INTRODUCTION
LITERATURE REVIEW
RESEARCH METHODOLOGY
DATA PRESENTATION AND ANALYSIS
SUMMARY, CONCLUSION AND RECOMMENDATIONS
The global economic crisis, which erupted with the meltdown of the United States subprime mortgage market in 2007, has been described as the severest since the Great Depression. The crisis was subsequently spread from the United States to other economies, both in developed and developing countries. In the case of Nigeria, the emergent global crisis has impacted negatively on the nation’s financial sector, triggering instability in banks and the capital market. The banking sector is shaken particularly hard, causing the Central Bank to inject more than N400 billion naira or US$2.72 billion into vulnerable banks to forestall systemic collapse in the sector. In the capital market, equity prices, in the past couple of years, have fallen sharply, with the All-share Index at the Nigerian Stock Exchange down by 33 percent at the end of December 2009, from levels recorded in December, 2008. The instability in Nigeria’s financial markets poses severe challenges to policy makers, requiring urgent measures to stem the tide. Therefore the objective of this paper is to elaborate the challenges of the global economic crisis and its effects on Nigeria’s financial markets. The study shows that the nation’s financial markets are severely undermined by a combination of credit squeeze, loss of confidence and financial contagion that have paralyzed the banking system and capital markets. The paper consequently proffers policy measures hinged on deepening financial market regulation, economic reform and poverty reduction strategies.
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