Investigating the Impact of the Capital Market Operations on a Developing Economy: The Nigerian Experience (1983 – 2016)

Abstract

This work is undertaken to investigate the impact of the capital market operation on a developing the economy with the Nigeria experience over the period 1983 to 2016. The study employed the parametric test of Pearson regression to describe and analyze the various indices of the study such as market capitalization, all share index, number of listed securities, number of listed companies and gross domestic product (GDP). The study found that the most significant component of the Nigerian Capital Market is the Market Capitalization and demonstrates a significant correlation with the Nigeria economy. The other variables tested show less than 0.05 correlations implying that individually they also have a significant impact on the GDP meaning that these components have no significant effect on Nigeria economy. Reasons for this are the relatively small size of the few companies listed on the market while most big companies are still owned and funded by the government. The study recommends a comprehensive review of capital market regulations and fresh government policies to encourage the listing of companies to enlarge the market size. This study is beneficial for exposing the relatively small size of the capital market and this tends to foster their inability to contribute meaningfully to economic development during the period.