Interconnectedness between stock market and economic growth in Nigeria: Evidence from Yamamoto and pairwise approaches

This study examined the causal relationship between the stock market and economic growth in Nigeria from 1980 to 2023.Four key indicators of the equity market -market capitalization ratio, total value of shares traded, number of quoted irms, and turnover ratio were employed to ascertain the low of causality between stock market activity and economic performance.To achieve this, the study utilized the dynamic Toda-Yamamoto causality model alongside the conventional Pairwise Granger Causality technique for a comprehensive analysis.Notably, the two methods yielded somewhat divergent results; however, a key and reliable inding indicates a strong one-way causality from economic growth to stock market performance, particularly affecting market capitalization and turnover ratios.This outcome supports the demand-following hypothesis.Based on these indings, it is recommended that policymakers and regulatory authorities formulate and implement strategies aimed at increasing stock market listings and attracting new investors, thereby equipping the capital market with the necessary resources to signiicantly enhance Nigeria's economic development.