Impact of Capital Market Development on the Nigerian Economic Growth

Abstract

This study examined the impact of capital market development on the Nigerian economic growth for the period 1999-2019. Market Capitalization (TMC), All Share Index (ASI) and Total Value of Stocks (TVS) were used as proxies for the capital market development while Real Gross Domestic Product (RGDP) was use as a proxy for economic growth. Data use for the study were obtained from secondary sources, these data were analyzed using the statistical method of multiple regression. a unit root test was conducted using Augmented Dickey fuller and the result shows stationary of all the research variables. This research findings show that total market capitalization all share index and total value of stock are all joint predictor of economic growth provided by RGDP, though insignificantly. The all share index and total value of stock exert insignificant positive influence on RGDP growth rate while the total market capitalization has insignificant negative effect on economic growth. The implication of the result is that an increase in all share index and total value of stock will insignificantly increase economic growth. Hence, the study concludes that capital market development has not significantly impacted on economic growth in Nigeria. The study therefore recommends that there is a need for a diversified investment instruments in the capital market whereby debt and derivative instruments will attained as much prominence as ownership instruments. The research further recommends that Government should do everything possible to provide a safe and conducive investment climate by nipping in the bud, the prevalent activities of terrorist and kidnappers. This will not only encourage the Nigerian investors, but also attract foreign investors into the Nigerian capital market.