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Abstract
This study examines the effects of stock market development on Nigeria’s economy, spanning 1990 to 2024. Stock markets are widely recognized as being pivotal to economic growth, yet studies linking them to Nigeria’s economy remain limited and often yield conflicting results. Using real GDP as a proxy for economic growth, this study analyses the impact of stock market capitalization, value of traded stocks, All-Share Index, and consumer price index (included as a control variable). Time-series data were sourced from the Central Bank of Nigeria’s Statistical Bulletin. Employing the Fourier LM unit root test, Maki cointegration test and autoregressive distributed lag (ARDL) model, the study accounts for structural breaks and short-run dynamics. Findings revealed no long-run equilibrium relationship among the variables, and short-run estimates showed all stock market indicators were statistically insignificant, indicating limited direct short-term impact on Nigeria’s economy. However, Granger Causality Test results confirmed unidirectional causality from stock market indicators to real GDP, validating the supply-leading hypothesis. The study highlights systemic inefficiencies in Nigeria’s stock market and recommends innovative securities, capital market literacy initiatives, and strengthened regulatory frameworks to optimize the market’s contribution to economic growth. Keywords: Stock Market Development, Economic Growth, Real GDP, Supply-Leading Hypothesis, Structural Breaks, Maki Cointegration Test, ARDL Model