Nigerian Stock Market Performance and Economic Growth: An Error Correction Model (ECM) Approach
Authors: Eje, Grace Chinyere, Chude, Nkiru Patricia
Journal: International Journal of Advanced Finance and Accounting (IJAFA), ISSN 2765-8457
Citation: IJAFA 3(4), 2022-10-01.
DOI: 10.5281/zenodo.7128088
PDF: Download full-text PDF
Type: Original Research
Abstract
This paper investigated Nigerian stock market performance and economic growth: an error correction model (ECM) approach using time series data from the Central Bank of Nigeria (CBN) Statistical Bulletin. The study employed the error correction model (ECM) technique in estimating our specified models. We specifically investigated both the direction and magnitude of the impact of stock market performance (as proxied by market capitalisation, stock market turnover and stock market returns) on economic growth over the sample period covered by the study. Our main findings indicate that market capitalisation had a positive and significant impact on economic growth in Nigeria. Similarly, the stock market turnover ratio and stock market returns were found to exert a positive and significant influence on economic growth. We, therefore, infer that the respective outcomes of stock market performance support the position of theoretical expectation that stock market performance should be positively related to economic growth. Moreover, for each of our estimated models, we found that stock market performance is jointly significant in explaining economic growth in Nigeria over the period of the study.
Keywords
Stock Market Performance, Economic Growth, Error Correction Model Authorship Eje, Grace Chinyere 1, Chude, Nkiru Patricia 2 | DOI link:
Full Text
This paper investigated Nigerian stock market performance and economic growth: an error correction model (ECM) approach using time series data from the Central Bank of Nigeria (CBN) Statistical Bulletin. The study employed the error correction model (ECM) technique in estimating our specified models. We specifically investigated both the direction and magnitude of the impact of stock market performance (as proxied by market capitalisation, stock market turnover and stock market returns) on economic growth over the sample period covered by the study. Our main findings indicate that market capitalisation had a positive and significant impact on economic growth in Nigeria. Similarly, the stock market turnover ratio and stock market returns were found to exert a positive and significant influence on economic growth. We, therefore, infer that the respective outcomes of stock market performance support the position of theoretical expectation that stock market performance should be positively related to economic growth. Moreover, for each of our estimated models, we found that stock market performance is jointly significant in explaining economic growth in Nigeria over the period of the study.