ANALYSIS OF CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA

Miftahu Idris

Abstract


The significance of well-developed capital market in order to foster economic growth is highly imperative to developing countries, Nigeria inclusive. More so, capital market provides long-term financing that is designed to encourage economic growth. In view of the foregoing, this study examines the impact of capital market development on economic growth in Nigeria using annual data covering the period of 1981 to 2019. The analysis involves evaluating the stochastic characteristics of each variable under consideration by testing their stationary property and further estimates the model using ordinary least square technique, Johansen cointegration test and Granger causality test. Findings reveal the existence of a positive and long-run relationship between capital market development and economic growth in Nigeria. Further result from ganger causality test indicates the presence of a unidirectional causality running from capital market to economic growth for the period under consideration. In lieu of that, there is need to make provision for modern facilities in the capital market targeted towards encouraging foreign investors by maintaining state of the art technological services. More so, there is need for Nigeria to develop a capital market that is effective and efficient, by expanding access to credit and financial services, encourage long-term savings mobilisation and long-term capital for investment. 

Keywords


capital market development; economic growth; ordinary least square technique; Johansen cointegration; Granger causality test; Nigeria.

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