CAPITAL MARKET AND THE GROWTH OF DOMESTIC ECONOMY: EVIDENCE FROM
NIGERIA

Ogbonna, BigBen Chukwuma 1*
bigbenogbonna@ebsu.edu.ng
and
Eze, Onyebuchi Michael 2*
Onyimikey88@yahoo.com
Department of Economics, Ebonyi State University, Abakaliki, Ebonyi State, Nigeria

Abstract
This research was commissioned to examine the influence of capital market on economic growth in Nigeria
from 1985 to 2018. The ex-post facto research design was adopted in the investigation. The study utilized
multiple regression analyses in which the Cointegration test and Vector Error Correction Model were the
methods employed in the analysis. Time series data obtained from the Central Bank of Nigeria statistical
bulletin on gross domestic product, market capitalization, all-share index, and private domestic savings
were analyzed in the study. The results revealed that market capitalization had a positive and significant
effect on GDP, while all-share index had a negative and insignificant impact on GDP, which suggest that
capital market appeared to be bearish in Nigeria within the period under review. The results further
indicate that private domestic savings had a positive relationship with GDP even though such association
appeared inconsequential. On the above notes, the study recommended that government should as a matter
of fact; formulate appropriate economic policies that would ensure the stability share prices which
encourage nationals’ and foreigners’ participation in the capital market in the country. In so doing, market
capitalization will improve leading to improved growth in the domestic economy.
Keywords: Capital Market, Economic Growth, Cointegration Test, Vector Error Correction Model

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