Analysis of Financial Markets and Performance of Nigerian Economy

Madume Winifred Chinyere, Emeka J Okereke and Nwulu Stephen Onyemere
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Madume Winifred Chinyere: University of Port Harcourt Business School, Nigeria.
Emeka J Okereke: University of Port Harcourt Business School, Nigeria.
Nwulu Stephen Onyemere: University of Port Harcourt Business School, Nigeria.

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Abstract: One of the issues confronting the Nigeria State has been achieving sustained growth and prosperity in the midst of abundance. The financial market has been conceived as a pillar of growth and operations in the market can drive the domestic economy. This propelled the inquiry into the impact of financial market operations on the performance of the Nigerian economy. In analyzing the nexus between financial market operations and performance of the Nigerian economy, the study employed secondary data sourced from the Central Bank of Nigeria Statistical Bulletin and the World Development Indicator. The study observed the past evolution of the series from 1990 to 2021. Real gross domestic product was chosen to reflect the performance of the Nigerian economy. The study proxy financial market operations using ratios outstanding government securities, outstanding equity, and outstanding bond, while controlling for credit to private sector as percentage of GDP. The econometrics technique of cointegration and autoregressive distributed lag (ARDL) estimation tool was employed in analyzing the short run and long run behaviour of the series. Evidence from the bound test attest to long run relationship between the variables of interest. From the long run result, the study found evidence of significant positive impact of outstanding government securities on performance of the Nigerian economy. In addition, a significant positive relationship was found between outstanding equity and performance of the Nigerian economy. Credit to private sector was found to exert a direct and significant impact on real GDP. An increase in outstanding bond insignificantly improved the performance of the Nigerian economy. Instigated by these findings, the study advanced that formal legal and regulatory barriers instituted by regulatory bodies that pose as impediment to growth of the financial market should be remove in order to attract investors and increased credit allocation to real sectors of the economy to boost economic activities.

Date: 2023-04-21
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Published in Asian Journal of Economics, Finance and Management , 2023

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05132204

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