Impact of Capital Market Activities on the Nigerian Economy
Ikeobi, Nneka Rosemary
Department of Actuarial Science,
Faculty of Management Sciences, University of Jos, Jos, Nigeria.
Email: nikeobi2002@yahoo.com
ABSTRACT
This paper assesses the impact of capital market activities on the Nigerian economy by examining relationships between capital market indicators and economic growth using a multiple regression model. Gross domestic product (GDP) was used as proxy for economic growth while market capitalization (MCAP), number of deals (NODL), value of deals (VALD) and all-share index (ASI) were used as proxies for capital market activities. Money supply (MS) and credit to private sector (CPS) were included in the
model as control variables. The results revealed that market capitalization and value of deals had positive but insignificant impact on the economy, while number of deals and all-share index had negative and insignificant impact. These findings indicate that the Nigerian capital market has not impacted significantly on the Nigerian economy by efficiently channeling funds for real sector investment. The negative relationship between economic growth and number of deals and all-share index is indicative that
the Nigeria capital market is generally illiquid and points to its inefficiency in its ability to channel funds to the real sector of the economy for productive investment. The implication of these findings is that capital market regulators should intensify efforts aimed at removing all identified impediments to capital market operations to make it more attractive and accessible to firms seeking long-term funds. Keywords: Capital Market, Capital Mobilization, Capital Allocation, Finance, Economic Growth, Nigeria
