Symbiotic Disclosure of Real Sector and Financial Sector: Evidence in Nigerian GDP and Stock Market Capitalization

Suoye Igoni, Lucky Orlu and Ucheoma. I Ezirim
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Suoye Igoni: Department of Banking and Finance, University of Nigeria, Nsukka, Nigeria.
Lucky Orlu: Department of Economics, Rivers State University, Port Harcourt, Nigeria.
Ucheoma. I Ezirim: Department of Finance and Banking, University of Port Harcourt, Choba, Nigeria.

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Abstract: The focus of this study is to identify the disagreement if any between the real sector and the financial, and to disclose its activities alongside macroeconomic factors before the emergence of the 2016 and 2017 fair recession in Nigeria. The ending controversies of the financial sector being a host or a parasite to the real sector pave the gesture for this study. This study, therefore, evaluated the prevailing casual disclosure between the Nigeria Stock Performance and Gross Domestic Product alongside other Macroeconomic indicators, such as exchange rate, external reserves, Inflation rate, and Interest rate data sourced from Central Bank of Nigeria over the period 1985-2014. The Augmented Dickey-Fuller and Granger Causality tests were employed. The results disclose a significant symbiotic link between Stock Market Capitalization and GDP in the growth process. On the other hand interest rate tends to influence Market capitalization activities. The study concludes that GDP and Stock Market Capitalization constitute significant influential variables in the Nigerian economy as both promote each other, while the inference of interest rate follows movements in Stock Market Capitalization. The implications to these findings show that the financial sectors and the real sectors both operate within and obey the demand follow and supply leading hypotheses. The study recommends that the Central of Nigeria should collaborate with the Bank of Industry and the Agricultural Development Bank to issue out soft loans to capable entrepreneurs to uphold the symbiotic disclosure shown in this study. Finally, CBN should properly manage the macroeconomic variables to improve the Nigerian economy.

Date: 2020-05-07
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Published in Asian Journal of Economics, Finance and Management , 2020, 2 (1), pp.86-95

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05299386

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