Capital market impact on economic growth in nigeria

Project Abstract

The relationship between capital markets and economic growth has been a subject of significant interest and debate among researchers and policymakers in Nigeria. This study aims to investigate the impact of the capital market on economic growth in Nigeria by analyzing the relationship between key indicators of the capital market, such as market capitalization, liquidity, and trading volume, and economic growth indicators, such as gross domestic product (GDP) growth rate and per capita income. Using time series data from 2000 to 2020, the study employs econometric techniques such as regression analysis to examine the causal relationship between the capital market and economic growth. The findings suggest that the capital market plays a crucial role in driving economic growth in Nigeria. Specifically, an increase in market capitalization and trading volume is positively associated with higher GDP growth rates, indicating that a vibrant capital market can stimulate economic activity and investment in the country. Furthermore, the study explores the channels through which the capital market impacts economic growth, such as providing financing for businesses, enhancing capital allocation efficiency, and fostering innovation and entrepreneurship. The results show that a well-functioning capital market can contribute to job creation, poverty reduction, and overall economic development in Nigeria. In addition, the study examines the policy implications of the findings and provides recommendations for policymakers to further strengthen the link between the capital market and economic growth. These recommendations include improving regulatory frameworks, enhancing market transparency and investor protection, and promoting financial literacy and investor education to increase participation in the capital market. Overall, this research contributes to the existing literature on the relationship between the capital market and economic growth in Nigeria by providing empirical evidence of the positive impact of the capital market on economic development. The findings underscore the importance of a well-functioning capital market in driving economic growth and suggest that further reforms and investments in the capital market can help unlock the full potential of Nigeria's economy.

Project Overview

<p> </p><div><p><strong>1.2 STATEMENT OF PROBLEM</strong></p><p>The need to embark on the study is motivated by a number of challenging factors which include the following;</p><p>Decline in the capital market contribution to the real sector of the economy.</p><p>Decline in money supply of the Nigerian economy, arising from decline in capital market contribution to the real sector of the economy.</p><p>Alajekwu and Achugbu (2012) postulated that traditional theorists believed that financial market in general has no correlation with economic growth. This position studies on finding the effect of financial market on growth. Ample of studies have debunked that traditionalist and established association on the above view, the World Bank (2001) acknowledged that economic growth without a well developed domestic financial market would be detrimental to the long run growth prospects of developing countries.Financing the saving investment gap especially in the less developed economy where saving mobilization could not keep pace with the level of investment has necessitated the need for encourage foreign capital inflow in order to bridge the gap and this promote economic growth.The need to develop the Nigerian Capital Market is therefore primary and of necessity in the minds of any forward looking nation and the motivating factor behind the researcher decision to emback on this study which is intended to establish whether the Nigerian Capital Market influences economic goal within Nigeria.</p><p><strong>1.3 OBJECTIVE OF THE STUDY</strong></p><p>The scope of carrying out this research work is to capture the Capital Market Impact on the Economy Growth in Nigeria. To actualize this, the following strategic objectives are formulated by the researcher.<br>To ascertain the level of relationship between Stock Market capitalization and Gross Domestic Product in Nigeria.<br>To determine if All-Share Index affects Money supply of the Nigerian economy</p><p><strong>1.4 RESEARCH QUESTIONS</strong></p><p>1. To what extent dose stock market capitalization affect the gross domestic products in Nigeria?</p><p>2. Would All-Share Index of Nigeria Capital Market impact on Money supply of the Nigerian economy?</p><p><strong>1.5 STATEMENT OF HYPOTHESIS</strong></p><p>1. Ho: There is no significant relationship between Stock Market Capitalization and Gross Domestic Product in Nigeria.</p><p>Hi: There is significant relationship between Stock Market Capitalization and Gross Domestic Product in Nigeria.</p><p>2. Ho: All-Share Index of the Nigeria Capital Market is not significantly related to Money supply of the Nigerian economy.</p><p>Hi: All-Share Index of the Nigeria Capital Market is significantly related to Money supply of the Nigerian economy.</p><p><strong>1.6 SCOPE OF THE STUDY</strong></p><p>In this study, the researcher attempted to capture capital market impact on the economy growth in Nigeria. This is motivated by poor performance of the Nigeria stock exchange, under development of the Nigerian economy etc. the objective of the study is to ascertain the level of relationship between stock market capitalization and gross domestic product in Nigeria. The research work focuses on the Impact of Capital Market on the Nigerian Economy using Market Capitalization, all-share Index and Volume of traded securities as proxies for Capital Market while Goss Domestic Product GDP and Per-Capita Income as proxies for the dependent Variable. The study is anchored on the Secondary Data, specifically Central Bank of Nigeria and Securities and Exchange Commission statistical bulletins from 2009-2014. The study is based in Asaba Metropolis of Delta State of Nigeria.</p><p><strong>1.7 SIGNIFICANCE OF THE STUDY</strong></p></div><h3></h3><br> <br><p></p>