EFFECT OF CAPITAL MARKET ON ECONOMIC GROWTH IN
NIGERIA: A QUANTITATIVE APPROACH
Dr. Muhammad Bello Abubakar, Dr. Olusegun Adegoke Adewusi and Dr. Ali Dalha Haruna, Bashir Aminu
ABSTRACT
The study aims to explore the effect of the Nigerian capital market on economic growth. The study employs quantitative research using annual secondary data for 38 years from 1981 to 2018 to assess the effect of capital market on economic growth in Nigeria. The data were analyzed using Lag Length Selection Criteria, ARDL Bound Test for Cointegration, Long and Short Run Estimations, and Diagnostic Tests encompassing Serial Correlation, Heteroskedasticity, Cusum Test, and Ramsey Reset Test. The results show a well established long-term connection between capital market and economic growth in Nigeria. This conclusion is substantiated by the F-statistics of 10.96, exceeding the upper bound values across all levels of significance, thereby affirming the existence of a lasting link between the capital market and economic growth within the Nigerian context. Specifically, capital market variable such as market capitalization and equity indicate a positive and significant effect on economic growth. The ARDL error correction model (ECM) was used to estimate the parameter estimates that align with the expected signs, validating their appropriateness. The findings of the study validate the existence of effect of capital market in Nigeria, and the study recommends that the regulatory authority should formulate policies aimed at enhancing capital market operations.