It shows also that the level of investment is the channel through which stock markets enhance economic growth in the long-run.
Substituting for K in equation 4: Theoretical Foundation and Methodology The theory of this study is based on neo-classical growth model drawn from Cobb- Douglas production function to capture the impact of capital market growth on economic growth.
In Nigeria, Federal Government bonds constitute about 90 per cent of the market while state and corporate bond account for the remainder," the Afrinvest report added. Hence, we conclude that the variables are stationary and the model is specified and regressed at first difference.
The liquidity role stands out clearly as the most significant among the numerous functions provided by the stock market.
Atje and Jovanovic tested the hypothesis that the stock market has a positive impact on growth performance. During the exercise, 78 companies sold over million shares worth N million through the Exchange in order to comply with the Nigerian Enterprises Promotion Act The turn over ratio is seen as a complement of market capitalization ratio.
They maintain that liquid stock markets may lead to an improvement in corporate governance through the incentives it offers investors to acquire better information about firms which in turn lead to efficient resources allocation and hence promotes economic growth.
The fixed income market, it added, has grown from a market value of N1. In a developing economy like Nigeria, there is the additional requirement for foreign direct investment in order to meet the lacuna created by the inadequacy of the local savings for propelling investment, which is a motivating factor to rapid economic development and growth.
They argue that through greater diversification, stock markets influence growth by shifting investment into higher return projects. It stood at in and by While some studies maintain that stock market development vigorously drives growth others are of the view that it retards growth.
That is the Nigerian economy seems to source more of its investment capital capital structure from the banks than the capital market. To provide special financing strategies for those projects with long term gestation periods.
That is an increase of Journal of Finance 46 4pp. His findings show that capital market development is significantly correlated with long-run growth. To serve as a broad communication area for its constituencies and the dual role of overseeing the markets and their member-firm participants. Previous studies carried out have hardly come to a unanimous conclusion on the causal linkage between stock market development and economic growth.
Chapter 29 Nigerian Stock Exchange: The use of control variables in regression analysis is to avoid the problem of simultaneity bias Choong et al. Stimulating ideas, initiating policy changes and innovation for the growth of the securities market; ii.
The potentials of capital market in Nigeria as a catalyst to economic and industrial development cannot be over emphasized. The capital market as an internal part of a country’s financial system operates at the long end of the system to mobilize resources for long term development and growth.
Adenuga: Stock Market Development Indicators and Economic Growth in Nigeria 35 paper examines what relationship exists for Nigeria and also contributes to the historical debate on the role of the financial system by empirically investigating.
Atje and Jovanovich () in studying 40 countries for the periodand focusing on the dynamics of market size, find a strong positive correlation between the level of financial development and stock market development and economic growth.
stock market development and economic growth in Ghana and Nigeria, but revealed a bidirectional causal relationship between stock market development and economic growth in Kenya.
When MC was used as a proxy for stock market development, MC and LS were found to Granger cause economic growth. Bidirectional causality was found between.
H1: The development of the Nigerian Stock Exchange is positively associated with economic growth in Nigeria.
SIGNIFICANCE OF THE STUDY The significance of an efficient and well functioning stock market in spurring economic growth has been well emphasized in the literature.
Stock market development has an key role to play in economic development. Shahbaz, et al() argue that stock market development is an important wheel for economic growth as there is a long-run relationship between stock market development and economic .Nigeria stock market a catalyst to financial and economic development