Determinants of Stock Market Performance and Manufacturing Sector Growth in Nigeria (1987-2013)

Abstract

The paper attempts to evaluate the relationship between determinants of stock market performance and manufacturing sector growth in Nigeria using time series data (1987-2013).Secondary data was used and collected from the CBN statistical bulletin and national bureau of statistics. Hypotheses were formulated and tested using Ordinary Least Square (OLS) econometrics and the study reveals that there is a positive significant relationship between stock market performance and manufacturing sector in Nigeria. There is also a positive significant relationship between capacity utilization and market capitalization in Nigeria. There is a positive significant relationship between capacity utilization and new issues in Nigeria. The coefficient of determination indicates that about 88% of the variations in manufacturing sector growth can be explained by changes in stock market performance (variables). The study therefore recommends that market forces should be allowed to operate without any hindrance because interference in security pricing is inimical to the performance of the stock market and the manufacturing sector growth in Nigeria. The determination of stock prices should be deregulated for the purpose of achieving a sustained effort to stimulate productivity in the manufacturing sector of the economy. For any meaningful manufacturing sector growth, government should ensure that polices are consistent over time, as policy inconsistency in the past had led to closure of many manufacturing industries.

Keywords: Determinants, Stock Market Performance, Manufacturing, Sector Growth, Nigeria.