The Structural Conduct and Performance of the Nigerian Capital Market (1991 – 2018)

Abstract

The objective of this study is to examine the structural conduct of the Nigeria’s Capital Market and the effect of its performance on economic growth in Nigeria. The Nigerian Capital market was established and saddled with the responsibility of inducing a significant change in the economy. The study therefore, seeks to identify how various factors like structural operations of the market and the environmental factors affect the performance of the market and its effect on the Economy. The study adopts a time-series research design relying extensively on secondary data covering 1991 -2018. The Neo- Classical growth model as specified by Harrod-Domar which sets output as a linear function of Labour (L), Capital (K) and the index of technology (A) was augmented to contain the capital market indicators for adequate analysis. The study utilizes the method of regression analysis to analyse its data, incorporating multivariate co-integration to examine the long run relationship between the dependent variable Real Gross Domestic Product (RGDP) and the independent variables Market Capitalization (MC), Total New Issue (TNI), All Share Index (ASI) and Quoted Companies (QC). The result shows that three variables (MC, TNI, and QC) exhibit direct positive relationship, while one (ASI) exhibits inverse and statistically insignificant relationship with economic growth. It is therefore recommended that relevant regulatory agencies should focus on enhancing efficiency and transparency in the market to improve investors’ confidence. Therefore, there is the need for effective and favourable macroeconomic environment to facilitate economic growth and ensure that channels of capital market induced growth are built around effective systems.

Keywords: Capital Market, Capital inflows, Market Capitalization

DOI: 10.7176/JESD/10-24-14

Publication date: December 31^st 2019