THE ROLE OF STOCK MARKET AND ECONOMIC GROWTH IN NIGERIA

Nigerian stock exchange has existed since 1961, it truly began to operate effectively when the civilian government returned to power in Nigeria in 1999. Until recently, the trading activity in the Nigerian stock market was quite limited; as a result, the prices exhibited considerable stability, which can be seen by analyzing the turnover ratio during that time frame. Most research conducted on the Nigerian stock market has focused on market efficiency.This study examines the role of the stock market in driving economic growth in Nigeria over the period 1993 to 2023, utilizing the Ordinary Least Squares (OLS) regression method. By analyzing time series data, we assess the impact of stock market indicators such as market capitalization, stock turnover ratio, and trade volume on Nigeria's Gross Domestic Product (GDP). The OLS approach is employed to investigate the linear relationship between stock market performance and economic growth, addressing potential challenges such as multicollinearity, autocorrelation, and heteroskedasticity within the dataset. Results reveal a statistically significant, positive correlation between stock market development and economic growth in Nigeria, suggesting that an efficient stock market may stimulate economic expansion by facilitating capital formation and resource allocation. This study offers insights for policymakers, emphasizing the need to strengthen Nigeria’s stock market infrastructure and regulatory environment to foster sustainable economic growth.