THE ROLE OF STOCK MARKET IN THE GROWTH OF NIGERIAN ECONOMY (1980-2010)

ABSTRACT
This study investigates the short run effect, long run effect and causal relationship between stock market and economic growth in Nigeria. The Augmented Dickey Fuller unit root test, Ordinary Least Squares, Johansen Co- integration test and Pairwise granger causality methods were applied to the variables. The OLS result showed that the all share index had a significant but negative relationship with economic growth; The Johansen co- integration test showed that a long run relationship exists between the stock market performance and economic growth in Nigeria in the long run while the Granger causality test results showed that stock market performance does not granger cause economic growth but economic growth granger causes stock market performance at 5 percent significance level. The study suggested some of the possible reasons for the negative impact of stock market on the Nigerian economic growth and recommended that efforts should be made to improve the stock market performance to have a positive effect on the real gross domestic product of Nigeria overtime.