Evaluating Sustainable Relationship between Stock Market Development and Nigeria’s Economic Growth

Abstract

Our paper investigates the sustainable relationship between the stock market development and Nigeria’s economic growth with Zivot Andrew structural unit root test and Autoregressive Distributed Lag model (ARDL) technique from1980–2020, we discovered an evidence of a long-run link between Nigeria’s economic progress and stock market size at a speed of adjustment of 60% per annum. Further evidence shows that in the long run, market liquidity (TVR) showed a positive (coef =1.4) but insignificant (prob = 0.7) effect on economic performance. As much as the Nigerian stock market is growth inducing, evidence shows that the market indicators failed to produce significant effect on the growth of the economy in the long-run. To achieve a long-lasting impact, the market needs to be deepened (liquidity) through enhancing its trading infrastructures and policies. Furthermore, Security and Exchange Commission needs to encourage and lure unquoted firms which have attained some certain level of capitalization to get listed on the exchange.