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EFFECTS OF CAPITAL MARKET DEVELOPMENT ON THE ECONOMIC GROWTH OF NIGERIA
Abstract: This study examines the effect of capital market development on the economic growth of Nigeria using data on Real Gross Domestic Product as a proxy for economic growth while capital market variables constitute the independent variables. This includes Market Capitalization, All Share Index, Number of Listed Securities and the number of listed companies The study adopted an expost-facto research design which utilized secondary data for the period 1983 -2016. While an Augmented Dickey-Fuller unit root test was used for preliminary analysis; an Autoregressive Distributed Lag (ARDL) was used for the model estimation. .A combination of ARDL bounds test for co-integration, ARDL short and long run error correction models were used for estimation. All the tests helped to confirm the integrity of our models. Findings of the study indicate that, the Number of listed Securities and All Share Index maintained a significant relationship with economic growth in Nigeria both in the short and long runs. Based on the findings of study it was recommended that government should help to remove all impediments to stock market development in the form of tax, legal and regulatory barriers as they act as disincentives to investments in the capital market. Again, government should help to maintain policy consistency in the pursuit of growth in the Nigerian capital market. By so doing, counter developmental policies should not be allowed to crowd out the gains of capital market development and by extension on economic growth in the long run. Lastly the government should find ways and means of boosting the confidence of investors to retain their portfolio investments.
Keywords: Capital market, All share index, Market capitalization, Number of listed securities, number of listed companies