Capital Market and Economic Growth in Nigeria
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Abstract
Description
This study seeks to evaluate the contribution of capital market to the
growth of Nigeria’s economy. 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 2014. The data were subjected to Phillip Perron Unit Root
Test at level and first difference. The result shows that, at one percent
significance level, all the variables were stationary at first differencing.
The result of the normalized cointegrated series further reveals that market
capitalization rate, total value of listed securities, labor force participation
rate, accumulated savings and capital formation are significant
macroeconomic determinants factors of economic growth in Nigeria. It
was then recommended that, for the capital market to realizes its full
potentials, its environment must be enabled to promote and encourage
investment opportunities for both local and international investors, since
the stock market operates in a macroeconomic environment. Consequently,
an improvement in the Nigerian trading system with the aim of increasing
the ease with which investors can purchase and sell shares, could
guarantee the stock market liquidity
Keywords
H Social Sciences (General), HG Finance