ABSTRACT

The stock market plays an important role in Nigerian economy in the sense that it mobilizes domestic resources and facilitates savings and investment. It impacts positively on the economy by providing financial resources through its intermediation process for financing long term projects. The main objective of the study is to analyze the effect of stock market on the growth of Nigerian economy. The data used is a secondary data collected from central bank of Nigeria statistical bulletin The analysis scope covered a period of thirty-four years spanning from 1980-2014. The econometric method adopted is the Ordinary Least square method (OLS), Augumented Dickey Fuller, Unit root test, Cointegration and Error correction model. The variables of the model include Gross domestic product (GDP) as the dependent variable and market capitalization, total new issues and value of listed shares are independent variables. The result show that total new issues and value of listed shares are statistically significant while market capitalization statistically insignificance. This research recommend that there is need to introduce and implement policies that will increase the level and size of Market Capitalization in the Nigerian Stock Market by the government through the Central Bank as increase in Market Capitalization will surely increase fund availability for desired investment which in turn will increase productivity of the Nation. The positive impact of total New Issues is an indication that organizations operating in the country should open access to public for investment and by so doing make returns available to the investors thereby increasing an average investors’ income.