Does Stock Market Development Raise Economic Growth? Evidence from Nigeria

Abstract

This paper investigates whether stock market development raises economic growth in Nigeria, by employing the error correction approach. The econometric results indicate that stock market development (market capitalization-GDP ratio) increases economic growth. The recommendations therein include - removal of impediments to stock market development which include tax, legal, and regulatory barriers; development of the nation's infrastructure to create an enabling environment for where business can strive; employment of policies that will increase the productivity and efficiency of firms as well encourage them to access capital on the stock market; enhancement of the capacity of the Nigeria Security and Exchange Commission to facilitate the growth of the stock market, restore the confidence of stock market participants and safeguard the interest of shareholders by checking sharp practices of market operators (particularly speculators).

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