Capital Market Performance And Economic Growth In Nigeria And The United States Of America
Efosa Osaretin IMADE
Department of Banking and Finance, University of Benin, Benin City, Nigeria
Keywords: Capital Market, Economic Growth, Econometric, Statistical Methods
Abstract
The study empirically investigates the link between capital market and economic growth in Nigeria and the US covering a period of 28 years (1990 to 2017). The rationale for the research is that capital markets have been arguably discussed in the empirical literature by several scholars as a veritable tool for stimulating economic growth in countries across the globe in which Nigeria and the US are inclusive. The cointegration econometric method and the error correction model (ECM) were utilized in the analysis of the data from Nigeria and the USA. Preliminary tests such as the unit root tests were done. The findings from the empirical analysis revealed that only gross fixed capital formation has a considerable impact on the growth of the economy in Nigeria in both the short and the long run. In the US case, market capitalization, market index and gross fixed capital formation are significant factors in the determination of the US economic growth in the long run. Value of stock traded has no impact on both the Nigerian and the US economies. The study recommends among others that, government should regulate the activities of the capital market as sswell as those of the operators through code of conduct, ethics and governance, to ensure investor protection and enhance market efficiency. This action will in future time impact positively on economic growth at large. Since improved market capitalization and higher economic performance will guarantee higher income for firms and individuals.