An Assessment of Nigerian Stock Exchange Market Development to Economic Growth

Abstract

This research investigates the effect of Nigerian stock exchange market development on economic growth using a 20 year time series data from 1990-2010. The method of analysis is ordinary least square techniques. The study measures the relationship between stock market development indices and economic growth. The stock market capitalization ratio was adopted as a proxy for market size while value traded ratio and turnover ratio were used as proxy for market liquidity. The study revealed that market capitalization and value traded ratio have a negative correlation with economic growth while turnover ratio has a strong positive correlation with economic growth. The policy makers and other institution relevant should put effort towards tuning market capitalization and value trade ratio into significant positive in the near future, so as to encourage economic growth in line with stock market development.