Modeling the effect of Capital Market: Empirical evidence from Nigeria.

Abstract

This study takes a look at resource mobilization for long term economic development, an insight into the role of the Nigerian capital market. We attempted to model the effect and importance of the Nigerian capital market, as a veritable source of medium and long term development. The data collected were from the Central Bank of Nigeria statistical bulletin and the Security and Exchange Commission from the period of 2001 to 2010. The SPSS statistical tool was used to analyze the data. The economic development was proxy by gross domestic product (GDP), while the capital market variables considered included the annual market capitalization (AMC) and the total volume of transactions (TVT). Findings revealed that there was a positive relationship between the capital market activities and gross domestic product, although the relationship was not statistically significant. It is thus recommended that the more fundamental issue of building investor confidence must be addressed through transparency, fair trading transactions, political stability and social security; stringent requirements for entry into the market should be relaxed and adequate publicity should be given to the activity of the capital market. It is believed that when these recommendations are implemented, the impact of the capital market on the economy will become more significant.

Keywords: Gross Domestic Product, Resource mobilization, Market Capitalization, Capital market,