Analysis of Capital Market Performance and the Growth of the Nigerian Economy: A Cointegration Approach

Godwin Chigozie Okpara


This study investigated the impact of the capital market performance on the growth of the Nigeria economy. To carry out this investigation, the researcher used the real gross domestic product (as a proxy for development indicator) on the market capitalization, newissues, value of shares traded and turnover ratio as capital market indicators. The cointegration approach was used for the analysis of data. The results show that there exist a longrun relationship between the growth of GDP and the capital market indicators. The gross domestic product is positively and significantly related to the one period lag of the capital market indicators. The lagged error correction term (ECTt-1) is significant and has the expected negative sign confirming the existence of longrun relationship between the dependent and explanatory variables. The causality test shows that capital market indicators namely, market capitalization and value of shares traded granger causes the growth of GDP. The researcher therefore calls for boosting of the activities of capital market through public enlightenment campaign and more relaxation of entry requirement into the Nigerian Stock Exchange. This is necessary for the continuous growth of the economy


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