Stock Market Activities and Economic Growth in Nigeria: A Cointegration Approach

  • Ashamu Sikiru O. Department of Banking and Finance, Faculty of Management Sciences, Lagos State University, Ojo, Nigeria
  • Soyebo Yusuf A. Department of Banking and Finance, Faculty of Management Sciences, Lagos State University, Ojo, Nigeria
Keywords: Stock Market, Market Capitalization, Economic Growth, Investors, Cointegration.


Stock markets have been the main catalyst of economic growth in most economies. However, there are mix results on the exact nature of the influence of key stock market variables on economic growth in developing economies. Thus, this study examined the effect of stock market measures on economic growth in Nigeria. This paper employed an ex-post facto research design using annualized data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and Stock Exchange Fact books for the period 1985 to 2017 and they were analysed using the error correction estimate regression technique at 5% level of significance. The result ecm (-1) is statistically sign and significant, stock market activities such as market capitalization (  = 0.0386, p > 0.05), number of deals (  = 0.0487, p < 0.05) and All share Index ( = 0.0921, p < 0.05) have positive influence on economic growth, while volume of trading (  = -0.6110, p < 0.05) has a negative effect on economic growth. These results suggested that all the specified variables except market capitalization have significant effect on economic growth in Nigeria. The study concluded that stock market activities influence the economic growth in Nigeria. Therefore, it is recommended that investors should take the advantage of the numerous opportunities offered by the stock market while market makers and regulators should continue to operate according to best market practices in order to ensure confidence and continuous patronage by various economic agents.


Afolabi, A. A. (2015). Impact of the Nigerian capital market on the economy, European Journal of Accounting Auditing and Finance Research, 3(2): 88-96.

Beck, T. & Levine, R. (2001). Stock Markets, Banks, and Growth: Correlation or Causality? Policy Research Working Paper 2670, Washington DC: World Bank.

Bencivenga, V. R., Smith, B. & Starr, M., (1996). Equity Markets, Transaction costs, and Capital Accumulation: An illustration. World Bank Economic Review, 10:643- 65.

Copeland, T. E. & Weston J. F. (1979). Financial Theory and Corporate Policy, 3, 32-26.

Echekoba, F. N., Ezu, G. K. & Egbunike, C. F. (2013). The impact of capital market on the growth of the Nigerian economy under democratic rule, Arabian Journal of Business and Management Review, 3(2):53-62.

Enisan, A. & Olufisayo, A.O.(2009). Stock market development and economic growth: evidence from seven Sub-Sahara African Countries”. Journal of Economics and Business, 61(2).

Fama, E.F. (1970). The behaviour of stock market prices, Journal of Business 39(1) 31-65.

Fynn, K. D. (2012). Does the equity market affect economic growth? Macalester Review Journal, 2(2):1-12.

Ikikii, S. M. & Nzomoi, J. N. (2013). An analysis of the effects of stock market development on economic growth in Kenya, International Journal of Economics and Finance, 5(11), 145-155.

Ishioro O. B. (2013), Stock market development and economic growth: evidence from Zimbabwe. Ekon. Misao praksa dbk.

Jibril, S. R., Salihi, A. A., Wambai, U. S., Ibrahim, F. B., Muhammad, S. and Ahmad, T. H. (2015). An assessment of Nigerian stock exchange market development to economic growth, American International Journal of Social Science, 4(2), 51-58.

Johansen, S. (1991). Estimation and hypothesis testing for cointegration vectors in Gaussian Vector Autoregressive Models. Econometrica, 59,1551-1580.

Koirala, J. (2011). The effect of stock market development on economic growth: an empirical analysis of UK, Electronic copy available at:

Kolapo, F. T. & Adaramola, A. O. (2012). The impact of the Nigerian capital market on economic growth (1990-2010), International Journal of Developing Societies, 1(1),11–19.

Mishra, P.K., U.S., Mishra, U.S., Mishra, B.R., & Mishra. P. (2010). Capital market efficiency and economic growth: The case of India. European Journal of Economics, Finance and Administrative Sciences Issue ,27 (18), 130-138.

Nowbutsing, B. M. & Odit, P. M. (2009). Stock Market Development and Economic Growth:The Case of Mauritius, International Business and Economics Research Journal, 8(2), 77- 88.

Odhiambo, N.M. (2010). Stock market development and economic growth in South Africa: An ARDI Bounds. Department of Economics, University of South Africa.

Okodua, H., & Ewetan, O. O. (2013). Stock market performance and sustainable economic growth in Nigeria: A bounds testing co-integration approach. Journal of Sustainable Development, 6(8).

Okoye, V. O. & Nwisienyi, K. J. (2013). The capital market contributions towards economic growth and development: the Nigerian experience, Global Advanced Research Journal of Management and Business Studies, 2(2), 120-125.

Osei, V. (2005). Does the stock market in Ghana? A granger causality analysis bank of Ghana Working Paper ,05(13).

Oskooe, S.A.P. (2010). Emerging stock market performance and economic growth. School of Economics, Kingston University. American Journal of Applied Sciences, 7(2), 265-269.

Pan L. & Mishra V. (2016). Stock Market Development and Economic Growth: Empirical Evidence from China. Department of Economics Discussion Paper 16/16, ISSN 1441- 5429, Monash Business School.

Popoola, O. (2014). The effect of stock market on Nigerian economy. Unpublished Manuscript, Department of Economics, Landmark University, Kwara State, Nigeria.

Popoola O.R, Ejemeyovwi O. J, Alege, O.P., Adu O., & Onabote A. A. (2017). Stock market and economic growth in Nigeria. International Journal of English Literature and Social Sciences, 2(6), 97-106.

Wang, B. & Ajit D. (2013). Stock Market and Economic Growth in China. Economic Bulletin, Access Econ, 33(1), 95-103.
How to Cite
O., A. S., & A., S. Y. (2020). Stock Market Activities and Economic Growth in Nigeria: A Cointegration Approach. American Economic & Social Review, 6(1), 1-7.
Original Articles/Review Articles/Case Reports/Short Communications