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Effect of the Nigerian Stock Exchange on Economic Growth in Nigeria: Perspectives from Local Investors

Author

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  • Eze, C. C.
  • Ezenwa, N.
  • Chikezie, C.

Abstract

This study examined the effect of the Nigerian Stock Exchange on Economic Growth in Nigeria: Perspectives for the period 1990-2015. To achieve this objective of the study, annual time series data of real gross domestic product (RGDP), Domestic participation (DOP), Listed domestic companies (LDC), the Turnover ratio of the stock market (TOR), and Value of shares traded to GDP ratio (VST) were collected and analysed using techniques of Autoregressive Distributed Lag Model (ARDL) and ARDL bounds test)ADF unit root test was used to test the stationarity of time series variables. The order of integration of all variables was at the level and first difference. Therefore, the ARDL bounds test for co-integration was adopted and ARDL method of estimation was used to estimate short-run dynamics among variables. The results showed that there exists a long-run relationship among variables. LDC had a negative and significant effect on lnRGDP. In the second lag with a p-value of 0.0459. While VST had a positive and significant effect on lnRGDP with a p-value of 0.0334 TOR had a Negative and significant effect on lnRGDP with a p-value of 0.0296; The positive coefficient exhibited by VST as a function of lnRGDP symbolizes that the effective participation of Nigerian investors in the Nigerian stock exchange is capable of having positive effect on the nation’s economic growth and development. The paper recommends that proper investors’ education should be adequate to forester increased domestic participation.

Suggested Citation

  • Eze, C. C. & Ezenwa, N. & Chikezie, C., 2020. "Effect of the Nigerian Stock Exchange on Economic Growth in Nigeria: Perspectives from Local Investors," Nigerian Journal of Agricultural Economics, Nigerian Journal of Agricultural Economics, vol. 10(1), October.
    • Handle: RePEc:ags:naaenj:309943
    DOI: 10.22004/ag.econ.309943
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    References listed on IDEAS

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    1. Kehinde Adekunle Adetiloye & Abiola Ayopo Babajide & Ngozi Favour Ugwu, 2015. "Constraints to Capital Market Growth in African Economies: The Case of Nigeria," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 4(3), pages 1-1.
    2. Abu Nurudeen, Obida Gobna Wafure & Elisha Menson Auta, 2011. "Determinants of Foreign Direct Investment: The Case of Nigeria," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(3), pages 50-67, August.
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