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Effects of Capital Market Development on the Economic Growth of Nigeria

Author

Listed:
  • Udo Ginikachi Cynthia

    (Department of Management Technology (FMT), School of Management Technology, Federal University of Technology, Owerri, Imo state, Nigeria)

  • Nwezeaku Nathaniel Chinedum

    (Department of Management Technology (FMT), School of Management Technology, Federal University of Technology, Owerri, Imo state, Nigeria)

  • Kanu Success Ikechi

    (Department of Banking and Finance, Faculty of Social and Management Sciences, Eastern Palm University, Ogboko Ideato, Imo State, Nigeria)

Abstract

This study examines the effect of capital market development on the economic growth of Nigeria using data on Real Gross Domestic Product as a proxy for economic growth while capital market variables constitute the independent variables. This includes Market Capitalization, All Share Index, Number of Listed Securities and the number of listed companies The study adopted an expost-facto research design which utilized secondary data for the period 1983 -2016. While an Augmented Dickey-Fuller unit root test was used for preliminary analysis; an Autoregressive Distributed Lag (ARDL) was used for the model estimation. A combination of ARDL bounds test for co-integration, ARDL short and long run error correction models were used for estimation. All the tests helped to confirm the integrity of our models. Findings of the study indicate that, the Number of listed Securities and All Share Index maintained a significant relationship with economic growth in Nigeria both in the short and long runs. Based on the findings of study it was recommended that government should help to remove all impediments to stock market development in the form of tax, legal and regulatory barriers as they act as disincentives to investments in the capital market. Again, government should help to maintain policy consistency in the pursuit of growth in the Nigerian capital market. By so doing, counter developmental policies should not be allowed to crowd out the gains of capital market development and by extension on economic growth in the long run. Lastly the government should find ways and means of boosting the confidence of investors to retain their portfolio investments

Suggested Citation

  • Udo Ginikachi Cynthia & Nwezeaku Nathaniel Chinedum & Kanu Success Ikechi, 2021. "Effects of Capital Market Development on the Economic Growth of Nigeria," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 7(2), pages 30-46, June.
    • Handle: RePEc:mgs:ijoied:v:7:y:2021:i:2:p:30-46
    DOI: 10.18775/ijied.1849-7551-7020.2015.72.2003
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    References listed on IDEAS

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    1. Ifuero Osad Osamwonyi & Abudu Kasimu, 2013. "Stock Market and Economic Growth in Ghana, Kenya and Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 4(2), pages 83-98, April.
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    5. Abu Nurudeen, 2009. "Does Stock Market Development Raise Economic Growth? Evidence from Nigeria," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 1(1), pages 015-026, December.
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    Cited by:

    1. Oladapo Fapetu & Segun Michael Ojo & Adekunle Alexander Balogun & Adeoba Adepoju Asaolu, 2022. "Capital Market Performance and Macroeconomic Dynamics in Nigeria," Papers 2207.00773, arXiv.org.

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    More about this item

    Keywords

    Capital market; All share index; Market capitalization; Number of listed securities; number of listed companies;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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