The Dynamics of Stock Market Performance Fundamentals and Economic Growth in Nigeria: A Causality Investigation

Abstract

There is a plethora of theoretical arguments about the behavioural nature of the dynamics of the proxies of stock market performance fundamentals and economic growth and development of an economy.  The specific objective of the paper is to examine the link between series of stock market fundamental and the proxy of real national development in Nigeria.   Time series data were collected from the fact book of Nigerian Stock Exchange and Central Banks of Nigeria’s Statistical Bulletin from 1980-2013. The methodology adopted is Error Correction Model and Granger Causality tests. The paper further establishes a significant positive relationship between the explanatory variables and explained variable at 5% Confidence Interval.  It is therefore recommended that government should take the issue of eliminating corruption, and particularly insiders’ abuse related cases and corporate governance issues in the market should be taken so seriously. This is to ensure that the market becomes more productive and represents real agent of economic development like it is in the stock market of developed nations of the world.

Keywords: Theoretical Arguments, Stock Market Fundamentals, Real Development, Time Series, Causality.