Trade Openness, Stock Market Development and Economic Growth of Nigeria: Empirical Evidence

Abstract

The study investigates the effect of trade openness on the impact of stock market development on economic growth of Nigeria. The ADF test revealed stationarity of the variables at first difference. The Johansen multivariate cointegration test confirms a long-run co-integrating relationship at 5% level of significance. In addition, the regression estimates shows that trade openness response to the relationship between stock market development does not have significant effect on economic growth. The pairwise granger causality test shows that there is no causal relation between trade openness and economic growth on one hand; and trade openness and stock market development on the other hand. The study conclude that exposure to external economies (trade openness) has no significance contribution to the development of Nigerian stock market in particular and the economy in general.

Keywords: Stock market development, Nigeria, trade openness, economic growth, FDI.