Impact of capital market volatility on economic growth in nigeria 1985 2016 doi. The history of nigeria capital market could be traced to. It was concluded that capital market in nigeria has the potential of growth inducing but it has not contributed meaningfully to the economic growth of nigeria because of low market capitalization, low absorptive capitalization, illiquidity, and misappropriation of funds among others. Capital market is made up of markets and institutions which facilitate the issuance and secondary trading of longterm financial instrument. It is important that interest rate should be lowered so as to increase the level of investment. Performance indicators of capital market and the economic. The paper assessed the effect of nigerian capital market performance indicators on economic growth of nigeria from 1997 to 2006. Employing the ordinary least square multiple regression model, the two hypotheses formulated were tested in order to ascertain the nature of relationship between the capital market and nigeria s economic growth. The vec causality test indicated a bidirectional causality between economic growth and capital market development in nigeria. Capital market and nigerias economic growth 1980 20 okpoto, sunday ituma econonmics department, ebonyi state university, abakaliki email. Stock market volatility and economic growth in nigeria. It was found that capital market ratio and turnover ratio are both significant and positive drivers of economic growth in nigeria and that stock markets affect. This study on the development of the capital market institution in an emerging economy like nigeria seeks to examine not only how it came to be established but also how this institution has evolved.
An autoregrssive distributed lag ardl model find, read and cite all the. As the results suggests, it becomes beneficial for nigeria to develop the capital market and to also work on some impediments that hinders the market like tax. The history of nigeria capital market could be traced. In recent years, all her efforts to grow the economy, nigerias rate of economic growth has remained very volatile and sluggish. Pdf impact of capital market on the economic growth in. Assessment of financial restructuring and capital market on. Pdf this study examined the impact of capital market indicators on economic growth in nigeria from 19862015. An increase in investment will lead to an increase in economic growth in nigeria. This page provides nigeria gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic. The history of nigeria capital market could be traced to 1946 when the british colonial. Impact of capital market on the economic growth in nigeria. The nigerian capital market represents a small but growing proportion of the nations economy. I shall first consider whether the design of the financial system. The empirical results showed that, there was unidirectional causality between capitalization of the stock market and economic growth, which ran from economic growth gdp to capitalization of the stock market mcap at 5 percent significant level.
Through the press and different media, the public are informed about the prices of different securities. It is important that the government should implement policies that will make the market more efficient and reposition it for growth within the. There is a positive relationship between value of transaction in the capital market and economic growth. This study seeks to determine the impact of capital market on economic growth in nigeria using using annual data from 1981 to 2010. The impact of the nigerian capital market on economic. Determinants of economic growth in nigeria kazeem b. This study used a multiple regression analysis to compute the annual time series variables. A multivariate regression approach was employed to estimate augmented growth models.
Pdf capital market development and economic growth in nigeria. The impact of the nigerian capital market on economic growth 19902010 f. Emerging capital markets all over the world have a history and nigeria is not in any way different. This enables the public to take necessary investment decisions. This study attempts to examine the relationship between capital market and economic growth in nigeria. A diverse system is the key to commerce 7 this report examines how global financial flows promote economic growth and how the global financial system meets the needs of main street the related issues of the. The secondary market provides a forum for the sale. New securities are issued in the primary market and companies issuing these securities receive the proceeds for the sale. Empirical analysis of the impact of capital market efficiency. To encourage the growth of the pevc industry in nigeria. This study therefore examines the major economic growth determinants as well as the direction of causality that exists between economic growth and some selected economic growth indicators in nigeria, employing the johansen cointegration and granger causality tests. Fdi in nigeria contributes positively to economic growth. The capital market variables captured in the model such as market capitalization, number of deals and value of transactions were all positive and significant in promoting economic growth in nigeria.
Critics of the stock market argue that, stock market prices do not accurately reflect the underlying fundamentals when speculative bubbles emerge in the market binswanger, 1999. The empirical investigation of the impact of the capital market on the economic growth in nigeria shall be restricted to the period between 1986 and 2011 due to the nonavailability of some important data. Objective of the study the objective of this research study is to evaluate and determine the structural relationships that exist between capital market and economic growth in nigeria from 19802009. Nigeria capital market on economic growth between 1990 to 2011 and revealed that the nigeria benin journal of social sciences, vo lume 22, number 1, june 2015, 111 9. Pdf impact of capital market on the economic growth in nigeria. An analysis of the nigerian capital market performance and. Consequently, government, at various points in time sought to promote an orderly growth and development of the market for viable investment opportunities.
Evidence from vecm approach abubakar hassan, omoshola d. The paper draws on economic theory to assess the role of capital markets in terms of consumption, investment and economic growth. Human capital development and economic growth in nigeria. It is a great pleasure and honour for me to join the oesterreichische nationalbank for its 2001 economics conference on the single financial market. Empirical analysis of the impact of capital market. Financial market development and economic growth in. It is ranked as the 27thlargest economy in the world in terms of nominal gdp, and the 22ndlargest in terms of purchasing power parity. Openness to trade and available human capital, however, are not fdi inducing. This paper seeks to examine the impact of the nigerian capital market on its economic growth from the period of 19902010. The capital market is so vital to the development of any economy that no country can risk its existence without putting in place measures to regulate the activities of the market. The recommendations drawn from the study centered on revisiting the manpower needs of the various sectors of the economy.
This means that the performance of the stock market is an impetus for. International financial markets center for capital. The economic growth was proxied by gross domestic product gdp while the capital market variables considered include. The study investigated the impact of capital market on the economic growth in nigeria.
The capital market is a highly specialized and organized financial market and indeed essential agent of economic growth and development because of its ability to facilitate and mobilize saving and investment. This paper examines the impact of capital market on economic growth in nigeria. The effect of the stock exchange on economic growth. Stock market volatility and economic growth in nigeria 1980. However, the vital role of the capital market in economic growth and development has not been comprehensively investigated thereby creating a research gap in this area. There is a positive relationship between the volumes of shares traded in the capital market and economic growth. The ols is employed in estimating the model and the augmented dickeyfuller adf unit root test is used to examine the properties of the time series variables incorporated in.
A multivariate regression approach was employed to. This study seeks to evaluate the contribution of capital market to the growth of nigerias economy. Nigeria capital market operation and economic growth. To achieve this objective, an error correction model was. Impact of human capital development on economic growth. Evidence from nigeria 1, oladipo t, bashorun, 2, tunde a, bakarearemu 1,department of finance, university of lagos, lagos, 2,department of economics, university of lagos, lagos, abstract. The nigeria capital market is subdivided into primary and secondary markets. Impact of nigerian financial markets on the economic growth.
Pdf capital market indicators and economic growth in. This study is undertaken to examine the contribution of the capital market in the nigerian economic growth and development. Despite the growth of the nigerian economy, poverty is still on the increase and this calls for a shift from monolithic oilbased economy to a more plural one with agriculture being the lead sector. This study investigates empirically into the acclaimed positive role played by stock markets in driving. It is on the premises that this research paper wishes to examine the impact of the nigeria capital market on economic growth and development from 1990 to. An increase in the value of transaction will in turn lead to economic growth in nigeria. Capital market is the barometer of the economy by which you are able to study the economic conditions of the country and it enables the government to take suitable action. The research problem in recent times there has been a growing concern on the role of capital market in economic growth and thus the capital market has been the focus of economic policies and policy makers because of the perceived.
For this study, the nigerian economy was viewed in terms of economic growth, while the performance of the stock market is an impetus for the growth and. Market capitalization mcap, number of listed securities nol, value of transactions vot, and number of deals nod. The historical evolution of the nigerian capital market. The capital market of every economy is setup for the attainment of specific objectives, some of which includes facilitating economic growth and stability, sourcing of the much needed capita for economic development, amongst others. The ols is employed in estimating the model and the augmented dickeyfuller adf unit root test is used to examine the properties of the time series variables incorporated in this study. The impact of capital market and economic growth in nigeria. Abstract this paper seeks to examine the impact of capital market on economic growth of nigeria from the period of.
Capital market is an engine of economic growth and development globally, nigeria inclusive. The capital market in nigeria in historical perspective. Pdf the paper examined the effect of a well developed capital market on economic growth in nigeria. Annual time series data were obtained from the central bank of nigeria statistical bulletin and securities and exchange commission statistical bulletin for the. The impact of capital market on the nigerian economy citeseerx. Impact of nigerian capital market capitalisation on the. The findings in this paper show that capital market turnover contributed positively to economic growth which implies that capital market contributed a lot to economic growth in nigeria. Capital market and economic growth in nigeria covenant.
Impact of capital market volatility on economic growth in. Financial market development and economic growth in nigeria. However, donwa and odia 2010 empirically analyzed the impact of the nigerias capital market on her socioeconomic development from the period of 1981to 2008 and it was discover that capital market indices market capitalization, total new. Stock market development and economic growth in nigeria. Although the overall effect of fdi on economic growth may not be significant. Adaramola banking and finance department, ekiti state university, ado ekiti, nigeria. This study investigates empirically into the acclaimed positive role played by stock markets in driving growth, with evidence from the nigerian stock market. The economy of nigeria is a middleincome, mixed economy and emerging market, with expanding manufacturing, financial, service, communications, technology and entertainment sectors.
Nigeria gdp annual growth rate 19822019 data 20202022. Ajide1 this paper investigates the role of frazer economic freedom index on fdi growth relationship over the period spanning 1980 through 2010 using annual time series data. Capital market, economic development, regulations, contributions introduction a capital market is a segment of a nation financial system where the main article of trade is medium and longterm financial instruments. Var to examine the impact of capital market activities on economic growth in nigeria, acknowledging the role of capital market in the mobilization of longterm funds for economic development as well as to identify the key capital market variables fundamental to economic growth for policy direction. This means that the performance of the stock market is an impetus for economic growth and development. Assessment of financial restructuring and capital market. Nigeria is a vast agricultural country endowed with substantial. Impact of human capital development on economic growth in nigeria. Economic growth in nigeria has largely been accounted for by. It was recommended that pro poor policies should be designed for. It is argued that the macroeconomic policy environment is critical in influencing capital market and hence the extent to which the market.
Agricultural production and economic growth in nigeria. Abstract this paper seeks to examine the impact of capital market on economic growth of nigeria from the period of 198020. Phd department of banking and finance faculty of management sciences ekiti state university, ado ekiti, nigeria pmb 5363, ado ekiti, nigeria email. Pdf on jan 10, 2017, odo idenyi and others published capital market indicators and economic growth in nigeria. According to abiola and okoduwa 2008, the financial market consists of two major segments, the. The nigerian capital markets the securities and exchange. Pdf the impact of the nigerian capital market on economic. According to abiola and okoduwa 2008, the financial market consists of two major segments, the money market and the capital market. Pdf capital market development and economic growth in. Also, while workable policies should be put in place to bring about an overall economic growth, expenditures on health and public education should be. This study examined the impact of nigerian capital market on economic growth and development between 1990 and 2011. Based on the findings, the study recommends that policy makers in nigeria should pay more attention to factors that can boost stock market development, foreign direct investment, trade openness, inflation and banking sector development in order to impact economic growth more positively in line with theoretical evidence that market opening. I would like to take the opportunity today to talk about the role of financial markets for economic growth. Cbn 2007 has it that a comparative analysis of equity market capitalization of the nigerian capital market with some countries in north and south america.
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