INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 3 NO. 3 2018


An Empirical Analysis of Capital Market as a Tool for Economic Growth in Nigeria

Monday A. Gbanador AND Brenda N. Gbanador


Abstract


This study investigates the impact of Capital Market on economic growth in Nigeria using a time series data from 1985 to 2017. The ordinary least square (OLS) regression was utilized using data that were collated from the CBN statistical bulletin. The Gross domestic product was used as proxy for economic growth while Market capitalization, Value of transaction and the all shares index were used as proxy for capital market variables. The findings from the study revealed that capital market has significant impact on economic growth. Furthermore, the study provides evidence that market capitalization exert positive impact in explaining and predicting economic growth in Nigeria. Thus, the study concluded that this variable played a significant role in influencing the capital market performance on Nigeria’s economic growth. On the other hand, the value of transaction and all shares index do not have significant impact on the growth of the economy. The reasons for this result could be attributed to the quality of quoted stocks, weak form market efficiency and the underdeveloped nature of the Nigerian Capital market. The study therefore recommend that the security and exchange commission (SEC), the Nigerian stock exchange (NSE) and other relevant agencies should ensure that the stock market is fully automated to enable market participants have easy access to the relevant information about the market and its activities. To boost the value of transactions and liquidity in the Nigerian capital market, there is need to introduce more investment instruments such as derivatives and cross-border quotation. Furthermore, SEC should restore confidence in the market by ensuring transparent and fair trading.


keywords:

Economic growth; Nigerian Capital market; Market capitalization; All shares index; Gross Domestic Product; Market efficiency


References:


Acquah-Sam & Salami, K. (2014). Effect of capital market development on economic growth
in Nigeria. European Scientific Journal 10(7), 511-534, March.

Atoyebi, K., Ishola, S. A., Kadiri, K. I., Adekunjo, F. O., & Ogundeji, M. O. (2013). Capital
market and economic growth in Nigeria. An empirical analysis. Journal of Humanities
and Social Sciences, 6(6), 60-68.

Adekanye, F. (2010). The element of banking in Nigeria. Offa, FazBurn
Araoye, F.B & Ajayi, A.M. (2018). The impact of stock market development on economic
growth in Nigeria. Journal of Business and African Economy 4(1), 1-15.

Bachelier, L. (1990). Theorie de la Speculation. Paris; Gauthier –Villar. Reprinted English in

Cootner, P (1964). The Random Character of stock Market Prices.(ed) Cambridge:
M.I.T. Publishers.

Briggs, A.P (2015). Capital market and economic growth of Nigeria. Research Journal of
Finance and Accounting, 6(9), 82-93.

Caporale, G. M., Howells, P., & Soliman. A. M. (2005). Endogenous growth models and stock
market development: evidence from four countries. Review of Development, Journal of
Economic Development.

Ewah, S.O.E, Esang, A.E., & Bassey, J.U (2009). Appraisal off capital market effiency on
economic growth in Nigeria. International Journal of Business Management, 4(12),
219-221.

Fama, E.F. (1965). The behaviour of stock-market prices. Journal of Business, 38(1), 34-105,
January.

Idowu, A., & Babatunde, M.A. (2012). Effect of financial reforms on capital market
development in Nigeria. Asian Journal of Business and Management Sciences, 1(8), 44-
52.

Josiah, M., Samson, A.A., & Akpeti, O.E. (2012). Capital market as a veritable source
of development in Nigerian economy. Journal of Accounting and Taxation, 4(1), 7-18.

Kendall, M.G. (1953). The analysis of economic time-series, Part 1: Price: Journal of Royal
Statistical Society, 96, 11-25.

Nwaolisa, E.F., Ezu, G.K., & Egbunike, C.F. (2013). The impact of capital market on the
growth of the Nigeria economy under democratic rule, Arabian Journal of Business and
Management Review (OMAN Chapter) 3(2), 53-62.

Odetayo, T.A & Sujuyigbe, A.S. (2012). Impact of Nigerian capital market on economic
growth and development. International Journal of Arts and Commerce. 1(5), 1-. October

Okafor, C., & Arowoshegbe, A.O. (2011). Stimulating economic development through the
capital market: The Nigerian experience. JORIND, 9(2), 1-16.

Oke, M.O. (2013). Capital market operations and economic growth in Nigeria (1985-2011).
International Journal of Business and Social Science, 4(7), 166-172. July

Osaze, B.E. (2000). The Nigeria capital market in the African and global financial system.
Benin City: Bofic Consults Group Limited.


DOWNLOAD PDF

Back


Google Scholar logo
Crossref logo
ResearchGate logo
Open Access logo
Google logo