Capital Market, Selected Macroeconomic Variables and Nigeria Economic Growth – A Quantile Regression Approach

In many economies, the capital market and macroeconomic variables play vital roles as drivers of economic growth and development. Capital market remains an effective channel of financial intermediation and a stable macroeconomic environment is a promoter of sustainable economic growth. The study therefore assessed empirically how the capital market and selected macroeconomic variables affects Nigeria's economic growth using the quantile regression approach. Specifically, capital market were proxied by market capitalization (MCP), all share index (ASI) and number of shares traded (NOS) while selected macroeconomic variables are inflation rate (INF), exchange rate (EXC), Fiscal deficit (FD), government debt (GD). Time-series quarterly data covering 1985–2022 were obtained for the study from CBN statistical bulletin. Estimation methods used in the study’s analysis include Philip-Peron unit root test, descriptive statistics, co-integration analysis and Quantile regression approach. Findings from the study showed that MCP positively impacts economic growth in the long and short run. The ASI affects economic growth positively and insignificantly in the long and short runs, NOS positively impacts economic growth in the long and short run, INF exerts a negative effect on the economic growth of Nigeria. FD positively impacts economic growth but not significant. GD positively impacts economic growth in the long. Hence, the study recommends that the government should as a matter of urgency reform the capital market for optimal productivity of the selected capital market proxies. Secondly, government should ensure stability in macroeconomic variables through promoting macroeconomic policies and reform to achieve expected stability. Thirdly, government should diversify the economy to enable multiple sources of revenue as this will improve public expenditure that will yield growth and development.