Analysis of Capital Market and Economic Development in Nigeria: Time-Series Evidence from Nigeria 1981-2017

Uke Kalu Ejibe, Asemota Iyore

Capital Market, Economic Growth, and Market Capitalization variables

A well-developed capital market creates a sustainable low-cost distribution mechanism for multiple financial products and services across the country. This study has sought to demonstrate an important role played by capital market in economic growth and development. To achieve this objective, an error correction model was estimated for economic growth in Nigeria, using Vector Error Correction techniques on an annual time series data spanning from 1981 to 2017.  Our results were subjected to ADF Unit Root Test and it’s stationary after first difference, which implies that they are integrated of order I(1) series at one percent significance level. The result of the normalized cointegrated series further reveals that market capitalization rate, total value of listed securities and number of deals are significant macroeconomic determinants factors of economic growth in Nigeria. It was then recommended that, Government through the Central Bank should introduce and implement favourable monetary policies that will increase the level and size of Market Capitalization in the Nigerian Capital Market, this increase will surely increase fund availability for desired investment which in turn will increase productivity of the Nation.

https://doi.org/10.31871/IJNTR.7.6.11