IMPACT OF CAPITAL MARKET ON THE DEVELOPMENT OF THE NIGERIAN ECONOMY

Authors

  • STEPHEN BASSEY DUKE
  • STEPHEN NKAMARE

DOI:

https://doi.org/10.14738/abr.34.1379

Abstract

This study attempts to investigate the performance of the Nigeria capital market and the growth of Nigerian economy from 1986-2005. Data on stocks were modeled to test for the relationship between market capitalization, the number of stock traded in the capital market and development in the economy (GDP). A multiple regression analysis involving the ordinary least squares estimation technique was employed to discover the composite effect of capital market indices such as government stocks, industrial stocks and equities on the development of the economy during the twenty years in review. The multiple correlation coefficients which measured the strength of association between the economic development and capital market performance was positive, indicating that there was a direct perfect relationship among the variables. The result also indicates that none of the variables (predictors) individually predicted GDP. In spite of the enormous opportunities provided by the on-going reforms and the booming economy, the capital market in Nigeria has performed below its potentials owing to a number of factors. Accordingly, it was recommended that there should be a strong need to put in place policy measures that would guarantee competitive participation and cause investors to stop the attitude of "buy and hold" of securities which will delay rapid development of Nigerian economy

References

Adetunji, W. (1977). Money and capital markets in the economy. including the role of money market institutions. Central Bank of Nigeria Economic and Financial Review. 31 (1), 13-19

Agarwal, R.N (1997). Inflow of foreign portfolio investment in developing countries. A study of determinants of macroeconomic impact. The Indian Economic Review 32(2),217-229

Ahmed, (1992). The role of Central Banks in capital development: The Nigerian experience. Bullion Publication of the Central Bank of Nigeria, 16(4):21-25.

Akamiokhor, G (1992). The role of regulatory bodies in capital market development: The Nigerian experience. Bullion Publication of the Central Bank of Nigeria, 16 (4), 26- 31.

Akingbohungbe, S.S. (1990). The role and impact of securities and exchange commission in the economy. Nigeria Securities Market Journal. 6(2), 31-40.

Akpan, 1. (2004). Fundamental of finance, Uyo: Nelgrafik press.

Akpan, O.E. (1995). Thin and thick capital markets: empirical test of evidence I for the Nigerian stock exchange in Nigeria. Journal of Economic and Social Studies, 37 (1) 65-69.

Anyanwu, D.C. (1998). Stock market development and Nigeria's economic growth. The Nigerian Journal of Economics and Social Studies. 1 (2) 4-7

Anyanwu, J.C., Oyefusi, A., Oackhenan, H. & Dimowo, F.A. (1997). The structure of Nigerian economy 1960-1997. Onitsha: Joanee educational publishers

Asika, N. (1991). Research methodology in the behavioural sciences. Ikeja: Longman

Ayadi, O. (2006). Random walk hypothesis and the behaviour of stock prices in Nigeria. The Journal of Economics and Social Studies, 1 (25), 7-8.

Babalola, J.A (2001). The performance of the Nigerian capital market since deregulation in 1986. Central Bank of Nigeria Economic and Financial Review. 39(1), 1-19

Babutsidze, Z. (2004). The critical assessment of the empirical evidence on the imperfection of capital markets. The Nigerian Journal of Economics and Social Studies. 4 (2) 14-20

Branes, P. (1986). Thin trading and stock market efficiency: A case of the Kuala Lumpur stock exchange. Journal of Business Finance and Accounting 13(4) 10-50.

Briston, E (1969), Financial structure and economic development. Economic Development and Cultural Change, 15 (1) 257-268.

Cho YJ. (1986). Inefficiencies from financial markets in the absence of well functioning equity markets. Journal of Money, Credit and Banking, 18. 14-23

Copeland, T.E. & Weston J.F. (1983). Financial theory and corporate policy. New Jersey: Prentice-hall incorporated

Demirguc-Kunt .A. & Makgimovic, V. (1996). Stock market development and financing choices of firms. World Bank Economic Review ,10 (15) 236-245.

Demirguc-Kunt, .A. & Levine, R. (1996). Stock markets, corporate finance and economic growth. World Bank Economic Review, 10: 412-19.

Donald E.F. & Ronald J.J. (2006). Security analysis and portfolio management, New York: Pearson education, Inc. and Darling Kindersley publishing Co.

Dryden, M. (1970). A statistical study of United Kingdom share prices. Scottish Journal of Political Economy, 2 (36): 41-46

Edogi J. (2006). Stock market investment and strategies. Don-Hill: Nigeria enterprises

Ekineh O. (2000). The Nigerian capital market; present and future challenges. paper presented at a workshop on legislating for capital market in a democratic environment organized by the securities and Exchange Commission, Nicon Hilton Hotel Abuja, Oct. 12.

Ekpenyong D.B. (1994). Investing in securities in Nigeria the investor’s guide. Uyo: Linnet Palil publications

Etuk, E. J (2003). Business research method. Calabar: University of Calabar Press

Fama, E.F. (1965). The behaviour of stock market prices. Journal of Business, 2 (38) 20-22

Fama, E.F. (1970). Efficient capital market: A review of theory and empirical work: Journal of Finance, 4 (5), 18-20

Fobbozzi, F.J. & Modileani, F. (1992). Capital markets institutions and investments, London: Prentice -Hall

Foley, BJ. (1999). Capital market, London: Macmillan

French, D.W. (1989). Security and portfolio analysis, concepts and management: London: Merrill publishers.

Giwa, M. R. (1990). Stock markets. A spur to economic growth, financial and development. Journal of Finance,,41 (3)15-20

Gordon, MJ. (1962). Investment financing and valuation of Corporation. Homewood: Richard Irwin

Hananna, H (2004). Equilibrium in a capital asset markets, Econometrical, 1 (2), 1- 6.

Husain, F. & Kelvin, F. (1999). Efficiency in a thinly traded market: The case of Pakistan savings and development. Journal of Financial Economics, 2l(1), 26-32

Jensen, M. (1978). Some anomalous evidence regarding market efficiency. Journal of Financial Economics, 3(6),12-17

Kadiri, A.O. (1983). Pricing in capital market. Bullion Publication of Central Bank of Nigeria 8(4):24-30

Keane, S.M. (1989). Seasonal anomalies and the need for perspective. The Investment Analyst, 91: 32-35

Kein, D. (1984). Size related anomalies and stock return seasonality: further empirical evidence. Journal of Financial Economics, 12: 6-10

Kendall, c.c. (1988). Capital markets development. Finance and Development, 4:32- 36.

Levine, R. & Zervos, S. (1996). Stock market development and long-run growth. The World Bank Policy Research Working Paper. 1582: 688 - 726.

Levy, E. S. (1967). Financial depending in economic activity. New York: McGraw-Hill

Lumby, S. (1994). Investment appraisal and financial decision. London: Chapman & Hall Publishers

Mbat, D.O & Udoka C.O (2008). Weak form market efficiency: dynamic effects of information on the Nigeria stock market, 1986-2004. African Journal of Contemporary Issues 8 (8): 44-56

Mbat, D.O. (2001). Financial management, Uyo : Domes Associates

Nnanna, C.E. (2004). Financial markets in Nigeria. Journal of Financial Economics, 41 56-65

Nwankwo, G.O (1980). The Nigerian financial system. London: Macmillan

Nwankwo, K (1993). Financial market institution: A managerial approach. Retrieved on 15 August 2008 from www.financialmanegment

Nzotta, S.M. (2004). Money banking and finance (theory and practice). Owerri, Hudson Jude, Nigeria publishers.

Okereke, O. (2000). Investment decisions. Retrieved on 17 July 2008 from www.nigerianfinancialsystem

Onoh, J.K (2002). Dynamics of money, banking & finance in Nigerian emergence market. Lagos: Astra meridian publishers

Onyido, 0 (1994). The Nigerian stock market in operation. Ikeja: Jeronme Larito and associates.

Osaze, E.A. (1997). The development of capital markets in Africa with particular reference to Kenya and Nigeria. International Monetary Fund Staff Papers, 18 (2) 420 - 476.

Osei, K. (2002). Assets pricing and information efficiency of the Ghana stock market. African Economic Research Consortium Research Paper; 58.115, 1-15.

Osisoma, B.C., (1989). Capital market efficiency in Nigeria. Unpublished PhD thesis carried out in the Faculty of Management Sciences, University of Nigeria, Nsukka

Prateen C. (1993). The Stock Market.. Cambridge: Syndicate Press

Ronald, C. & Grandbois C. (1999). Performance of the securities exchange of Barbados, savings and development. Retrieved October 7 2008 from .www.brookings.edu.

Sharp, W.F. (1964). Capital asset prices A theory of market equilibrium under condition of risk. Journal of Finance, 4 (10), 20-21.

World Bank (1996). Exchange rate expectation and portfolio investment. Retrieved on July, 17 2008 from www.worldbankfinancialreport

Downloads

Published

2015-08-25

How to Cite

DUKE, S. B., & NKAMARE, S. (2015). IMPACT OF CAPITAL MARKET ON THE DEVELOPMENT OF THE NIGERIAN ECONOMY. Archives of Business Research, 3(4). https://doi.org/10.14738/abr.34.1379