IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 4 NO. 2 2018

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Capital Formation in the Nigerian Capital Market and Its Effect on Economic Growth.

Samuel Toyin Adeleye, (Ph.D)

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Abstract

The capital market is established to principally channel long term investible funds through intermediation process for financing long term strategic projects. It thus occupies an important position in the transformation of an economy. This study therefore investigated the factors that affected long term capital formation through the Nigerian capital market and their effect on economic growth. The study covered a period of twenty-five years spanning from 1990-2014. The econometric methodology adopted is the Ordinary Least square method (OLS). Secondary data was obtained from the Central Bank of Nigeria (CBN) statistical bulletins, Nigerian Stock Exchange (NSE) fact books, Security and Exchange Commission (SEC) market Bulletins and relevant journals. The independent variables of market capitalization, number of quoted companies and traded value and the dependent variable of gross domestic product. Result revealed that the stock market had a significant but weak impact on the Nigerian economy. Absence of an efficient stock market starved economy of long term funds for sustainable growth and development. Government should formulate policies that will improve and develop the capital market for accessibility of long term investment funds by the industrial sector. A stricter regulatory environment is recommended for the capital market to curb their nebulous activities and relaxing some of the stringent requirements for viability of the Small and Medium Enterprises (SME's) listing on the stock exchange.

keywords:

Capital formation; gross domestic product; Investment fund; Capital Market; Sustainable growth

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