Does stock market-based financial development promotes economic growth in emerging markets? new evidence from Nigeria

This study examines the effect of stock market financial development on economic growth in Nigeria. The study spans the period 1980–2016. The paper leans on ARDL approach to cointegration. From the results of the study, stock market financial development promotes economic growth in the short-run, but on the long-run, the impact of stock market financial development on economic growth was not significant. Market capitalization, the value of shares traded, and market turnover ratio were all significant in the short run while openness to trade was not. Meanwhile, trade openness was the only variable that had a significant impact on economic growth in the long-run. The Bounds test reveals a long-run relationship among the variables. All the variables, apart from trade openness, were positively correlated with economic growth. The results of this study support that stock market development plays a major role in economic growth in Nigeria. It is recommended that the regulatory authority enacts policies that will promote liquidity, stability and accountability in the stock market which could possibly perpetuate economic growth in Nigeria.