Stimulating Economic Development Through the Capital Market: The Nigerian Experience

  • C Okafor
  • AO Arowoshegbe


This paper examines the impact of the Nigerian capital market performance on the economic development of Nigeria. In pursuance of this, we constructed two models. The dependent variables identified in models 1 and 2 were Gross Domestic Product and Gross Fixed Capital Formation respectively. The explanatory variables were Market capitalization, All shares index Value of transactions, Volume of transactions and Number of listed companies for each of the models. The Ordinary Least Square (OLS) regression models were used for the analysis of data collected. Multiple regression models were used with aid of Microfit Interactive Econometric Software Package. The results indicate that: Market Capitalization, All-Shares Index and number of listed companies were positively related to and capable of influencing Gross Domestic Product; while Volume of transactions and Market Capitalization were positively related to Gross Fixed Capital Formation. The results have proved that the performance of the capital market impacts positively on the economic development of Nigeria. The study has revealed a high popularity problem as evidenced in the impact of value of transactions on economic development, and the high buy-hold attitude of Nigerian investors. The study also indicates that Gross Fixed Capital Formation in Nigeria is not financed significantly by the capital market. However, it is important to note that the place of the capital market as a catalyst for Nigeria’s Socio-economic development will remain more significant in the years to come, as it helps to support national growth and development. The capital market should therefore be accorded a pride of place in national economic management.

Keywords: Impact, Economic Development, Capital Market, Market performance.


Journal Identifiers

eISSN: 1596-8308