specific quantities and
  2. Decision specific qualities

With respect to decision specific quantities accounting information must be relevant and reliable. When accounting information is free from error and biases and faithfully represent the fundamental realities of the organization. It is said to be reliable if it has the capacity to influence the decision making it is said to be relevant. The quality of accounting information available.

The two keys measure in accounting information are earning and book value.

Dechew & Schrand,2004 state  that Accounting information is the most sought after indicator by investors. This is so because it allow them to make decision as to the value of equity extent literature as documented the statistical association between equity value and key boltom line measure  of earning and book value (Ball & Brown (1968).

Empirical literature examining the association between firm value and earning document a weak relationship. A lot of factor has been adduced for it one factor however that has not been address is that of earning quality.

Earning quality can be defined as “Absence of earning management. This is so because where manager intentionally manipulate earning it reduce the quality of earning consequently tier usefulness as decision criterion. The incentive to engage in earning management is accentuated by many actors to include the quality of corporate governance, the legal environment opportunity available to manipulate earning etc. In the context of the foreign earning quality assume a critical dimension with respect of quality of investment decision.  


  • Statement of Problem

A survey of corporate business in Nigeria specially in banking industry over the years will reveal several instance of distresses is depositor and investor is that of bank giving lean bill of health by auditory only for those banks become distress in no distant time. In 2010 the CBN declared 10 banks as critically ill. This was against the backdrop of fatalistic reported earnings by such banks by 2011 these banks reported several losses that wiped up their capital base. The implication of this was that profit hitherto reported where of dubious quality or doubtful quality.

The principal problem which this study address is the quality of earnings in quoted firms in the Nigeria stock exchange for the past 10 years.

  • Research Questions

In order to achieve the objective of the study the following questions are seeking for answer(s).

  1. What is the quality of earning in Nigeria?
  2. Do the quality of earning increase or decrease?
    • Objectives of the Study
  1. To find out the quality earning in Nigeria.
  2. To find out if the earnings in Nigeria increase or decrease.
  • Statement of Hypothesis

In order to achieve the objective stated above, the following hypotheses are raised.

HO1: Earning quality has decline overtime in Nigeria.

Ho1: Earning quality has increase overtime in Nigeria.

Ho2: Earning quality is negatively related to market return and volatility.

Ho2: Earning quality is positively related to market return and volatility.

  • Significance of the Study

Earning quality is of interest to users of financial statement particularly investors. For the average Nigeria investor perhaps the only source of information available for investment decision making is accounting information. A key component of that is earning quality. This study is of interest to different categories of the public.

  1. For the investor, it focuses on the importance of earning quality as part of decision making criterion.
  2. For regular earning quality represent a measure of the potency and desirability for enforcement mechanism.
    • Scope of the Study

This study covers a time period 2002 to 2010. A period in which the stock market witnessed dramatic changes it is a period that coincides with liberalization of the economy  and in which the market experience turbulence between 2006 and 2008 equity price climb high and by 2009 and 2010. The market nose-drive. Some have argued that the market exuberance in 2007 and 2008 had nothing to do with fundamentals such as earnings but rather with skyrocketing oil prices. The focus on quoted firms is informed by stringent reporting requirement relative to those unknown quoted firms. They are expected to have their financial statement audited and publicly available for investor.   

  • Limitation of the Study
  • Data collection: The study has limitation on the primary and secondary source of data. The primary data from questionnaires and interview were scanty because of errors in opinion of the respondents on the objectives of the secondary source of data collection. There were not enough literature on the study in the schools library.
  • The secrecy of the organization was another major constrain is that the top management staff were not willing to dispose certain information that would have enable the researcher to make a proper conclusion.
  • Language barrier was another factor in some of the junior staff of the company do not understand spoken English.

The retrieval of the administered questionnaire pose another challenges to the end that some of the management staff were not around as at the times the researcher came to collect the answered questionnaires. This inhibits a great problem that hindered the researcher to form a proper conclusion.

  • Definition of Terms

Earning quality simply mean the degree to which management’s choices of accounting estimate can affect imported income (thus choice occurs every period) some of such estimate may be difficult quantify given the company the lee way (opportunity) to report a wide range of periodic earnings.


The Impact of Corporate Strategy on Investment Decision in Nigeria


The research work investigates the impact of corporate strategy on investment decision in Nigeria. Effective corporate strategy plays a critical role in defining the businesses in which a company will compete, preferably in a way that focuses resources on how to convert distinctive competence into competitive advantages. The broad objective of the study is to investigate whether Cadbury Nigeria plc strategic pattern affects the company’s expansion investment decision and also to investigate how strategic pattern shows the growth and profitability of a firm that is increase in sales and market value. The primary source of data collection was used where stratified questionnaires were distributed to respondents. The simple random sampling technique was used to select a sample size of 50 personnel. The chi-square statistical tool was used to test the stated hypotheses and the findings revealed that the Net profit margin, measures the overall firm’s ability to turn each naira sales into profit. The study concludes that corporate strategy affects expansion investment decisions of organizations, i.e. strategic pattern affects the company’s expansion investment decision. The study recommends among others that management should reinforce the need for a strategic framework for problem solving under complexities and the relevance of strategic considerations in investment planning.




1.1   Background to the Study

It is glaring that investment decisions without a sound corporate strategy is like a ship without a rudder and a waste of time no wonder said that allowing resources to investment without a sound concepts to divisional aid corporate strategy is a lot like throwing darts in a darkroom. Investment decision which involves a firm’s decision to invest its current fund most efficiently in the long-term assets in anticipation of an expected flow of benefit over a series of years include: expansion acquisition, modernization and replacement of the long term assets, sales of a division or business (divestment), change in the method of sales distribution advertisement campaign, research and development programme etc needs a well formulated strategy.

A well formulated strategy help to marshal and allocate an organization resources into a unique and viable posture based on its relative interval competences and short comings anticipated changes in the environment and the contingent moves by intelligent opponent. Therefore, this study is aimed at focusing on the impact of overall corporate strategy on investment decisions in Nigeria with a particular emphasis on Cadbury Nigeria Plc to highlight the effective and efficient attainment of investment decisions of an organization particularly on expansion in achieving a sustainable competitive advantage capital efficiency and profitable long term growth and wealth maximization of shareholders.

Corporate strategy is the pattern of decision in a company that determines and reveals it objectives, purposes or goals, produces the principal policies and plans for achieving this goals and defines the ranges of business the company is to pursue, the kind or economic and human organization it is or intend to be and the nature of the economic and non economic contribution it intends to make to its shareholders, employees, customers and communities.

Effective corporate strategy plays a critical role in defining the businesses in which a company will compete, preferably in a way that focuses resources on how to convert distinctive competence into competitive advantages. It also means an ineffective corporate strategy will affect the overall performance of the organization particularly the firm’s investment decision since it the primary driven force (Verrechia, 2005), organization must therefore formulate a strategic decision that will determine the overall direction of the firm major goals, policies and action sequences into a cohesive whole.

It becomes a matter of great concern to management because any wrong step taken with a view of addressing any of the above taken will adversely affect the smooth running of the organization for instance, the huge amount of capital tied up in long term assets in anticipation of the expected cash flow over a series of years that is irreversible and even if reversible at substantial loss could be committed to other profitable venture within a short period that will yield quick return. The internal and external environment trends that gives the firms its identity. Its power to mobilize the strength and likelihood if success in the market place may crystallize to formless reality of loss of sustainable competitive advantage, superior skills, superior position and resources. As Charles Dawin said that it is not the strongest of the series that survive or the most intelligent, but the one most responsive to change. In the same way, if manager do not evaluate their resources in relative to competitor’s strategy there will be no superior return over long term on investment (expand) and shareholders values, growth and competitive advantage will dissipate.

Recently, a lot of emphasis has been placed on the view that a business firm facing a complex aid changing environment will benefit immensely in terms of improve quality of decision making if capital budgeting decisions are taken in the complex of its overall corporate strategy. This approach provides the decision making if capital budgeting decisions are taken in the complex of its overall corporate strategy. This approach provides the decisions maker with a central theme or a big picture to keep in mind at all times as a guideline for effectively allocating corporate fimucia1 resources.

The Impact of Corporate Strategy on Investment Decision in Nigeria


1.2   Statement of Problem

The practice of corporate strategy in relation to investment decision by business organization in Nigeria is a new phenomenon; however, it is self evident that no individual firm is problem free. The problem to be addressed is; the effect of strategy on the firm’s investment decision particularly on the area of expansion. How strategic pattern shows the growth and profitability of a firm. From various business reviews, management and accounting literatures read and discover more problems like: What should we expand on or acquire within our core competences and resources at hand? And what are the approach to allocating investment capital and resources within the context of the interval and external environment trends.


The Impact of Corporate Strategy on Investment Decision in Nigeria