CAPITAL MARKET DEVELOPMENT AND NIGERIA ECONOMIC DEVELOPMENT

Abstract

This study examines the impact of capital market development on Nigeria's economic development from 2010 to 2024. The persistent shallow nature, illiquidity and low contribution of the Nigerian capital market to gross domestic product despite various reforms motivated the study. The specific objectives were to assess the effects of market capitalization, value of transactions and total new issues on Real Gross Domestic Product. The study adopted ex-post facto research design with annual secondary data sourced from CBN Statistical Bulletin, Nigerian Exchange Group and SEC. The Autoregressive Distributed Lag [ARDL] bounds testing approach was employed to test for long-run cointegration and the ECM. Results revealed a long-run cointegration relationship. Market capitalization, value of transactions and total new issues had positive and significant effect on economic development, with market capitalization being the strongest driver. Turnover ratio had positive but insignificant effect, indicating illiquidity. The Error Correction Model showed 62.3% speed of adjustment. The study concluded that capital market development significantly drives economic development but requires deeper reforms to improve liquidity. It recommended reducing listing costs, simplifying new issues and enhancing retail participation.