The Capital Market And The Challenges Of Real Sector Financing In Nigeria.
[A STUDY OF THE PERIOD 2000-2009]

CHAPTER THREE 3.0

RESEARCH METHODOLOTY

3.1 INTRODUCTION

This chapter describes the procedures used in carrying out this study. It defines the research design, the population, the methods of data collection and presentation, the data analysis techniques employed in the course of the research.

3.2 RESEARCH DESIGN

Research design means the structuring of finding aimed at identifying variables and their relationship with one another. In this research, the regression and correlation analysis will be used to measure the degree of relationship between market capitalization and Gross Domestic Product (GDP), share capital and profitability.

3.3 POPULATION

The population to be covered in this research is the total number of listed equities on the Nigerian Stock Exchange with particular attention to the productive sector, and the fixed income debt instruments. Thus, the study population is 199, with Nigerian Stock Exchange (NSE) as the only capital market institution under study. The listed equities as reported in the Nigerian Stock Exchange Daily official list and annual report of the CBN are 199 as at 2009. (The period under study).

3.4 SAMPLING TECHNIQUES

The nonrandom as well as random sampling method is applied using the NSE which is the only Stock Exchange in Nigeria and selected quoted stocks on the Exchange for the period under study.

3.5 METHODS OF DATA COLLECTION

The data was basically obtained from secondary sources, which include quarterly, fact books, daily trading list from the NSE, libraries, institutional journals, CBN statistical Bulletin as well as newspapers.

3.6 PROCEDURES FOR DATA ANALYSIS

The data will be analyzed using stock market indicators from which may be assessed the level of development and growth impact of the Nigerian Stock Exchange in the productive sector of the economy, such indicators includes;

• Market capitalization 2000 - 2009.
• Volume of shares traded
• Value of shares traded 
• Number of listed securities
• All shares index 61
• Number of listed deals
• Number of new issues of Equity and debt securities

The Nigerian Stock Exchange Market capitalization (ie the total value of all quoted securities on the exchange) will be assessed and compared with gross domestic formation. Also, the volume of shares traded, value of new equities and debt securities or financial instruments will be applied to evaluate the market size and its impact on productive sector growth and development. Market capitalization here is the independent variable, while, Gross domestic Product(GDP) is the dependent variable. The Gross Domestic Product (GDP) will be used to represent the growth of the economy. Also volume, value of shares traded, all shares index, number of listed securities, and number of deals will be analyzed using a bar chart, multiple bar chart where appropriate

3.6.1MODEL SPECIFICATION A model is a representation of a problem situation or an economic system. The model for this research is thus: GDP = (Mkt Cap) or (Mkc) 62 Where; GDP = Gross Domestic Product at current market price. Mkc = Market Capitalization of the NSE

3.6.2 METHOD OF ANALYSIS Regression Method – The regression method of analysis shall be applied using the following criteria;

(A) ECONOMIC CRITERIA: - This has to do with the size and significance of the coefficient of the parameters

(B) STATISTICAL CRITERIA: The statistical test for significance is the coefficient of determination (R2), the statistical t test explaining the above will be as follows:

(C) The coefficient of determination (R2) = The proportion of the variance is called “coefficient of determination” The R2 shows the level of variance of the dependent variable, the higher the R2 the better the fit. The formular for the R2 therefore;

Where: R2 = Coefficient of determination