Effect of the Stock Market on Standard of Living in Nigeria. An ARDL Analysis

This study examines the effect of stock market performance on Nigeria’s standard of living over the period 1993–2023. The HDI served as a proxy for the standard of living, while Market Capitalization, Number of Listed Companies, Turnover Ratio, and Traded Value represented indicators of stock market performance. Annual time-series data were obtained from the World Development Indicators (WDI) and UNDP. The analytical techniques included descriptive statistics, Augmented Dickey–Fuller (ADF) unit root tests, Autoregressive Distributed Lag (ARDL) bounds cointegration tests, ARDL estimation, and post-estimation diagnostics. The ADF results revealed a mixture of stationary and non-stationary variables, integrated at I(0) and I(1). The ARDL bounds test confirmed the existence of a long-run relationship between HDI and stock market performance indicators. The long-run ARDL estimates showed that Market Capitalization and Turnover Ratio had positive but statistically insignificant effects on HDI, while Traded Value exhibited a negative but insignificant effect. Conversely, the Number of Listed Companies demonstrated a statistically significant negative effect on HDI in the long run. The study concluded that the development of the Nigerian stock market has not yet translated into tangible improvements in human development, and recommended policy reforms aimed at tax incentives and procurement preferences to verifiable investments by listed firms in jobs, health, and education; scale HDI-linked/social bonds and mandate impact reporting so capitalization yields measurable HDI gains.