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

Monday A. Gbanador; Brenda N. Gbanador

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.

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

Abstract

Keywords

References

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT