macroeconomic variables, capital market development, Nigerian economy, ARDL cointegration analysis


There is limited availability of equity and long term capital for business, governments and private sectors which was caused by saving-investment gap. This study therefore examined the macroeconomic determinants of capital market development in Nigeria. The study made use of annual data sourced from various statistical bulletins of Central Bank of Nigeria and National Bureau of statistics spanning from 1986 to 2016. The underpinning theory for this study is Calderson –Rossell Theory (1991). The study employed ARDL Cointegration analysis and Error Correction Model to explore the macroeconomic determinants of capital market development in Nigeria. The findings from the study revealed that there is existence of cointegration between the macroeconomic variables and the stock market capitalization (SMC) which was used as proxy for capital market development. The ARDL Error Correction Model Long run results showed that virtually all variables have insignificant positive relationship with stock market capitalization though the coefficients of macroeconomic variables are small which were all below 25% compare to the value of stock trade (VST) that represents stock market liquidity which was very high about 92%. The adjusted R-square value showed that the determinant variables employed in this study can jointly explain about 44% of the systematic variation in stock market capitalization. Therefore, this study concludes based on the above results that stock market liquidity significantly contributed to the growth of capital market development rather than macroeconomic variables. In line with the findings of this study, it was recommended that the government of Nigeria should improve on the macroeconomic variables through effective resetting of macroeconomic policies.


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How to Cite

ADEYEMI, P., OLALERE, S., & OLUYEMI, B. (2021). THE MACROECONOMIC DETERMINANTS OF CAPITAL MARKET DEVELOPMENT IN NIGERIA (1986-2016). Quantum Journal of Social Sciences and Humanities, 2(1), 64–71. Retrieved from