Rule of law and preventing fraud in Nigeria’s capital market
| DOI | https://doi.org/10.1108/JFC-03-2021-0057 |
| Published date | 12 July 2021 |
| Date | 12 July 2021 |
| Pages | 951-961 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Uchechukwu Nwoke,Ibenaku Harford Onoh |
Rule of law and preventing fraud
in Nigeria’s capital market
Uchechukwu Nwoke and Ibenaku Harford Onoh
Department of Commercial and Corporate Law, Faculty of Law,
University of Nigeria, Nsukka, Nigeria
Abstract
Purpose –The purpose of this paperis to critically analyse the correlation between the ruleof law and the
efficientfunctioning of capital markets. It attempts to examine the Nigerian capitalmarket and how the rule of
law can be usedto prevent fraud and promote the proper functioningof the market.
Design/methodology/approach –The paper adopts the doctrinal approach through a critical evaluat ion
of concepts. Using existing literature in the subject area, it evaluates the inter-connectedness between law and the
capital market and how the rule of law is an important instrumentin capital market development.
Findings –The paper finds that there have beennumerous infractions of the rule of law by capital market
actors,leading to stultification in the growth and developmentof this sector of the Nigerian economy.
Originality/value –The paper offers a fresh insight into the correlation between the rule of law and
capital markets.By critically assessing the inter-connectivitybetween the two concepts, it extends the body of
knowledge in this area by showing how the operations of the Nigerian capital market could be improved
through the properapplication of the rule of law.
Keywords Capital market, Rule of law, Fraud, Institutions, Economic development, Nigeria
Paper type Research paper
Introduction
Law and economics is an importantdiscipline of analysis in legal studies and in economics,
although there have been a number of controversies on the best way to figure out the
connection between economic relations and the regulatory role of law (May, 2018).
Undoubtedly, in policy circles, the positive relationship between law and economics has
propelled an interest in the rule of law as a key partof contemporary efforts to establishand
promote economic growth (May, 2018). It is now a wide spread perception of international
politics that the rule of law is a good thing, and more specifically that it supports and
underpins contemporary market societies (May, 2014). According to Thomas Carothers
(2008), the degree of apparent international consensus on the value and importance of the
rule of law is striking. Almost all other parts of the Western donor consensus concerning
what is good for other countries are hotly debatedwhile the value of the rule of law is largely
accepted without significant debate.Put differently, there is a general acceptance by policy
makers and in the academic community that the rule of law is central to the successful
establishment of capitalmarkets (May, 2018).
As Mattei and Nader (2008) have argued:
[...] in the contemporary neo-liberal views of the law, less developed economies are seen as
lacking something very simple and universal. They lack the simple and universally valid minimal
institutional system necessary for the unfolding of an efficient market.
That is the rule of law (May, 2018). The rule of law is an indispensable foundation for a
market economy, which providesan essential environment for the creation and preservation
Preventing
fraud in
Nigeria’s
capital market
951
Journalof Financial Crime
Vol.29 No. 3, 2022
pp. 951-961
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-03-2021-0057
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