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ABSTRACT
The performance of the stock market is frequently regarded as an important or good barometer for gauging a country's economic strength and development. Thus, an economy with an active stock market may have its essential stock market index utilized as a reference in measuring changes in the general level of economic activity within the concerned economy on a regular basis. The study focuses on the stock market and its impact on Nigeria's economic growth. The study adopted an ex-post facto research design to investigate the causal relationship between the stock market development and economic growth in Nigeria. Quantitative data analysis methods were used in the analysis of data. This study adopts the Auto Regressive Distributed Lag modeling technique (ARDL) and the ECM to investigate the impact of stock market development on the economic growth of Nigeria. The study concludes that all the major indicators of stock market development have no significant impact on economic growth in Nigeria thereby suggesting low stock market development and its attendant insignificant impact on economic growth within the period of study. Also, volume of transactions indicative of market activity and liquidity had significant negative impact on economic growth. Thus, we aver that the level of development of the stock market in Nigeria is low and ipso facto did not have significant impact on economic growth in Nigeria within the period 1985 to 2022. The study recommended among others, that Capital market regulatory authorities should ensure that the market microstructural frameworks are improved upon to promote both the depth and breadth of the stock market in Nigeria Furthermore, more financial instruments should be introduced to the market. In fact, trades in derivatives, index futures and debt instruments should be encouraged and actively promoted. In addition, institutional structures (including legal and regulatory framework) of the market should be strengthened to ensure market efficiency and thus boost the confidence of market participants; particularly foreign investors’ confidence in the market.
