In the recent times, the literature appears to emphasize a sound capital market as an important driver of economic growth due to its ability to provide liquid asset for investment. The issue raised in this paper is about the effect of capital markets on economic growth. If a strong capital market is a panacea to economic growth, why do least developed economies not embrace it? To what extent can economic growth be affected by capital markets? These issues were theoretically explained in the methodology and the data analysis was subjected to empirical test. Using aggregate data for growth indicators and capital market indicators, we adopted a structural dynamic model to investigate the issue. It was found that capital market ratio and turnover ratio are both significant and positive drivers of economic growth in Nigeria and that stock markets affect economic growth through savings mobilization. It is asserted that large, liquid and efficient stocks markets can ease savings mobilization. The paper recommends that stock market should be made attractive to foreign economies, although it can also spell doom during a burst. However, if the funds had been carefully utilized, , the economy may not be significantly affected during a burst..
PAPER TITLE :CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL ANALYSIS
FUTA JOURNAL OF MANAGEMENT AND TECHNOLOGY | VOLUME 1 NUMBER 1 2016
- Author(s) : Ologunwa, O. P. and O. V. Sadibo