EFFECT OF CAPITAL MARKET ON THE ECONOMIC DEVELOPMENT OF EMERGING ECONOMIES; THE NIGERIA EXPERIENCE

Purpose: This study examined the effect of Nigeria's capital market on the economic development the country. The aim of this study is to determine how much the capital market has contributed to Nigeria's Human Development and Unemployment Reduction in the country. The specific objectives are to determine the effect of: Market Capitalization, All Shares Index, Volume of market Transactions, Value of market Transactions affect both Unemployment rate and Human Development Index. Methodology: The secondary data for this study came from the World Bank report for the period 1991 to 2022 and the CBN statistical bulletin. The Augmented Dickey-Fuller Unit Root test was conducted to check for the stationarity of the data set, the Johansen co-integration test was used to determine if the relationship in the models exists in either the short run or long run, and the Granger Causality was also conducted. The dependent variables were the Unemployment Rate and the Human Development Index, whereas the independent variables were Market Capitalization, All Shares Index, Transaction Volume, and Transaction Value. Findings and Conclusion: Market capitalization and the All-Shares Index are significantly correlated with the Human Development Index, although there is no correlation between the Human Development Index and Transaction Volume or Value, according to a review of the regression data. In the second model, the correlations between market capitalization, the All Shares Index, the quantity and value of transactions, and the unemployment rate are not statistically significant. The study's conclusions indicate that while the capital market has a small effect on unemployment, it has a large impact on the Human Development Index. Therefore, in order to eliminate fraud and other unethical actions that breach investor trust, we implore the regulatory authorities to take regulatory measures that tend to improve and maintain the market's Market Capitalization and All Share Index. Originality: This study contributes to the existing literature by examining how capital market affects economic development in Nigeria. This research has also successfully developed a model that could be used to predict the effect of Capital Market on both Human Development Index and Unemployment Reduction in Nigeria.