AN ERROR CORRECTION REPRESENTATION OF MARKET LIQUIDITY – ECONOMIC GROWTH NEXUS IN NIGERIA: A RECENT EXPERIENCE
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 2
Abstract
The study examines the relationship between market liquidity and economic growth in Nigeria over the period of 1987-2012 using time series data. The starting point of our analysis was to check for the time series properties of the underlying data using the Augmented Dickey Fuller (ADF) and the Engle-Granger procedure. The existence of non-stationarity and co-integration were established which necessitated an ECM for the analysis. But first, the popular Granger-Causality Test was conducted to ascertain whether Market Liquidity Granger-causes Economic Growth or vice-versa. The empirical result from the Granger causality test indicates that market liquidity does not granger-cause GDP; neither does GDP granger-cause market liquidity. From the result, Market Liquidity captured by its proxies of Turn-over Ratio, Market Capitalization and Private Sector Credit are statistically significant in explaining GDP. Based on the findings, we suggest the monetary authorities should focus on policies that will develop financial infrastructure that will ensure macroeconomic stability under which economic agents can make decisions that promote rapid financial market development and subsequent capital market performance. The problem of low awareness about the operations of the capital markets in the economy can be reduced by educating the populace about the opportunities available in the market.
Authors and Affiliations
Kaine, A. I. N*| School of Agricultural Sciences, National Open University of Nigeria, KM4 Kaduna-Zaria Express Way, Rigachikun, Kaduna, Nigeria, Olotu, McRollins Efe| Departments of Economics, Novena University, Ogume, Delta State, Nigeria
Keywords
Related Articles
- EP ID EP2252
- DOI -
- Views 533
- Downloads 37
ISLAMIC CULTURE IMPACT OF INCREASING SATISFACTION AND PERFORMANCE OF EMPLOYEES: STUDY OF EDUCATIONAL INSTITUTIONS SABILLILAH SAMPANG
Many studies conducted by experts who want to know the direct relationship between organizational cultures with organizational performance, but there are also some empirical studies which found that organizational cultur...
FINANCIAL REPORTS QUALITY AND CORPORATE SOCIAL RESPONSIBILITY
This study explores the correlation between CSR and the quality of financial reports according to Stewardship Theory for 100 Best Corporate Citizens. The empirical results of the overall samples indicated that by practic...
EXCHANGE RATE FLUCTUATIONS AND MACROECONOMIC PERFORMANCE IN SUB-SAHARAN AFRICA: A DYNAMIC PANEL COINTEGRATION ANALYSIS
In the light of the widespread effects of the recent global financial crisis on exchange rate and other macroeconomic developments, this paper investigates the implications of exchange rate fluctuations on output and oth...
DO QUALIFIED FOREIGN INSTITUTIONAL INVESTORS IMPROVE INFORMATION EFFICIENCY: A TEST OF STOCK PRICE SYNCHRONICITY IN CHINA?
Stock price synchronicity at a country level has been the subject of many previous studies, but for most investors it is more relevant at a firm level. Working from the perspective of a foreign investor stock price synch...
FINANCING CAPITAL INVESTMENTS IN NIGERIA: THE ROLE OF THE BANKING INDUSTRY
A developing nation like Nigeria needs huge capital outlay to finance the needed infrastructures and capital investments necessary to drive the economy. This study lays much emphasis on whether the banking industry is re...