EFFECT OF CAPITAL MARKET ON NIGERIAN ECONOMY(1985-2017)

ABSTRACT

This study examines the effect of capital market on Nigerian economy. This study specifically examines the effect of market capitalization, all share index, and total value of shares traded on Nigerian economy proxied by real gross domestic product. The study adopted ex post facto research design. A time series data from 1985 to 2017 were collected from CBN statistical bulletin 2017 and used for the econometric analysis. The econometric analysis techniques used for this study was ordinary least square with double-log multiple regression model. The Econometrics Views (EViews) version 8.0 was used for the analysis. Generally, the result indicates that capital market has significant effect on Nigerian economy. To be specific, the result indicates that market capitalization and all share index respectively has positive and significant effect on Nigerian economy. While total value of share traded has positive but statistically insignificant effect on Nigerian economy. The study recommends among other things that the government should design and implement policies that will increase the market capitalization, which will in turn increase economic growth. 

TABLE OF CONTENTS

Title Page ﾿ i

Declaration ﾿ ii

Certification ﾿ iii

Acknowledgements ﾿ iv

Dedication ﾿ v

Table of Content ﾿ vi

L ist of Tables ﾿ ix

Abstract ﾿ x

CHAPTER ONE ﾿

INTRODUCTION ﾿

1.1 ﾿ Background to the study ﾿ 1

1.2 ﾿ Statement of the problem ﾿ 4

1.3 ﾿ Objectives of the study ﾿ 5

1.4 ﾿ Research  questions ﾿ 6

1.5 ﾿ Research hypotheses ﾿ 6

1.6 ﾿ Scope of the study ﾿ 6

1.7 ﾿ Significance of the study ﾿ 7

CHAPTER TWO

LITERATURE REVIEW

2.1 ﾿ Conceptual review ﾿ 8

2.1.1 ﾿ The roles of capital market ﾿ 11

2.1.2 ﾿ Challenges of the Nigerian capital market    ﾿ 12

2.1.3 ﾿ Some Capital Market Performance   Indicators  ﾿ 13                             

2.1.3.1 Market capitalization ﾿ 13

2.1.3.2 All share index ﾿ 13 ﾿

2.1.3.3 Total value of stock traded ﾿ 13

2.1.4 Overview of the Nigerian capital market ﾿ 14

2.1.5 Reasons for the establishment of the Nigerian capital market ﾿ 14

2.1.6 The Nigerian security and exchange commission ﾿ 15

2.1.7 The Nigerian stock exchange ﾿ 17 ﾿

2.1.8 Functions of Nigerian stock exchange ﾿ 18

2.1.9 Economic growth ﾿ 18

2.2  THEORITICAL FRAMEWORK ﾿ 19

2.2.1 Financial liberalization theory ﾿ 19

2.2.2 Endogenous growth theory ﾿ 20

2.2.3 Modern portfolio theory ﾿ 20

2.3 EMPIRICAL REVIEW ﾿ 21

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research design ﾿ 28 ﾿

3.2 Scope of the study                                            ﾿ 28 ﾿

3.3 Nature and source of data ﾿ 28 ﾿

3.4 Model specification ﾿ 28

3.4.1 Description of  model variables ﾿ 30 ﾿

3.4.1.1 Dependent variable                                  ﾿ 30

3.4.1.2 Independent variables ﾿ 30

3.5 ﾿ Data analysis method ﾿ 30

CHAPTER FOUR

DATA PRESENTATION ,ANALYSIS,AND INTERPRETATION OF RESULTS

4.1 Data presentation                                            ﾿ 32

 4.2    Data analysis and interpretation                    ﾿ 33 

4.2.1 Descriptive analysis                                      ﾿ 33

4.3    Inferential statistics and test of hypotheses    ﾿ 35

CHAPTER FIVE

SUMMARY OF FINDINGS ,CONCLUSION , AND            RECOMMENDATIONS                                                 

5.1 Summary of findings                                          ﾿ 40

5.2 Conclusion                                                          ﾿ 40

5.3 Recommendations                                              ﾿ 41

5.4 Contribution to knowledge                                  ﾿ 42

REFERENCES

APPENDIX

LIST OF TABLES

Table 4.1: ﾿ Data Presentation ﾿ 32

Table 4.2: ﾿ Descriptive Statistics ﾿ 33

Table 4.3: ﾿ Regression Estimates for the Effect of Capital 

Market on Nigerian Economic growth ﾿ 35