Analysis of Financial Markets and Performance of Nigerian Economy

PDF

Published: 2023-04-21

Page: 131-140


Madume Winifred Chinyere *

University of Port Harcourt Business School, Nigeria.

Emeka J. Okereke

University of Port Harcourt Business School, Nigeria.

Nwulu Stephen Onyemere

University of Port Harcourt Business School, Nigeria.

*Author to whom correspondence should be addressed.


Abstract

One of the issues confronting the Nigeria State has been achieving sustained growth and prosperity in the midst of abundance. The financial market has been conceived as a pillar of growth and operations in the market can drive the domestic economy. This propelled the inquiry into the impact of financial market operations on the performance of the Nigerian economy. In analyzing the nexus between financial market operations and performance of the Nigerian economy, the study employed secondary data sourced from the Central Bank of Nigeria Statistical Bulletin and the World Development Indicator. The study observed the past evolution of the series from 1990 to 2021. Real gross domestic product was chosen to reflect the performance of the Nigerian economy. The study proxy financial market operations using ratios outstanding government securities, outstanding equity, and outstanding bond, while controlling for credit to private sector as percentage of GDP. The econometrics technique of cointegration and autoregressive distributed lag (ARDL) estimation tool was employed in analyzing the short run and long run behaviour of the series. Evidence from the bound test attest to long run relationship between the variables of interest. From the long run result, the study found evidence of significant positive impact of outstanding government securities on performance of the Nigerian economy. In addition, a significant positive relationship was found between outstanding equity and performance of the Nigerian economy. Credit to private sector was found to exert a direct and significant impact on real GDP. An increase in outstanding bond insignificantly improved the performance of the Nigerian economy. Instigated by these findings, the study advanced that formal legal and regulatory barriers instituted by regulatory bodies that pose as impediment to growth of the financial market should be remove in order to attract investors and increased credit allocation to real sectors of the economy to boost economic activities.

Keywords: Financial markets, outstanding government securities, outstanding equity, economic performance


How to Cite

Chinyere, M. W., Okereke, E. J., & Onyemere, N. S. (2023). Analysis of Financial Markets and Performance of Nigerian Economy. Asian Journal of Economics, Finance and Management, 5(1), 131–140. Retrieved from https://globalpresshub.com/index.php/AJEFM/article/view/1801

Downloads

Download data is not yet available.

References

1. Acha IA, Akpan SO. Capital market performance and economic growth in Nigeria. Noble Int J Econ Financ Res. 2019;4(2):10-8.
2. Arodoye NL, Edo SE. Capital market development and economic growth in Nigeria. Benin J Soc Sci. 2015;22(1):111-39.
3. Aigheyisi OS. Does stock market development play any role in the effect of FDI on economic growth in Nigeria? An empirical investigation. Oradea J Bus Econ. 2016;1(2):51-61.
DOI: 10.47535/1991ojbe010
4. Taiwo JN, Alaka A, Afieroho EO. Capital market and economic growth in Nigeria. Acc Financ Manag J. 2016;1(8):497-525.
5. Atoyebi KO, Ishola SA, Kadiri KI, Adekunjo FO, Ogundeji MO. Capital market and economic growth in Nigeria. An empirical analysis. J Humanit Soc Sci. 2013;6(6):60-8.
6. Edame GE, Okoro U. An analysis of the Nigerian capital market performance and economic growth in Nigeria. J Pover Invest Dev. 2013;1(1):57-64.
7. Ugwuanyi CU. Impact of capital market on Nigerian economy, 1981-2014. Int J Manag (IJM). 2017;8(3):134-42.
8. Solow RM. A contribution to the theory of economic growth. Q J Econ. 1956; 70(1):65-94.
DOI: 10.2307/1884513
9. Swan TW. Economic growth and capital accumulation. Econ Rec. 1956;32(2): 334-61.
DOI: 10.1111/j.1475-4932.1956.tb00434.x
10. Brealey RA, Myers SC, Allen F, Mohanty P. Principles of corporate finance, 12/e. McGraw-Hill Education. 2018;12.
11. Hobijn B, Jovanovic B. The information technology revolution and the Stock Market: evidence. Am Econ Rev. 2001; 91(5):1203-20.
DOI: 10.1257/aer.91.5.1203
12. Mishra SK, Puri VK. Economic of development and planning: Theory and practice, Himalaya publishing house; 2016.
13. Kaplan RS, Norton DP. Transforming the balanced scorecard from performance measurement to strategic management: Part I. Acc Horiz. 2001;15(1):87-104.
DOI: 10.2308/acch.2001.15.1.87
14. Owolabi A, Ajayi NO. Econometrics analysis of impact of capital market on economic growth in Nigeria (1971-2010). Asian Econ Financ Rev. 2013;3(1):99-110.
15. Isola Lawal A, Olukayode Somoye R, Ayoopo Babajide A, Ikechukwu Nwanji T. The effect of fiscal and monetary policies interaction on stock market performance: evidence from Nigeria. Future Bus J. 2018;4(1):16-33.
DOI: 10.1016/j.fbj.2017.11.004
16. Chen S, Komal B. Impact of stock market development on economic growth: Evidence from lower middle income countries. Manag Admin Sci Rev. 2016;5(2):86-97.
17. Mamun A, Basher S, Hoque N, Ali MH. Does stock market development affect economic growth? Econ Evid Bangladesh Manag Acc Rev (Mar). 2018;17(1): 123-44.
18. Phillips PCB, Perron P. Testing for a unit root in time series regression. Biometrika. 1988;75(2):335-46.
DOI: 10.1093/biomet/75.2.335
19. Samuelson PA. Proof that properly anticipated prices fluctuate randomly. Ind Manag Rev. 2016;6:41-9.