The role of stock market development on economic growth in. There are elements upon which a nations economic development are dependent. The study measures the relationship between stock market development indices and economic growth. This is because, for sustainable growth and development to take place, funds must be effectively mobilized and allocated to enable business and the economy harnesses their human, material and manager. The quest for economic growth and development compelled nigeria to acquire external debt. This research work was aimed at ascertaining the impact of external debt on economic growth in nigeria. The purpose of this paper is to provide a theoretical framework that integrates the endogenous growth and functions of financial markets and institutions theory in order to investigate how the financial market and the banking sector develop indicators that affect economic growth in these countries. Jul 27, 2012 the purpose of this paper is to provide a theoretical framework that integrates the endogenous growth and functions of financial markets and institutions theory in order to investigate how the financial market and the banking sector develop indicators that affect economic growth in these countries. Stock market development and economic growth in africa. Pdf the role of stock market development on economic growth.
A this is because, for sustainable growth and development to take place, funds must be effectively mobilized and allocated to enable business and the economy harnesses their human, material and. This study specifically examines the impact of stock market performance on economic growth and development in nigeria, and on stock price of united bank for africa plc. Impact of stock market development on economic growth. The broad objective of this study is to examine the impact of stock market development on the economic growth in nigeria while specific objectives are to. This paper examines the impact of both bank and marketbased financial development on economic growth in south africa during the period from 1980 to 2012. Unlike some previous studies, the current study employs meansremoved average to construct both bank and market based financial development indices. The results show that there is a positive relationship between the stock market development and economic growth. The stock market capitalization ratio was used as a proxy for market size while. This study tested the relationship between financial development and economic growth in nigeria for the period 20022006. Stock market development, economic growth, co integration, granger causality, nigeria jel classification. Fdi and inflation had an insignificant influence on stock market development whereas treasury bill rates negatively affected stock market development in ghana. The further analysis of the data has been made with regression analysis.
This study therefore examines whether stock market development promote growth in nigeria. The effect of the stock exchange on economic growth. Per capita output growth is however an important component of economic. The study used time serial data for 30 year period.
Both banks and stock market promotes economic growth. Based on the findings, the study recommends that policy makers in nigeria should pay more attention to factors that can boost stock market development, foreign direct investment, trade openness, inflation and banking sector development in order to impact economic growth more positively in line with theoretical evidence that market opening. Oseni and enilolobo 2011 examined the impact of fdi and stock market development on economic growth in nigeria. Stock market volatility and economic growth in nigeria 1980. It uses annual data from a panel of 36 countries, of which 18 have stock markets, in africa over the period 19802010. The impact of banks and stock market development on economic. The impact of stock market development on economic growth in. Stock market development, economic growth, co integration, granger causality, nigeria. The stock market provides a medium for capital market activities and it is often cited as the barometer of. Impact of human capital development on economic growth. An analysis of the impact of stock market development on. The importance of capital market as one of the vehicles upon which most under.
Pdf impact of stock market development on economic growth in. Pdf impact of stock market development on economic growth. Stock market development, economic growth, time series. Unlike some previous studies, the current study employs meansremoved average to construct both bank and marketbased financial development indices. Liu and hsu 2006 reported a positive impact on economic growth of stock market development in taiwan, korea and japan. According to abiola and okoduwa 2008, the financial market consists of two major segments, the money market and the capital market. The impact of stock market development on economic growth.
This study examined the impact of nigerian capital market on economic growth and development between 1990 and 2011. However, there exists very little empirical evidence on the relationship between stock market development and economic growth in a developing. The results indicate that the stock market indeed contributes to economic growth as all. Impact of human capital development on economic growth in nigeria oladeji abidemi omotayo department of curriculum and instruction emmanuel alayande college education, oyo abstract. Department of economics joseph ayo babalola university, ikeji arakeji, osun state, nigeria email.
In addition, the impact of stock market development on economic growth is discovered in a sample of 14 countries with a dynamic panel data model setting. Capital market development and economic growth in nigeria. Stock market liquidity and economic growth in nigeria 1980. Adamu and sanni 2005 examined the role of the stock market on nigeria s economic growth, using grangercausality test and regression analysis.
The essence is to know the aspect of stock market development that is the main driver of growth in nigeria. The impact of the nigerian capital market on economic. This study examined the effect of stock market development on nigerias economic growth. Arestis et al 2001 usa, uk, germany, france and japan. This is approved for students in accountancy, business, computer science, economics, engineering, arts. Pdf effect of foreign direct investment and stock market. Furthermore, the result indicated that fdi and stock.
Gdp is the dependent variable, a proxy for economic growth. The findings of the study support the view that stock market development and economic growth in nigeria are complementary and any improvements in the stock market would have a positive impact on economic growth in nigeria. Foreign direct investment and stock market development in. This research investigates the effect of nigerian stock exchange market development on economic growth using a 20 year time series data from 19902010. The results also show that political risk, law and order, and bureaucratic quality are important determinants of stock market development because they enhance the viability of external finance. April 2011 186 functions of the nigerian stock exchange the nigerian stock exchange is a financial institution which provides facilities for the sale and purchase of stocksbondsshares in the capital market. The paper, thus, recommended that the government should inject much fund into the capital market and implement appropriate reform policies aimed at ensuring reliable, efficient and stable stock market in nigeria. The paper found that stock market positively spurs economic growth in nigeria indicating that increase in stock market participations would enhance growth in nigerian economy.
Tokunbo 2006 examined if stock market promote economic growth in nigeria the stock market is a common feature of a modern economy and it is reputed to perform some necessary functions, which promote the growth and development of the economy. Nigeria found positive impact from stock market development to economic. The results indicate that the stock market indeed contributes to economic growth as all variables conformed to expectation. This study employs the ordinary least square ols methods of estimation, heteroscedasticity and autocorrelation. The importance, effect, causes, relationship, comparison, history, role, solutions are discussed. The result shows that the capital market stock market development which has been measured by stock market capitalization and economic development measured by gross domestic product gdp has positive significant correlation with each other. The role of a developed stock market in the development of any economy cannot be over emphasized in view of its potentials and likely impact on the economy if. Tokunbo 2006 examined if stock market promote economic growth in nigeria the stock market is a common feature of a modern economy and it is reputed to perform some necessary functions, which promote the. Effects of exchange rate movements on economic growth in. We still need to know the impact of inflation on the stock market performance and to check whether or not inflation was a key driver of the stock market index in zimbabwe and vice versa. The crucial role of education in the overall development of a nation cannot be overemphasized. Stock market development and economic growth in nigeria. Stock market liquidity and economic growth in nigeria. An assessment of nigerian stock exchange market development.
Other explanatory variables were employed in the model. The author reported that a sig nificant positive effect of stock. The works of francia et al 2007, barasory 2008, showed that shareholder protection causes stock market development and eventually economic growth. An empirical analysis of the impact of financial market. The method of analysis is ordinary least square techniques. Secondary data were employed for the study covering 1985 to 2014.
This study examines the impact of the nigerian stock exchange on economic growth from 1981 to 2011. Stock market volatility and economic growth in nigeria. Aug 28, 2016 an analysis of the impact of stock market development on economic growth in nigeria. Some studies documented that the casual nexus between stock market development and economic growth in nigeria is unidirectional and stock market has played an important role in promoting economic. Stock market liquidity and economic growth in recent times, there has been a growing concern on the role of stock market liquidity on economic growth and vice versa levine and zervos, 1996. Financial market development and economic growth in nigeria. Also, the impact of the stock market development together with that of the banking sector on economic growth has been. The mobilization of resources for national development has long been the crucial focus of development economists. The impact of banks and stock market development on. The effect of stock market development on economic growth. Nigerian stock exchange and economic development abstract. This means that the performance of the stock market is an impetus for. The effects of stock market on economic growth and. The role of a developed stock market in the development of any economy cannot be over emphasized in view of its potentials and likely impact on the economy if well harnessed.
The method of analysis used is ordinary least square ols techniques. May 19, 2015 this paper examines the impact of both bank and market based financial development on economic growth in south africa during the period from 1980 to 2012. Pdf financial development and economic growth in nigeria. Nigeria economic outlook top 10 themes for 2019 disclaimer this document has been prepared for general guidance on matters of interest only, and does not constitute professional advice. Does insurance market activity promote economic growth. Pdf panel data models play an important role in consequence of. The nigerian stock exchange has not been having the best of times as an aftermath of the global financial crisis after an unprecedented surge in returns on investment which has resulted in a con. Variables which positively and significantly affected stock market development in ghana include economic growth and gross capital formation. Get free research paper on an analysis of the impact of stock market development on economic growth in nigeria project topics and materials in nigeria.
Introduction the relationship between stock market development and economic growth has been a debatable issue in finance and economics. Impact of the nigerian stock exchange on economic growth. Market capitalization is a proxy for the nigerian stock exchange. Adeoye amuda afolabi department of economics and management studies afe babalola university pmb 5454 adoekiti nigeria abstract. Capital market development, economic growth, interest rate, money supply and capital formation. This paper seeks to examine the impact of the nigerian capital market on its economic growth from the period of 19902010.
Fdi, domestic investment and stock market development positively and significantly affect economic growth, but the effect of the interaction between stock market development and fdi on economic growth is negative and significant, indicating that the nigerian bourse is not yet fully developed to engender positive growth effect of fdi. Capital market development, economic growth, interest rate. However, granger causality in the context of var shows evidence of bidirectional relationship between stock market development and economic growth for cote divoire, kenya, morocco and zimbabwe. Stock market development and economic growth in nigeria ssoar. Obamiro 2005 investigated the role of the nigerian stock market in the light of economic growth. The impact of financial development on economic growth. Impact of human capital development on economic growth in nigeria. The determinants of stock market development in emerging. This study therefore examines the major economic growth determinants as well as the direction of causality that exists between economic growth and some selected economic growth indicators in nigeria, employing the johansen cointegration and granger causality tests.
Using spearman rank correlation coefficient r s, this study found out. According to abiola and okoduwa 2008, the financial market consists of two major segments, the. The cointegration analysis revealed the existence of longrun relationship among the variables. Utilizing several econometric techniques, such as unit root test, cointegration test and granger causality test the study disaggregates stock market development into two components. The proponents of positive relationships between stock market development and economic growth hinged their argument on the fact that the stock market aids economic growth and. For instance, thornton 1995 did a study to validate the hypothesis that financial development can translate to economic growth by making use of data for 22 developing countries. This study investigated the role of stock market development on economic growth of nigeria using a 15year time series data from 1994 2008. The study suggests a positive influence of stock market development on economic growth for the countries with upper middle income ranges and. In nigeria, there is a weak evidence of growthled finance using. Chigbu federal university of technology owerri, nigeria and federal polytechnic nekede, owerri abstract the objective of this study is to examine the impact of capital market on economic growth in nigeria. The paper investigated the impact of stock market on economic growth in nigeria from 1981 to 2016 using a threeequation simultaneousequations model in a three stage least square 3sls estimation technique. In nigeria, there is a weak evidence of growthled finance using market size as indicator of stock market development. Pdf does stock market impact on the growth of nigerian.
International journal of economic development research and investment, vol. Chigbu federal university of technology owerri, nigeria and federal polytechnic nekede, owerri abstract the objective of this study is to examine the impact of capital market on. The objective of this study is to investigate the role of stock market development on economic growth in africa. Evidence from vecm approach abubakar hassan, omoshola d.
In recent years, all her efforts to grow the economy, nigerias rate of economic growth has remained very volatile and sluggish. The need to critically analyze the efficiency of capital market on the nigerian economy for the period between 1979 and 2008 as a reference point for developing economies is the bedrock of this work. Wilson, geoff briscoe empirical analysis of human capital development and economic growth in european regions hiro izushi, robert huggins nonmaterial benefits of education, training and skills at a macro level andy green, john preston, lars erik malmberg. This study specifically examines the impact of stock market development on longrun economic growth in nigeria. Also, the impact of the stock market development together with that of.
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