Examining the Nexus Between Fiscal Operations and Capital Market Growth: Implications for Financial Education in Nigeria

Ikole Dornubari; PhD; Thomas; Bariere; PhD; Michael; Saro S.; PhD

doi:10.56201/jafm.vol.12.no4.2026.pg271.283

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Examining the Nexus Between Fiscal Operations and Capital Market Growth: Implications for Financial Education in Nigeria

Ikole Dornubari, PhD, Thomas, Bariere, PhD, Michael, Saro S., PhD

Abstract

This paper examines how Nigeria’s fiscal operations influence capital market performance in Nigeria. It assesses the effects of government capital and recurrent expenditure, borrowing, and taxes on capital-market depth (market-capitalization/GDP) using annual time series data (1990–2023) and a mix of econometric techniques (unit-root tests, Johansen cointegration, VAR/ECM, Granger causality). The results show no robust long-run effect of aggregate expenditure on MCAP: expenditure impacts depend on composition, financing and operate with lags. By contrast, government-bond conditions negatively and taxes positively associate with long-run MCAP, while short-run predictive links are weak. It therefore concludes that financing structure, not headline spending, drives market depth. Consequently, the government should prioritize transparently appraised, productivity-enhancing capital projects; lengthen debt maturities and reduce short-dated domestic issuance to limit crowding-out through financial literacy and education.

Keywords

Fiscal operationsCapital Market PerformanceMarket CapitalizationGovernment Expenditureand Debt Financing.

References

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Examining the Nexus Between Fiscal Operations and Capital Market Growth: Implications for Financial Education in Nigeria

Abstract

Keywords

References

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