CAPITAL MARKET AND ECONOMIC GROWTH IN NIGERIA
Abstract
This study examined the relationship between capital market and economic growth in Nigeria from 1982 – 2023, using secondary data from the Central Bank of Nigeria statistical bulletin. Capital Market Theory and Endogenous Growth Theory was used as the theoretical framework. Ordinary Least Square (OLS) regression was employed for the empirical analysis. The statistical and econometric criteria were used to evaluate the model, and the results indicated that all exogenous variables in the model, except for value of market shares, were statistically significant. The Durbin-Watson statistic revealed no autocorrelation in the estimated model. The results further showed that share returns and market capitalisation had a positive relationship with economic growth, while tradable shares and value of market shares had a negative relationship with economic growth. The adjusted R-Squared indicated that 99.4% of the variations in economic growth were explained by the model. The study recommended that policymakers should encourage investment in the capital market by creating an enabling environment for investors and implementing policies that would boost market capitalisation. They should also promote policies that would increase the efficiency of the capital market to enhance share returns. Finally, efforts should be made to address the challenges associated with tradable shares and value of market shares, as they have a negative effect on economic growth.
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