WILBERFORCE JOURNAL OF THE SOCIAL SCIENCES (WJSS)
ISSN: 2504 – 9232
Volume 3, No. 1, March 2018
Pages 166-181
DOI: 10.36108/wjss/8102.30.0101
CAPITAL MARKET OPERATIONS AND THE NIGERIAN ECONOMY
THANKGOD APERE
Abstract
The objective of this study is to investigate the relationship between capital market operations and the Nigerian economy over the period 1981 to 2016,using the Structural Vector Autoregressive Econometric Technique. The results of this study show that the relationship between capital market development and economic growth was found to be positive. Empirically the impulse response result of this study shows that the response of real domestic product to market capitalization was positive and significant. On the second-row shock on market capitalization shows a negative response to real gross domestic product and later positive and did not die out in the long run. The response of all share price index to real gross domestic product and which is depicted in the third row shows that all share price index responds positively to real gross domestic product shocks. Total volume of transaction response to real gross domestic product, was negative over the first through the third forecasting period and became positive from the fourth period and did not die out in the long-run. The variance decomposition result shows that as market capitalization, all share price index and total volume of transaction increase, more shocks occur on real gross domestic product; thus, capital market impacts on economic growth to a large extent. This study therefore concludes that the capital market impact on economic growth via market capitalization, all share index, value of transaction and total listing of equity and government stock. As it was observed, market capitalization, government stock and value of transaction are important capital market variables that can influence economic growth. This study therefore recommends that the Nigerian government should strictly implement policy directed at officially ending laws that hamper its effective functioning of the Nigeria capital market. Also, there is the need for effective and favourable macroeconomic environment to facilitate the stock market to influence remarkable growth of the Nigerian economy.
Keywords: Capital Market Capitalization, Total Volume of Transaction, All Share Price Index, Capital Accumulation