Financial Engineering, Corporate Goverance and Nigeria Economic Development

John Ifeanyichukwu Osuoha

Department of Accounting and Finance, Faculty of Business and Law, Leeds Metropolitan University, Leeds, UK.

DOI: 10.4236/jfrm.2013.24010                

Abstract

The study shows that the present Nigeria financial system is incomplete and lacking in hedging mechanism. The Nigeria financial system has only organized Money Market and Capital Market. Although these markets have proved useful in mobilizing resources for firms and governments for development and growth of the economy but they are very vulnerable and not fully developed as expected because of the absence of an organized derivatives market. Derivatives markets suppose to provide an impetus and encouragement for more investors (both local and foreign) to patronize the money and capital markets knowing the risk of their investments can be managed. Also Nigeria abundant oil and gas resources are lacking in hedging mechanism to manage the volatility of oil and gas prices in the international market which directly affect the wealth and economic development of Nigeria. Therefore, Nigeria government and corporate leaders should fast tract the establishment of derivatives exchange in Nigeria where futures and options on Nigeria Mineral resources, agricultural produce and other basic instruments can be traded. This will attract more foreign investments in the Nigeria financial markets thus boosting liquidity of the market, increasing market depth and enhancing economic growth.

Keywords

Financial Engineering; Derivatives; Corporate Governance; Regulation; Economic Development

Conflicts of Interest

The authors declare no conflicts of interest.

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