Abstract
A stock exchange is an exchange where stock brokers and traders can buy and sell shares of stock, bonds, and other securities. All listings are included in the Nigerian Stock Exchange All Shares index. In terms of market capitalization, the Nigerian Stock Exchange is the third largest stock exchange in Africa. Objectives: The paper assesses the impact of Nigerian Stock Market (all share index, market capitalization, and number of equities) on Gross domestic product (Economic Growth). Materials and Methods: Regression analysis and ordinary least square technique were employed. Result and Discussion: The series was stationary at 1%, 5%, and 10% α level; the residuals were normally distributed but not serially correlated at 5% α level. All Share Index, Market Capitalization and Total Number of listed Equities have a joint and individual significant effect on Economic Growth (Gross Domestic Product) with Total Number of listed Equities having a negative (opposite) linear relationship with the Gross Domestic Product. The Durbin-Watson statistics (R2 = 0.9910 = 1.3686) suggest that the model is not spurious and it is devoid of positive and negative autocorrelation (DW = 1.3686 > dl = 1.07 and DW = 1.5033 - du = 2.17). Therefore, it can produce meaningful result when used for forecasting a positive relationship between gross domestic product, all share index and market capitalization with a 99.1% R-square value. Significant Positive connection between all share index, market capitalization, the number of equities and gross domestic product suggests that government policies and bills aimed towards rapid development of the capital market should be initiated.
Highlights
Capital Market is a financial market involving institutions that deal with securities with a life of more than one year
The paper assesses the impact of Nigerian Stock Market on Gross domestic product (Economic Growth)
Significant Positive connection between all share index, market capitalization, the number of equities and gross domestic product suggests that government policies and bills aimed towards rapid development of the capital market should be initiated
Summary
Capital Market is a financial market involving institutions that deal with securities with a life of more than one year. The Nigerian Capital Market of Nigerian Stock Exchange is a major player in the market for long-term funds. The main objectives of the Nigerian Stock Exchange as enunciated in the Memorandum of Association of the company are to create an appropriate mechanism for capital formation and provide efficient allocation of resources among competing alternatives. It is expected to provide special financing strategies for projects with long term gestation periods [5]. It helps to maintain discipline in the capital market as far as the participants and the investors are concerned, and as such, assists to broaden the share ownership in the market by providing the enabling environment and to provide and maintain fair prices for securities.
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