Rethinking Capital Market Clearing and Settlement Process for Efficiency in Developing Countries: Evidence from Nigeria

Obademi OLALEKAN, Eniseyin OLALEKAN

Abstract


This paper focuses on the efficiency of the capital market from the perspective of the clearing and settlement system with specific attention paid to ease of access to the right information, needed infrastructure and its impact on the growth of the market and the economy at large. Primary data generated through the use of administered questionnaires and responses therefrom were analysed based on the relationship and impact of variables such as availability of information, capital market efficiency, effective prices and actual occurrences. The ordinary least square estimation technique was deployed and findings showed that the lack of adequate infrastructure, relevant and timely information and share price volatility are still major challenges to an efficient market in Nigeria as it concerns the clearing and settlement process. The increase in transaction cost and the lack of depth of the market is a resulting effect of the inefficiency. It was recommended that strengthening over the counter deals and the introduction of derivatives, options could help in deepening the market. It was also recommended that government must put in place and sustain investors-friendly policies geared towards the efficiency of the market.


Keywords


Capital Market; Clearing; Efficiency; Derivative; Investors

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References


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