Examining the long-run relationship between stock market development and Nigerian economic growth

IF 1.3 Q3 ECONOMICS Journal of Financial Economic Policy Pub Date : 2024-07-10 DOI:10.1108/jfep-01-2024-0020

Udemezue Ndubuisi Nnakee, Chi Aloysius Ngong, Chinyere C. Onyejiaku, Shadrack Moguluwa, Josaphat Uchechukwu Joe Onwumere

{"title":"Examining the long-run relationship between stock market development and Nigerian economic growth","authors":"Udemezue Ndubuisi Nnakee, Chi Aloysius Ngong, Chinyere C. Onyejiaku, Shadrack Moguluwa, Josaphat Uchechukwu Joe Onwumere","doi":"10.1108/jfep-01-2024-0020","DOIUrl":null,"url":null,"abstract":"<h3>Purpose</h3>\n<p>This paper aims to examine the long-run relationship between stock market development and Nigerian economic growth from 1980 to 2020.</p>\n<h3>Design/methodology/approach</h3>\n<p>Market capitalization, number of listed companies, total value traded ratio and turnover ratio are used. An autoregressive distributed lag model is used for the analysis.</p>\n<h3>Findings</h3>\n<p>The market capitalization ratio and turnover ratio have positively significant links with economic growth. The number of listed companies has a negative and non-significant impact on economic growth. Total value traded ratio has a negatively significant link with economic growth in the short run. The positive but insignificant relationship between traded value ratio and turnover ratio in the long run growth means that the Nigerian stock market is growth inducing and on the right track as stock market liquidity drives growth.</p>\n<h3>Research limitations/implications</h3>\n<p>The government and Security Exchange Commission should increase the market liquidity level by improving the trading infrastructure. The government and regulatory authorities should improve and effectively implement the existing policies that would ensure stock market growth. This facilitates the investors’ speed to purchase and sell shares. The Securities and Exchange Commission should reduce transaction costs to encourage active trading activities. The market should be diversified with investment instruments such as derivatives, futures and swap options which would limit the adverse effect of listed companies in the market. To increase the stock market liquidity, the Security and Exchange Commission should apply moral suasion to bring private companies that have met certain financial thresholds to convert to public companies. Government should improve on the legislation to encourage more private companies to list on the stock exchange.</p>\n<h3>Originality/value</h3>\n<p>The study findings add value in that stock market development has a positive impact on economic growth in Nigeria.</p>","PeriodicalId":45556,"journal":{"name":"Journal of Financial Economic Policy","volume":null,"pages":null},"PeriodicalIF":1.3000,"publicationDate":"2024-07-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Financial Economic Policy","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/jfep-01-2024-0020","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}

引用次数: 0

Abstract

Purpose

This paper aims to examine the long-run relationship between stock market development and Nigerian economic growth from 1980 to 2020.

Design/methodology/approach

Market capitalization, number of listed companies, total value traded ratio and turnover ratio are used. An autoregressive distributed lag model is used for the analysis.

Findings

The market capitalization ratio and turnover ratio have positively significant links with economic growth. The number of listed companies has a negative and non-significant impact on economic growth. Total value traded ratio has a negatively significant link with economic growth in the short run. The positive but insignificant relationship between traded value ratio and turnover ratio in the long run growth means that the Nigerian stock market is growth inducing and on the right track as stock market liquidity drives growth.

Research limitations/implications

The government and Security Exchange Commission should increase the market liquidity level by improving the trading infrastructure. The government and regulatory authorities should improve and effectively implement the existing policies that would ensure stock market growth. This facilitates the investors’ speed to purchase and sell shares. The Securities and Exchange Commission should reduce transaction costs to encourage active trading activities. The market should be diversified with investment instruments such as derivatives, futures and swap options which would limit the adverse effect of listed companies in the market. To increase the stock market liquidity, the Security and Exchange Commission should apply moral suasion to bring private companies that have met certain financial thresholds to convert to public companies. Government should improve on the legislation to encourage more private companies to list on the stock exchange.

Originality/value

The study findings add value in that stock market development has a positive impact on economic growth in Nigeria.

查看原文

微信好友朋友圈 QQ好友复制链接

本刊更多论文

研究股票市场发展与尼日利亚经济增长之间的长期关系

目的本文旨在研究 1980 年至 2020 年期间股票市场发展与尼日利亚经济增长之间的长期关系。分析采用自回归分布滞后模型。研究结果市值比率和换手率与经济增长呈显著正相关。上市公司数量对经济增长的影响为负且不显著。成交总值比率与经济增长在短期内存在负向显著联系。交易价值比率和换手率在长期增长中呈正相关，但不显著，这意味着尼日利亚股票市场能够促进经济增长，并且由于股票市场的流动性推动了经济增长，因此其发展方向是正确的。政府和监管机构应改进并有效执行现有政策，确保股市增长。这有利于加快投资者买卖股票的速度。证券交易委员会应降低交易成本，鼓励活跃的交易活动。市场投资工具应多样化，如衍生工具、期货和掉期期权，这将限制上市公司对市场的不利影响。为增加股票市场的流动性，证券交易委员会应采用道德劝说的方式，促使达到一定财务门槛的私营公司转为上市公司。政府应完善立法，鼓励更多的私营公司在证券交易所上市。原创性/价值研究结果的价值在于，股票市场的发展对尼日利亚的经济增长具有积极影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文去求助

来源期刊

Journal of Financial Economic Policy ECONOMICS-

CiteScore

2.80

自引率

8.30%

发文量

期刊介绍： The Journal of Financial Economic Policy publishes high quality peer reviewed research on financial economic policy issues. The journal is devoted to the advancement of the understanding of the entire spectrum of financial policy and control issues and their interactions to economic phenomena. Economic and financial phenomena involve complex trade-offs and linkages between various types of risk factors and variables of interest to policy makers and market participants alike. Market participants such as economic policy makers, regulators, banking and competition supervisors, corporations and financial institutions, require timely and robust answers to the contemporary and emerging policy questions. In turn, such answers require thorough input by the academics, policy makers and practitioners alike. The Journal of Financial Economic Policy provides the forum to satisfy this need. The journal publishes and invites concise papers to enable a prompt response to current and emerging policy affairs.