Nigeria capital market a catalyst to financial and economic growth

Thursday, August 13, Balami Abstract Capital market is defined as the market where medium and long terms finance can be raised Akingbohungbe,

Nigeria capital market a catalyst to financial and economic growth

Received 12 August ; accepted 15 October Abstract This study investigates empirically into the acclaimed positive role played by stock markets in driving growth, with evidence from the Nigerian stock market. Stock market size and stock market liquidity. The essence is to know the aspect of stock market development that is the main driver of growth in Nigeria.

The findings suggest the dominance of stock market liquidity over market size. While there is a two way causation between stock market liquidity and economic growth with the strength of the causality coming more from stock market liquidity, market size is found to have little or no effect on growth.

Equally the results suggest a one way causation between financial deepening and growth with causality flowing from financial depending to economic growth. Market Size Versus Liquidity. Canadian Social Science, 8 5 In principle, the stock market is expected to accelerate economic growth by providing an avenue for growing companies to raise capital at lower cost.

Countries with developed stock markets provide alternative sources of financing to companies there by making them less dependent on bank financing, which in turn mitigate the risk of credit crunch. In recognition of the acclaimed catalytic impact of developed stock markets on economic growth, a plethora of studies now focus on the relationship between stock market development and economic growth.

Furthermore, in addition to the aforementioned limitations, previous studies such as those of NyongLevine and ZervosOgun and Iyoha use a single composite measure of stock market development as opposed to a variety of measures and document a positive and significant correlation between stock market development and long-run growth.

The use of cross-sectional approach by Levine and Zervos and a single composite measure of stock market development in Nigeria by Nyongand Ogun and Iyohaconstitutes serious empirical limitations on the robustness of their results for policy action.

The use of a variety and disaggregated measures of stock market development would have provided a richer and clearer picture of the potential links between stock markets and growth, thus showing clearly the aspect of stock market development that is the main driver of growth.

The determination of whether it is stock market size or stock market liquidity via their indicators that is the appropriate channel through which stock markets influence growth is important for policy direction.

This study therefore sets to address the short coming and lacuna created by previous studies by adopting various indicators of stock market development to determine which indicator is the best channel through which growth is driven by the stock market in Nigeria. The rest of the paper is organized as follows: Section 2 reviews empirical literature, section 3 outlines the methodology.

In section 4, empirical results are presented and discussed. Finally, section 5 provides the summary and concluding remarks of the study. Empirical literature and theoretical issues Empirical investigations of the link between stock market development and economic growth have been relatively limited in developing countries, especially Nigeria.

Theoretically, the relationship has been a subject of controversy.

Nigeria capital market a catalyst to financial and economic growth

Previous studies carried out have hardly come to a unanimous conclusion on the causal linkage between stock market development and economic growth.

While some studies maintain that stock market development vigorously drives growth others are of the view that it retards growth. For example, Singh is of the view that stock market accelerates economic growth by providing a boost to domestic savings and increasing the quantity and quality of investment.19 hours ago · However, the Minister expressed concern over low capital market size in Africa which has affected economic growth and development and said that, “Unfortunately, the size of most African capital.

Nigeria Capital Market Operation and Economic Growth: A Case of the Oil and Gas Sector OKE, MICHAEL OJO. (PhD) non-debt financial capital.

To determine the impact of stock market on the Nigeria economy, more funds are poised to establish the effect of stock market on Nigeria economic growth.

II. The vital roles played by the capital market in the achievement of economic growth thereby enables government, industries, corporate bodies to raise long-term capital for the purpose of financing new projects, expanding and modernizing industrial concerns.

Nov 25,  · The study also examined the impact of capital market development on economic growth in Nigeria and tested for the evidence of long run relationships.

Annual data on some capital market development indicators and real growth domestic product were collected and used for the study. The impact of capital market on Nigeria economic growth investigates the activities of the capital market in accelerating a stable economic growth in Nigeria.

The project work contain chapter one to five for free. intermediation is a catalyst to economic growth while some opted that financial intermediation is demand following. This of economic development to financial market.

To them, they financial sector and growth of the Nigeria economic laying emphasis on the activities of the banking, non-banking.