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Considerable debate exists on how stock exchanges affect economic growth. One line of research argues that stock market development is a positive and significant contributor to growth. On the other hand, other studies show that stock markets negatively affect growth or that they are not relevant contributors to economic growth. This paper seeks to identify the correlation between stock market development and long-run economic growth in Nigeria using the vector error correction modeling. Empirical results suggest that stock market development, as proxied by market capitalization to GDP ratio, does not contribute significantly to long-run economic growth in Nigeria. The implication of this findings is that the Nigerian economy has not gotten to the stage where the stock market can play critical economic development roles. However, efforts must be made to utilize the revenue from crude oil exports for investment in education, health, and capital goods to boost the country’s ailing manufacturing sector for sustainable development and set up robust institutions necessary for financial markets to flourish.

JEL Classification: G23, O16

Discipline: Financial Economics

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Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.


Stock market development, Financial intermediation, Economic growth, Time series econometrics, Nigeria



Stock Market Development and Economic Growth: Empirical Evidence from Nigeria

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