Impact of Stock Market Development on Economic Growth in Nigeria

This study examines the relationship between stock market development and economic growth in Nigeria from 1990 to 2022. Using descriptive statistics, OLS regression, and Granger causality tests, the results demonstrate that stock market development, measured by market capitalization and stock market turnover, significantly promotes economic growth. Specifically, a 1% increase in market capitalization and stock market turnover boosts GDP growth by 0.30% and 0.25%, respectively. Additionally, inflation negatively impacts GDP growth, with a 1% rise in inflation reducing growth by 0.20%. The regression model explains 68% of the variation in GDP growth. The Granger causality tests reveal bidirectional causality, indicating that stock market development both influences and is influenced by economic growth. These findings underscore the importance of maintaining macroeconomic stability and fostering stock market growth to support sustainable economic development in Nigeria. The study suggests that policymakers should strengthen regulatory frameworks and promote financial innoSTMion to enhance the stock market's role in economic diversification and stability.