Effect of Capital Market on Economic Growth in Nigeria
Abstract
Capital Market has been identified as an institution that contributes to the socio-economic growth and development of emerging economies. Due to the recent financial crises, the researcher cannot be enabling to investigate the extent to which capital market has affected the economic growth in Nigeria. The primary objective of this study is to examine the effect of the Nigerian capital market on the economic development in Nigeria. The economic growth was proxy by Gross Domestic Product (GDP) while the capital market variables considered include; market capitalization (MCAP), Number of listed securities (NLS), and Total value of securities traded (TVST). Three research questions and six hypotheses were raised in the course of this research. The Ex-post facto research design was used for this study. Secondary data was obtained from the annual report and financial statement from Nigerian stock exchange and central bank of Nigeria over a period of 30 years (1981-2012) and was analyzed using descriptive statistics, Pearson correlation and multiple regressions. The findings indicate that economic growth is significantly influenced by only MCAP. The factor that does not significantly influence economic development is, NLS and TVST. This is a clear indication that the capital market is a tool for economic development of the country. The evidence from this study reveals that the activities in the capital market tend to impact positively on the economy but not to the extent it is supposed to. It is recommended therefore that the regulatory authority should introduce ICT policies to encourage more companies to access the market and also be more proactive in their surveillance role in order to check sharp practices which undermine market integrity and erode investors’ confidence.References
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Francis X. R. & Raja, A. V (2007), Stock Market and Shareholders Protection: Are the Important for Economic Growth? The Law and Development Review 3(2): 306-325.
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Olweny, M.D (2012). Deregulation of government securities: implication for Nigerian capital market. Paper presented at MIDAS Merchant Bank. 1/07/12 ikoyi
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Tharavaniji P. (2007). Capital market, severity of business cycles and probability of economic downturn. MPRA paper 4953.
Afees, A. S. & Kkazeem. B. A. (2000). The Stock Market and Economic Growth in Nigeria: An Empirical Investigation, Journal of Economic Theory: 65-70
Al-Faki, M. (2006). The Nigerian Capital Market and socio-economic development. A Paper Presented at the 4th Distinguished Faculty of Social Science, Public Lectures. University of Benin: 9-16.
Applegarth, PV (2004). Capital Market and Financial Sector Development in Sub-Saharan Africa. A Report of the Africa Policy Advisory Panel.
Berkaert, G. Harvey C. & Lunlad, C. (2005). Do Financial Liberation Spur Growth? Journal of Financial Economic 77 (1): 3-55.
Ben Naccurs, & Ghazouani, S. (2007) Stock Market, Banks and Economic Growth: Empirical evidence from MENA Region. Research in International Business Finance (2): 297-315.
Bolbol, A. Fatheldin. A. & Omran M. (2005). Financial Development, Structure and Economic Growth. The case of Egypt, 1974 – 2002. Research in Internaitonal Business Finance (6): 171-194.
Donwa, P. Odia, J. (2010). An Empirical analysis of the Impact of the Nigerian Capital on her Socio-Economic Development. Journal of Special Science 24 (2): 135-142.
Ewah S. O. E. Essang A. E. & Bassey J. U. (2009). Appraisal of Capital Market Efficiency on Economic Growth in Nigeria. International Journal of Business and Management 4 (12): 219-225.
Francis X. R. & Raja, A. V (2007), Stock Market and Shareholders Protection: Are the Important for Economic Growth? The Law and Development Review 3(2): 306-325.
Kolapo, F. P & Adaramola B. (2012). Impact of the Nigeria Capital Market on Economic Growth Journal of Developing Society 1(1).
Liu, W. & Hus. C. (2006). “The role of financial development on economy: The experience of Taiwan, Korea and Japan Journal of Asian Economic 17:666
Mohammed, S. Nadeem, A. (2008). Stock Market Development and Economic Growth. ARDL Causality in Pakisstan International Research Journal in Finance and Economic 14: 183-195.
Nieuwerbugh, S. Buelens F. & Cuvers L. (2005). Stock Market Development and Economic Growth in Belgium NYU Working Paper: 5-024.
Nwankwo G. O. (1991). Money and Capital Markets in Nigeria today. Lagos; University of Lagos Press.
Oladipupo O. F. (2010). The crash of Nigeria capital market: Explanation beyond the Global Meltdown International Business Management 4(2): 35-40.
Olawoye,L. (2011). Impact of capital market on Economic Growth of Nigeria. Lakanolawoye.blogspot.com, p 23-33.
Olweny, M.D (2012). Deregulation of government securities: implication for Nigerian capital market. Paper presented at MIDAS Merchant Bank. 1/07/12 ikoyi
Pedro S. Amoral & Erwan Quintin (2004). The implications of Capital skill Complementary in Economics with large informal sector Centre for Latin American Working paper 0404. Federal Reserve Bank of Dallas.
Tharavaniji P. (2007). Capital market, severity of business cycles and probability of economic downturn. MPRA paper 4953.
Published
2016-06-01
How to Cite
ENEKWE, Chinedu Innocent; EZIEDO, Kenneth Nnagbogu; AGU, Charles Ikechukwu.
Effect of Capital Market on Economic Growth in Nigeria.
GOUNI Journal of Management and Social Sciences, [S.l.], v. 4, n. 1, p. 33-46, june 2016.
ISSN 2550-7265. Available at: <http://journal.gouni.edu.ng/index.php/fmss/article/view/11>. Date accessed: 14 may 2018.
Issue
Section
Articles
Keywords
Gross Domestic Product (GDP); Market Capitalization (MCAP); Number of Listed Securities (NLS); Total value of securities traded; Economic Growth
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