Impact of stock market growth on Nigeria’s economic growth

This research seeks to investigate the impact of stock market growth on economic growth of Nigeria and also to find out the causality and correlation between the two. The research uses data spanning from 2004 to 2023 obtained from Nigerian Exchange Group formally called Nigerian Stock Exchange (NSE). The data collected was first and foremost transformed into natural logarithm and then unit root test was conducted for all the variables (GDP and All Share Index (ASI)). Autoregressive Distributed Lag Model (ARDL) was used and the result reveals that there is a positive relationship between stock market growth and economic growth in Nigeria. Granger causality was also applied and the result showed that lGDP does not granger causes lallshare_index and lallshare_index also does not granger causes lGDP. Correlation tests indicate a positive and moderate relationship between the two variables. Post estimation tests were also conducted such as autocorrelation, multicollinearity, heteroskedasticity and also a model stability test (Cusum). The research provided some recommendations ranging from the improvement of market liquidity and regulatory frameworks, to the restitution of investors' confidence and the promotion of product diversification in the market. Such measures are vital if the desired impact of the stock market is to be realized for economic growth in Nigeria. The research goes on to say that should these policies be successfully implemented, the Nigerian stock exchange has the potential to contribute much more vigorously in the years ahead to sustainable and inclusive economic growth.