Stock Market Development and Economic Growth in Nigeria : An Empirical Examination ( 1985 - 2014 )

Abstract

This study examined the effect of stock market development on Nigeria’s economic growth. The objective of the study was to determine if stock market development significantly impact on the country’s economic growth. Secondary data were employed for the study covering 1985 to 2014. Ordinary Least Square (OLS) econometric technique was used for the time series analysis in which variations in economic growth was regressed on market capitalisation ratio to GDP, value of stock traded ratio to GDP, trade openness and inflation rate. The analysis revealed that stock market has the potentials of growth inducing, but has not contributed meaningfully to Nigerian economic growth, since only 26.5% of variations in economic growth were explained by the stock market development variables. Based on this, the study suggests for an encouragement of more investors in the market, improvement in the settlement system and ensuring investors’ confidence in the market.