ANALYSIS OF THE ROLE OF INSURANCE INDUSTRY IN THE PROMOTION OF CAPITAL MARKET SERVICES
The topic “Analysis of the roles of insurance industry in the promotion of capital market services” has been adequately researched on. The research identify that the roles of insurance industry in the promotion of capital market had been the major reason for the promoting of insurance industries in the capital market. The research used primary and secondary data collection which was distributed to the respondent and will be interpreted by the respondent. The research question objectives of the study, the research hypothesis were all validated and if at the end it was discovered that the promotion of capital market in the role of insurance industry has been the main stay of any insurance company.
1.1 BACKGROUND OF THE STUDY
When one is satisfied with basic need of man such as food, clothing, shelter etc. he would design for security against uncertainty according to Abraham Malsow in the theory of motivation, hence insurance provides security or protection against uncertainty.
Insurance is defied according to Nwite (2008) as a system for transforming the responsibility for paying looses from one party to another.
However, insurance play vital role in promoting capital market service in Nigeria. Insurance industry has required to provide technical assistance (TA) for supporting more balance development of capital market increasing the range and sophistication of financial products and strengthen the existing institution and policy frame work making the Nigeria capital market efficient competitive financially sound responsive to global trend and improve access to debt equity and risk management to support high level of economic growth and investment.
Furthermore, the insurance industry helps to government aims to build on previous advisory that addressed weaknesses in important area of capital market operation, and laid the ground work for the capital market to play a strong role in supporting Nigeria economic development with this regard the capital market has grown substantially. Loans from financial institutions continue to be the major sources of private sector financing as of 2007. Bank financing to gross domestic product (GDP) amounted to 80% while equities market 54%.
Therefore capital market can be defined as a part of finance market that provides, facilities for transfer of medium and long term funds to various economic Unilbal (1976).
1.2 STATEMENT OF PROBLEMS
i) The major problem ensilage the poor participation of Nigeria capital market in developing countries like Nigeria, because it is though it that firms are able to expand and obtain Nigeria machinery and equipment.
ii) Inadequate financial capital to take of and expansion of the small medium and large scale industries, such as lack of collateral and low credibility.
iii) Fraud is one of the problem capital market encounter. The rate of fraud in the economy is embracing thereby limited some capital market ability to effective and efficient operation in their economy.
iv) Inconsistence power supply is another problem facing effective operation of Nigeria capital market are operated through the use of electricity and beak in such power supply will challenge efficient operation.
v) Bad environment for investment: An environment which is not force due to political changes and religious or cultural crisis will affect effective operation of the Nigeria capital market.
1.3 OBJECTIVE OF THE STUDY
The research work is therefore directed toward the achievement of the following.
a) To have an overview of the study and operation of the capital market.
b) To identify a strong member regulation that will being about market discipline and confidence in the Nigeria capital market.
c) To determine how to reduce the cost of transaction to make the Nigeria capital market internationally competitive and alterative to both local and foreign investors
d) To examine the policies insurance industry often in bringing the effective and efficient of capital market.