ASSESSMENT OF RELATIONSHIP BETWEEN MARKET DYNAMICS, BANK CREDIT AND ECONOMIC GROWTH
Abstract:The study examined the relationship between capital market dynamics, bank credit, and economic growth in Nigeria. Secondary data was employed and sourced from the publications of the Security and Exchange Commission and Central Bank of Nigeria. The variables for which the data was sourced include: market capitalisation, All-Share index, market volume and market turnover, inflation rate, and Gross Domestic Product for the period 1988 to 2019. The data was analyzed using multiple regression analysis and other econometric tests such as the unit root test, co-integration test, and vector error correction mechanism (VECM). The findings revealed that capital market dynamic variables and bank credit had a significant positive effect on economic growth. It is concluded that the capital market has a positive and significant impact on the economic growth of Nigeria, both in the short and long run. Also, bank credits significantly impacted economic growth positively in Nigeria. The capital market contributes positively to economic growth in Nigeria. Based on the findings from the study, we recommend that investors should be encouraged with necessary incentives so as to increase the volume and value of equities being traded in Nigeria, thus widening the range of investment opportunities as well as increasing productivity. Further, the government should do everything possible to provide a safe and conducive investment climate by nipping in the bud the prevalent activities of terrorists and kidnappers. This will not only encourage Nigerian investors but also attract foreign investors into the Nigerian capital market.