ADVANCED JOURNAL OF FINANCE AND ACCOUNTING
Integrity Research Journals
Model: Open Access/Peer Reviewed
DOI: 10.31248/AJFA
Start Year: 2022
Email: ajfa@integrityresjournals.org
Stock market liquidity and economic growth in Nigeria
https://doi.org/10.31248/AJFA2024.019 | Article Number: 6ED431082 | Vol.2 (2) - August 2024
Received Date: 12 August 2024 | Accepted Date: 29 August 2024 | Published Date: 30 August 2024
Authors: Precious Onyinye Okey-Nwala# and Marshal Iwedi*
Keywords: Nigeria., All share index, market capitalization, economic growth, stock market liquidity
This study examines the intricate relationship between stock market liquidity and economic growth in Nigeria, offering a comprehensive analysis of data from 1985 to 2022. The research encompasses an exploration of the trends in Real Gross Domestic Product (RGDP), the Number of Deals (NOD), All Share Index (ASI), and Market Capitalization (MCP) in the Nigerian stock market. The key findings of this study reveal a persistent upward trajectory in economic growth in Nigeria, albeit with fluctuations. The Number of Deals (NOD) in the stock market has steadily increased over the years, signifying growing market activity. The All Share Index (ASI) and Market Capitalization (MCP) demonstrated substantial growth trends, emphasizing the stock market's importance in the nation's economic landscape. Cointegration tests reveal a long-term connection between stock market liquidity variables and economic growth, underscoring the stock market's influence on the economy. Regression analyses further establish ASI and MCP's significant and positive impact on economic growth. These results accentuate the stock market's potential as an engine for economic development. Causality tests provided mixed results, with MCP Granger causing NOD and ASI, while other relationships were not statistically significant. The study concludes by recommending the promotion of stock market participation and awareness, strengthening stock market regulations, investment in market infrastructure, diversification of investment options, and encouraging long-term investment strategies. These recommendations aim to capitalize on the positive impact of the stock market on economic growth and foster sustained economic development in Nigeria. This research contributes valuable insights for policymakers, investors, and stakeholders, emphasizing the pivotal role of the stock market in Nigeria's economic growth and development.
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