Nigerian stock market performance and economic growth: An error correction model (ECM) Approach

ABSTRACT This paper investigated Nigerian stock market performance and economic growth: an error correction model (ECM) approach using time series data from the Central Bank of Nigeria (CBN) Statistical Bulletin. The study employed the error correction model (ECM) technique in estimating our specified models. We specifically investigated both the direction and magnitude of the impact of stock market performance (as proxied by market capitalisation, stock market turnover and stock market returns) on economic growth over the sample period covered by the study. Our main findings indicate that market capitalisation had a positive and significant impact on economic growth in Nigeria. Similarly, the stock market turnover ratio and stock market returns were found to exert a positive and significant influence on economic growth. We, therefore, infer that the respective outcomes of stock market performance support the position of theoretical expectation that stock market performance should be positively related to economic growth. Moreover, for each of our estimated models, we found that stock market performance is jointly significant in explaining economic growth in Nigeria over the period of the study