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CAPITAL MARKET AND INDUSTRIAL PERFORMANCE NEXUS: Empirical Evidence from Nigeria

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  • Offum, Peter F.
  • Ihuoma, Chikulirim E.

Abstract

This paper examined the causal relationship between the capital market and the performance of the industrial sector in Nigeria from 1985 to 2015. The paper derived its theoretical basis from the finance-led growth hypothesis and the endogenous growth theory. For empirical analysis, the Phillips-Perron unit root was adopted to determine the time series characteristics of the variables, while causality was examined by employing the Granger causality test approach. Findings revealed that there is a unidirectional causality running from market capitalization ratio and total value of shares traded ratio to industrial performance. The paper recommends improved publicity on the strategic role of the capital market as well as a strong regulatory mechanism for its efficient and smooth operation in order to mobilise long term funds for industrial development in Nigeria.

Suggested Citation

  • Offum, Peter F. & Ihuoma, Chikulirim E., 2018. "CAPITAL MARKET AND INDUSTRIAL PERFORMANCE NEXUS: Empirical Evidence from Nigeria," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 60(3), pages 1-16.
    • Handle: RePEc:zbw:espost:191729
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    File URL: https://www.econstor.eu/bitstream/10419/191729/1/CAPITAL%20MARKET%20AND%20INDUSTRIAL%20PERFORMANCE%20NEXUS.pdf
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    References listed on IDEAS

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    3. Tobias O. Olweny & Danson Kimani, 2011. "Stock market performance and economic growth Empirical Evidence from Kenya using Causality Test Approach," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 1(3), pages 1-9.
    4. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Fundamental Sources of Long-Run Growth," American Economic Review, American Economic Association, vol. 87(2), pages 184-188, May.
    5. R. I. Udegbunam, 2002. "Openness, Stock Market Development, and Industrial Growth in Nigeria," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(1), pages 69-92.
    6. Najeb Masoud & Glenn Hardaker, 2014. "Stock market development, banks and firms growth: empirical evidence from Saudi Arabia," American Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 3(2/3/4), pages 185-216.
    7. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
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    Cited by:

    1. Wabei Catherine Mutafu, 2023. "Evaluation of the Impact of the Lusaka Stock Exchange on the Financial Performance of Telecommunication Companies in Zambia: A Study of Airtel Zambia Limited (2012 – 2021)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 494-508, June.

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    Keywords

    capital market; Granger causality;

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