CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA

Abstract

This study investigated the capital market development and economic growth in Nigeria from 1982 to 2024 by determining the effect of market capitalization, total value of transactions and all shares index on real gross domestic product. The researchers adopted the ex post facto research design, utilizing secondary data sourced from the Central Bank of Nigeria Statistical Bulletin and macrotrend website form (1982-2024). The study data was analysed using descriptive statistics, unit root, bounds cointegration tests, Auto-regressive Distributed Lag Models (ARDL) and Heteroskedasticity Diagnostic Test such as Breusch-Godfrey LM Test, Breusch-Pagan-Godfrey Heteroskedasticity test, Ramsey RESET Test. The study findings revealed that, while there is insignificant effect of market capitalization and total value of transaction on real gross domestic product in Nigeria in the both long run and short run, there is a significant effect of all-share index on real gross domestic product in Nigeria in the short run but has an insignificant effect on real gross domestic product in Nigeria in the long run. The study concluded that there is no significant effect of capital market development on economic growth in Nigeria for both short-run and long-run under the period study base on the ARDL model analysis. It was suggested amongst others that as market capitalization has been shown to positively affect economic growth in term of real gross domestic product, every effort should be made by policy makers in Nigeria to encourage the growth of the capital market and enhancing market capitalization of companies in the process for short term.