Stock Market Developmentand Economic Growth in Nigeria

E. O. Ajayi, F. E. Araoye


This paper empirically analyzed the effect of the Nigerian Stock market capitalization on the nation’s economic growth from 1985 to 2010. The economic growth was proxy by the GDP while the stock market variable considered included; market capitalization and market turnover ratio as independent variables as proxy for stock market development in terms of size and liquidity. The paper establishes a unidirectional causality that runs from economic growth to stock market. The result shows that economic growth influences stock market capitalization while stock market capitalization does not influence economic growth. The result indicates that economic growth catalyses stock market in Nigeria. The government is therefore advised to put up measures to stem up investors’ confidence and activities in the market so that it could contribute significantly to the Nigerian economic growth.

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