CAPITAL MARKET DEVELOPMENT AND ECONOMIC GROWTH: A COMPARATIVE STUDY OF GHANA AND NIGERIA

Abstract

This study the effect of capital market development on economic growth: A comparative study of Ghana and Nigeria. The longitudinal and cross sectional research design approaches were adopted, with data covering a period of (35) years from 1989 to 2023. Real Gross Domestic Product (RGDP) was used as proxy for economic growth, while the following variables; All Share Index, Total Value of Transactions, Market Capitalization and Total Number of Deals were used as proxies for the capital market development. The statistical tools used include, Augmented Dickey Fuller (ADF), Descriptive Statistics and Philips-Perron Unit Root Test, Co-integration Test, Ordinary Least Squares (OLS) and the Error Correction Method. The outcomes of the study showed that capital market exerted positive effects on economic growth in Ghana and Nigeria respectively. The results further showed capital market alone, led to significant economic growth in Nigeria, but not so significant on Ghana economic growth. Finally, the results generally indicated that the capital market in Ghana and Nigeria were still at the emerging stages as the markets largely depended on their economies rather than their economies depending on their capital markets. Based on these findings from the study recommended amongst other that, the governments of these countries must put in place appropriate economic policies that would encourage companies to enlist in the capital market and enhance market capitalization as well as the all share index because the more the participants in the market the more likely to be an increase in the overall market capitalization.