CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA

Anoke, Charity Ifeyinwa and Odo, Stephen Idenyi and Ogbonna, BigBen Chukwuma (2017) CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA. International Journal of Physical and Social Science, 7 (2). pp. 57-82. ISSN 2249-5894

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Abstract

This Study examined the implications of capital market development on economic growth of Nigeria from 1986 – 2015. The specific objectives of the study are to; (i) investigate the extent to which stable long run relationship exist between capital market development indicators and economic growth in Nigeria. (ii) determine if market capitalization has any significant impact on economic growth in Nigeria. (iii) determine if stock traded turnover ratio has any significant impact on economic growth in Nigeria. (iv) investigate if there exist any significant causal relationship between capital market development indicators and economic growth in Nigeria. The study adopted co integration, error correction mechanism and Granger causality test in estimation of the variables of the model with the following results; (i) stable long run relationship was identified between the dependent and independent variables as indicated by four (4) co integrating vectors. (ii) LMCAP has a positive insignificant impact on LRGDP in the short run as supported by the coefficient of 5.00E+08 and p value of 0.2210 and positive significant relationship with LRGDP in the long run supported by a coefficient of 8.15 and t –statistics of 4.0519. (iii) STTR has a negative significant impact on LRGDP both in the short and long run as supported by their respective coefficients and p values; -1.05E+12 (0.0004) and -1.44 (13.5253). (iv) the result of the Granger causality indicated a unidirectional causality running from LRGDP to LMCAP with a p value of 0.0003, STTR to LRGDP with a p value of 0.0049. The major implication of these results is that capital market development has not contributed significantly to the growth of the Nigerian economy within the period of the study. Based on the findings and policy implications, the study makes the following recommendations; (i) there should be a deliberate collaboration between government and private sector towards building conducive enabling environment that is supportive to the operations of the capital market. (ii) Government should initiate conscious and deliberate policies that will stimulate foreign portfolio investment in Nigeria especially in areas of security, provision of critical infrastructures to increase trading activities in the capital market. (iii) Government should strengthen the Nigeria already weak private sectors through additional funding from Central Bank of Nigeria and the introduction of relevant policies that will enhance their performance in the development of the capital market. The study concludes that a conducive business environment where security and investor’s confidence are guaranteed is indispensable in the realization of effective and efficient capital market activities needed to achieve economic growth.

Item Type: Article
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Faculty of Management and Social Sciences
Depositing User: mrs chioma hannah
Date Deposited: 27 May 2019 10:32
Last Modified: 27 May 2019 10:32
URI: http://eprints.gouni.edu.ng/id/eprint/1570

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