ABSTRACT
This study is an assessment of the performance of the capital market in the
deregulated Nigerian economy from 1986-2006. The research focus was directed
toward a deeper understanding of how capital market performance has impacted on
capital formation and economic growth in Nigeria. We concentrated on two capital
performance indications namely; market capitalization and growth in the number of
listed securities. Secondary data from Central Bank of Nigeria (CBN), Nigeria Stock
Exchange (NSE), and Federal Office of Statistics (FOS), which were obtained
through library research of relevant publications, were used. The econometric
technique of multiple regression analysis was used as the main estimation tool to
measure the degree of relationship between capital formation and Nigeria’s economic
growth respectively and capital market performance measures. The study was guided
by two hypotheses.
Both linear and log linear specifications of each of the
relationships were tried. Our hypotheses were tested with the R2 test and f-test. The
major findings of the study were: that the log linear specifications suit our data more
in terms of goodness of fit, precision of the estimates and tolerable level of multi
collinearity and that capital market performance has both significant and positive
impact on capital formation and economic growth in the deregulated Nigerian
economy. The study concluded that to increase the level of capital formation in
Nigeria and enhance economic growth of the country, efforts should be made to
enhance the performance of the capital market but how fast the market moves to
assume its rightful position as a major channel of capital formation needed for
Nigeria’ rapid economic growth will depend on how fast the major obstacles
impeding its performance are dispensed with. It recommended some measures to be
implemented to enhance the performance of the Nigeria capital market. Like The
regulatory and supervisory framework needs to be continuously reviewed and
strengthened to embrace the activities of the market, emphasis on transparency and
accountability on all aspects of economic management and corporate governance,etc.
