Stock Market Development and Economic Growth in Nigeria: An Empirical Assessment
Aigbovo, Omoruyi; Izekor, Andrew Osaretin

Abstract
Finance-growth nexus is reinvestigated by time series econometric techniques (unit root test, co-integration, error correction mechanism and granger causality) over the period of 1980-2011 for Nigeria. Economic growth was proxy by Real Gross Domestic Product (RGDP) while stock market development measures considered include; Market Capitalization (MCAP), Turn Over Ratio (TR), Total Value of Share Traded (VLT), and All Share Index (ASI). The study reveals that turnover ratio (TR) positively and significantly influences economic growth both in the short-run and long-run while total value of share traded (VLT) and all share index (ASI) were significant in the short-run. Also, all share indexes was observed to have a negative slope coefficient while value of share traded has a positive slope coefficient. Market capitalization positively and significantly influences economic growth in the long-run. The Granger causality test showed that economic growth promotes stock market development, but there is evidence of causality running from stock market development to economic growth. This result is consistent with theoretical postulation which suggests that stock market development have a key role to play in the economic growth of developing countries. In light of these findings, the study recommends that the government should promote greater regulation, supervision, and security of stock market and also improve the existing infrastructure in order to increase the level of investment in the market.

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