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An Empirical Analysis of Stock Market Development and Economic Growth in Nigeria

Author

Listed:
  • Oluwagbenga David ADEKUNLE

    (Department of Accounting, Finance And Taxation, Caleb University, Imota, Lagos State.)

  • Olalekan AKINRINOLA (PhD)

    (Department of Accounting, Finance And Taxation, Caleb University, Imota, Lagos State.)

  • Rasaq Adeyemi SALAUDEEN

    (Department of Accounting, Finance And Taxation, Caleb University, Imota, Lagos State.)

Abstract

This study investigates the relationship between the stock market development and economic growth in Nigeria between 1990 and 2023. As a result, gross domestic product growth rate was used as the dependent variable while independent variables in the study includes market capitalization, all share index, total securities listed on the stock exchange and value of stock traded. The Descriptive and Correlation Analyses, Auto-Regressive Distributed Lag Modelling (ARDL-Bound test) techniques as well as the Engle Granger causality test were used to analyse the data obtained from the CBN statistical bulletin, World Bank and NBS publications, 2024. The empirical results of the analyses reveal an existence of long-run relationship between stock market development and economic growth, where all share index, and total securities listed are indirectly related to economic growth with ASI been insignificant while TSL significantly impacted EGR. However, market capitalisation and value of stock traded are directly related with significant effect on economic growth which means MCP, TSL and VST had significant impact on changes of economic growth. Also, the R2 of 99.93% explained the proportion of variation that independent variables can explain in the dependent variable. Furthermore, the causality results revealed that all the stock market variables had a uni-directional causality running from each of them to economic growth. It is therefore, concluded and recommended that financial institutions should concentrate on stock market performances in Nigeria to boost the economic growth while regulatory agencies should adequately regulate stock market as it can affect the economy in a significant manner which will result in sustainable growth.

Suggested Citation

  • Oluwagbenga David ADEKUNLE & Olalekan AKINRINOLA (PhD) & Rasaq Adeyemi SALAUDEEN, 2025. "An Empirical Analysis of Stock Market Development and Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 1795-1806, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:1795-1806
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    References listed on IDEAS

    as
    1. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    2. Maku Affor Owen, 2020. "Stock Market Development and Economic Growth: Empirical Evidence From an Institutional Impaired Economy," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 496-509, October.
    3. Boyd, John H. & Prescott, Edward C., 1986. "Financial intermediary-coalitions," Journal of Economic Theory, Elsevier, vol. 38(2), pages 211-232, April.
    4. Montiel, Peter J, 1996. "Financial Policies and Economic Growth: Theory, Evidence and Country-Specific Experience from Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 5(3), pages 65-98, October.
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    Cited by:

    1. Lukasz Zieba, 2025. "Stock Exchange Development and Economic Growth: The Case of Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 1946-1963.

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