A Causality Study of Stock Market Development and Economic Growth in Nigeria and Brics


  • Ifuero Osamwonyi University of Benin
  • Godfrey OSASERI


Keywords: Stock Market, Real Gross Domestic Product, Market capitalization, inflation rate.



The study examines Stock Market development and economic growth in Nigeria and South Africa using quarterly time series data for the period 1995Q1 to 2015Q4 sourced from World Bank Indicator. The granger causality test and ordinary least squares multivariate regression and panel estimation methods were employed to determine how stock market development impacts on and granger causes economic growth of the emerging countries. Stationarity test was conducted using the Augmented Dickey Fuller test to ensure the regression result was devoid of spuriousness. Findings arising from the empirical estimations indicate that in Brazil, Russia, India, China and South African (BRICS), Total Value of Stock Traded Ratio (TVSTR) Granger causes Turnover Ratio (TR) unidirectionally while bi-directional relationship exists between Inflation Rate (INFR) and Real Gross Domestic Product Growth Rate (RGDPGR). In Nigeria, stock market development does not granger cause economic growth, and vice versa.  However, there is causality flowing from Turnover Ratio TR to grange cause TVSTR. It is therefore suggested that the Nigerian government could profit largely by maintaining multi-lateral trade and co-operation to foster more flow of foreign investment and tap into the various national resources of each of the BRICS country.


Keywords: Stock Market, Real Gross Domestic Product, Market capitalization, inflation rate.

JEL Classification: G10, E44



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