Evaluation of the Effects of Global Economic Meltdown on Nigerian Capital Market Development (2000 – 2009)

Abstract

The risk of global recession occasioned by the Global Economic Meltdown (GEM) heightened the volatility of commodity prices, which is the mainstay of most developing countries Nigeria inclusive. This paper evaluates the implications of the global economic meltdown on the Nigerian Capital market development. Data for the study are mainly secondary in form of annual aggregate time series data of market share index as the dependent variable and exchange rate, interest rate, inflation rate, unemployment rate as independent variables with a Dummy to represent the period of economic crisis. Ordinary least square (OLS) of multiple regressions was used to analyze the data into econometric model while F-statistics was used to test for the formulated hypotheses. Among the study findings are that the global economic meltdown has a negative effect on the Nigerian capital market development. On the basis of the findings, the study recommend fiscal policy formulation in form of tax regime, subsidies, grant and subvention as means for sustaining productive activities within the Nigerian economy. It also recommend that employers when it becomes imperative should adopt wage reduction as a means of cutting cost rather than retrenchment as a panacea for managing the pains of recession.