Abstract:
This study investigated the extent to which government Securities compare with Industrial Securities on the domestic capital market (piloted by the Nigerian Stock Exchange) in term s of investors ' preference, actual levels of subscription and turnover ratio , Factors militating against investment in Government Securities were equally investigated as well as their possible solutions, The aim was to reconcile policy recommendations in recent times that all tiers o f the Nigerian Government be urged to borrow Iron: the domestic capital market (as an alternative source or funding their projects C,UIll fiscal deficit s ) with certain past allusions that Nigeria government Securities arc not as marketable as Industrial Securities because o f their alleged non attractiveness to most other investors beside the institutional investor s. Survey and Ex-post- fac to research designs were used for the study, guided by SIX research questions and three hypotheses. Two sets of study population were utilized . One set being the total number/value or all government and industrial securities listed on the Nigerian Stock Exchange (NSI":). their rates of subscription (when originally issued) and turn -over ratios 1'01' the period 19XO -2000. The other set comprised a total of IXc) active dealing members o f the NS I~ out o f which a sample or 62 W (l S drawn using the systematic and purposive sampling techniques. The Investment Preference Rating Questionnaire ( IPRC)), designed by the researcher was utilized to elicit qualitative data from the second set of the study population . Frequency tables, percentages, am arithmetic mean were used lIS the analytical tool s for answering (Ill the research question s while the lann - Whitncy 'U" test ami the Student t-tcst were employed to verily the three hypotheses all o f which tested at 0.05 level or significance. The major findings of the study were (IS follows: ln vcsi ors arc dispassionate in their choice or investment between Government Securities and Industrial Securities once their perceived level of risks are equal. There was no significant difference between the mean levels of subscription in Government Securities and. those or Industrial Securities (both overall and subcomponents). The mean turnover ratio for Government Securities was significantly higher than that of Industrial Securities based on round -lot transactions only. Though affirming the dominance of institutional investors as major holders of Government Securities. the study on the whole shows that effective demand exists for Government Securities on the domestic capital market. The factors militating against the marketability of Government Securities were perceived to be deep-rooted within the government itself which can be overcome by a stable and fledging democratic governance coupled with a good regulatory environment to protect investors, in addition to issuing securities with attractive floating coupon rate.
