Impact of Capital Market Performance on Economic Growth in Nigeria

Impact of Capital Market Performance on Economic Growth in Nigeria.

ABSTRACT

This study examines the impact of Capital Market performance on economic growth of Nigeria for the period 1983 – 2010.  Economic growth was proxied by gross domestic product while capital market performance was measured by market capitalization, total new issues, volume of transaction and listed equities.

Data was collected using secondary source of data only.  The technique employed was multiple regression as tool of analysis for the study. The findings of the study shows that the capital market performance has positively and significantly impacted on the Nigerian economy within the period of the study (1983- 2010).

The study therefore, recommends among others that the Central Bank of Nigeria (CBN), the Nigerian Stock Exchange (NSE) and Security and Exchange Commission (SEC) should ensure free flow of information in the market.  This is necessary in order to attract more investors and increase new issues which will automatically increase the quantum of market capitalization that will result in improving the performance of the Nigerian capital market.

TABLE OF CONTENTS

Declaration……………… ii

Certification…………………. iii

Dedication………………………………… iv

Acknowledgement…………………………….. v

Abstract…………………………… vi

Table of Contents……………….. vii

CHAPTER ONE: INTRODUCTION

1.1 Background to the study …………………………. 1

1.2 Statement of the problem ……………… 5

1.3 Research questions …………………………. 6

1.4 Objectives of the study………. 7

1.5 Hypotheses of the study………………… 7

1.6 Significance of the study ………………. 8

1.7 Scope of the Study …………… 9

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction ……………. 10

2.2 Concept of Capital Market Variables……… … 10

2.3 Review of Literature in the Concept of Capital Market Variable … 15

2.4 Review of Empirical Studies on the Capital Market and Economic Growth. 19

2.5 Review of Empirical Studies on the Capital Market and Gross Domestic Product …. 30

2.6 Contribution of the Capital Market to Economic Growth of Nigeria… 36

2.7 Analysis of the Nigerian Capital Market’s Performance………….. 37

2.8 Theories of Economic Growth……. ….…… 39

2.9 Theoretical Framework…… ………… 41

2.10 Summary………. 42

CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Introduction…………… 44

3.2 Research design…………………. 44

3.3 Population and Sample Design…… 44

3.4 Sources of Data Collection ……………. 45

3.5 Technique of Data Analysis……… 45

3.6 Variable Measurement…………… 46

3.7 Decision Criteria…………. 47

3.8 Robustness Test……………….. 47

3.9 Justification of Methods and Techniques…….. 48

3.10 Summary……………… 48

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction………….. 49

4.2 Basic Statistic………….. 51

4.3 Descriptive Statistic….…. 51

4.4 Correlation Matrix…………… 53

4.5 Test of hypotheses……………… 54

4.6 Policy Implication of the Findings……… 59

4.7 Summary of the Chapter……………….. 61

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary…………………….. 63

5.2 Conclusion………………………… 64

5.3 Recommendations……………… 66

5.4 Limitation of the Study…………. 67

5.5 Areas for further Study…………… 68

Bibliography……………….. 69

Appendix……………………… 77

INTRODUCTION

The Capital market in any country is one of the major pillars of long-term economic growth and development. The market serves a broad range of clientele, including different levels of government, corporate bodies and individuals within and outside the country.

Capital formation entails accumulated savings out of the current incomes of either organization or individual. It is investment in fixed assets which in part is financed with monies raised through the capital market (Al-Faki, 2006).

The Capital market has been one of the major means through which foreign funds are injected into most economies and the tendency towards a global economy is more visible there than anywhere else.

It is therefore, quite valid to state that the growth of the capital market has become one of the barometers for measuring the overall economic growth of a nation (Emenuga, 1998).

BIBLIOGRAPHY

Abdullahi, A. (2005). Capital Market Performance and Economic Development in Nigeria: An Empirical Analysis. Paper Presented at the Department of Business Administration, Bayero University Kano.

Abu, N. (2009). Does Stock Market Development Raise Economic Growth? Evidence from Nigeria. Journal of Banking and Finance. 1(1) 15-26

Adam, J. A., & Sanni, I. (2005). Stock Market Development and Nigeria’s Economic Growth. Journal of Economics and Allied Fields, Vol. 2 No. 2, pp. 116-132.

Adamu, A. (2008).The Effect of Global Financial Crisis on Nigerian Economy.http://www.rrojasdatabank.info/crisisdb/onnigeria,retrieved on 28/05/2011 at about 18:00hrs.

Adebiyi, M.A. (2005). Capital Market Performance and The Nigerian Economic Growth. In Oluwatayo O.F. and Olasupo, A; Issues in Money, Finance and Economic Management in Nigeria. Lagos: University of Lagos Press.

StudentsandScholarship Team.