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The Impact Of Capital Market On The Economic Development In Nigeria (1985-2011)
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1.2 STATEMENT OF THE PROBLEM
The objectives of the capital market at
any point in time are geared towards attaining an appreciable
development and growth in the economy and providing a channel for
engaging and mobilizing domestic savings for productive investment.
Apart from its fund mobilization function, it performs intermediary role
by making it possible for those who have surplus funds to be able to
loan it out to those in need of it for productive purpose.
In the
last two decades, the link between financial intermediation and economic
growth is a subject of high interest among policy makers and economics
around the world, There have been attempt to empirically asses the role
of capital market and economic development.This have varied in methods
and results.
Adjasi and Biekpe(2005) found a significant positive
impact of capital market on economic development in counties classified
as upper middle income economics.in the same way(Chen et al 2004)
elaborated that the nexus between capital returns that is stock returns
and output growth and the rate of stock return returns is a leading
indicator of output growth various studies such as spears (1991 Levine
and zerous,1998, comincioll,1996 and Demirquc-Kunt 1994) have supported
the view that capital market promote economic development with well
functional financial sector or banking sector, capital market can give a
big boost to economic development. (Behadur and nevpone2006) concluded
that stock market fluctuation predicted the future growth of any economy
and causality is found in real variables.
There are also alternative
views of roles that capital market play in economic development. Apart
from the view that stock market maybe having no real effect on
development, there are theoretical concepts that shows that capital
market development may actually hurt economic development. For instance,
(stiglitz 1985, 1994 bencivera and smith 1991 and Bhide1993) noted that
capital market can argue that due to their liquidity stock market may
hurt development and growth since saving rates may reduce due to
externalities
In capital accumulation diffuse ownership may also
negativity affect corporate governance and invariably the performance of
listed firms, this impending the growth of capital markets? This
suggests that there is neither theoretical nor empirical consensus on
the impact of capital market on economic development.
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ABSRACT - [ Total Page(s): 1 ]Many efforts have been made towards understanding the relationship between capital market and the economic development of Nigeria. The capital market of every economy is setup for the attainment of specific objective which includes economic growth and stability; Data were collected and analyzed using ordinary least square analysis. These include F-test, to determine the significance of the entire regression plan, T- test to test for the significance of the individual variables and the second ord ... Continue reading---
