ABSTRACT
The abstract presented a study that examined the response of the Capital Market to Public expenditure in Nigeria. The research aimed to investigate the relationship between the four major categories of public expenditure in Nigeria (Administration, Economic Services, Social and Community Services, and Transfer Payments) and the development of the capital market, as measured by the Market Capitalization index. Time series data spanning from 1999 to 2020, sourced from the Central Bank of Nigeria Statistical Bulletin, were utilized for the study. The stationarity of the variables was assessed using the Augmented Dickey-Fuller unit root test, while the existence of long-run and short-run equilibrium conditions was analyzed through the co-integration and Vector Error Correction Model (VECM). The empirical findings revealed a long-run equilibrium relationship between Public Expenditure and Capital market development in Nigeria during the period under study. Specifically, it was observed that public expenditure in Administration exhibited a significant and negative long-term relationship with Capital market growth in Nigeria. Conversely, Expenditure in Economic Services, Social and Community Services, and Public Transfer showed a significant but positive long-run relationship with stock market growth. In light of these findings, the study recommended an increase in government expenditure to stimulate Capital market growth in Nigeria and a reduction in borrowing to alleviate the burden of frequent debt servicing. Furthermore, it suggested reducing the importation of basic social amenities and equipment, instead focusing on funding local contractors and industries to execute major projects and thereby enhance investment in the Capital market, ultimately leading to economic growth. In conclusion, this study provided valuable insights into the relationship between public expenditure and the performance of the Capital Market in Nigeria. The findings have significant implications for policymakers, offering strategic directions to foster Capital market development and improve the overall economic landscape.
TABLE
OF CONTENTS
Title page i
Declarations ii
Certification iii
Dedication iv
Acknowledgements v
Table of contents vi
List of Tables ix
List of Figures x
Abstract xi
CHAPTER 1: INTRODUCTION
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Hypotheses
1.6 Scope of the Study
1.7 Significance of the Study
7
1.8 Limitations of the Study
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Review
2.1.1 Concept of government expenditure
2.1.2 Capital expenditure
2.1.2.1 Importance of Capital Expenditures
2.1.3 Recurrent expenditure
2.1.4 Transfer payments
2.1.5 The capital market
2.1.5.1 Market capitalization
2.1.6 Conceptual framework
2.2 Theoretial Framwork. 16
2.2.1 Keynesian economics
2.2.2 Wagner's law of increasing state activity
2.2.3 Peacock-Wiseman hypothesis or displacement effect
2.3 Empirical Review
2.4.1 Extract of empirical review
2.4 Summary of Empirical Literature
2.5 Gap in Literature
CHAPTER 3: METHODOLOGY
3.1 Research Design
3.2 Area of Study
3.4 Method of Data Collection 39
3.5 Model Specification
3.6 Method of Data Analysis
3.7 Decision Rule
3.8 Diagnostic and Robustness Tests
3.9 Description of Variables
3.9.1 Dependent variables
3.9.2 Independent variables
CHAPTER 4: PRESENTATION OF
DATA, ANALYSIS AND DISCUSSIONS
4.1 Presentation of Data 46
4.2 Descriptive Statistic 47
4.3 Test for Stationarity 47
4.4 Lag Selection 48
4.5 Test for Long-run Equilibrium 49
4.6 Diagnostic tests 52
4.7 Post Estimation Test 53
4.8
Test of Hypotheses 54
4.9 Discussion of Findings 56
CHAPTER
5: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1
Summary of Findings 59
5.2
Conclusion 59
5.3
Recommendations 59
5.4 Contribution to Knowledge 60
5.5 Areas of further studies 60
References 61
Appendices 64
LIST OF TABLES
2.1 Webometric Summary of Reviewed Empirical
Studies 31
3.9.1
Summary of Operational Definition of
Research Variables 42
4.1 Data used for the Study 43
4.2.1 Descriptive statistic of data 44
4.3 Unit Root Test Results
For Stationarity Of Data 45
4.4 Lag Length Selection 46
4.5 Johansen Co-integration Rank Test (Trace) 46
4.5.1 Johanson co-integration
rank test (Maximum Eigenvalue) 46
4.6 Normalized Coefficient Test Result 47
4.7 Long-run Relationship 47
4.8 Short run Relationship 48
4.9 Summary of Diagnostic Test Result 49
LIST
OF FIGURES
2.1 Conceptual Frame work 14
4.1 CUSUM Test 50
4.2 CUSUM of Squares 50
Simple and direct methodology was utilized.
OKORO, O (2023). Response Of The Capital Market To Public Expenditure In Nigeria: 1999 -2020. Repository.mouau.edu.ng: Retrieved Oct 12, 2024, from https://repository.mouau.edu.ng/work/view/response-of-the-capital-market-to-public-expenditure-in-nigeria-1999-2020-7-2
OKORO, OKORO. "Response Of The Capital Market To Public Expenditure In Nigeria: 1999 -2020" Repository.mouau.edu.ng. Repository.mouau.edu.ng, 04 Sep. 2023, https://repository.mouau.edu.ng/work/view/response-of-the-capital-market-to-public-expenditure-in-nigeria-1999-2020-7-2. Accessed 12 Oct. 2024.
OKORO, OKORO. "Response Of The Capital Market To Public Expenditure In Nigeria: 1999 -2020". Repository.mouau.edu.ng, Repository.mouau.edu.ng, 04 Sep. 2023. Web. 12 Oct. 2024. < https://repository.mouau.edu.ng/work/view/response-of-the-capital-market-to-public-expenditure-in-nigeria-1999-2020-7-2 >.
OKORO, OKORO. "Response Of The Capital Market To Public Expenditure In Nigeria: 1999 -2020" Repository.mouau.edu.ng (2023). Accessed 12 Oct. 2024. https://repository.mouau.edu.ng/work/view/response-of-the-capital-market-to-public-expenditure-in-nigeria-1999-2020-7-2