Success O. Abusomwan

This study examines the impact of stock market on the Nigeria economy from 1990 to 2023. The research investigates the relationships between key stock market indicators; market capitalization, all share index, monetary policy rate, inflation rate, and gross fixed capital formation and economic growth, measured by GDP. Using the Autoregressive Distributed Lag (ARDL) model, the study explores both the short-run and long-run dynamics among these variables. Empirical findings reveal a significant long-run relationship between stock market performance and economic growth in Nigeria. Market capitalization and the all-share index exhibit strong positive effects on GDP, indicating that stock market expansion fosters capital mobilization, investment, and overall productivity. Institutional quality variables, such as civil and political rights, also influence growth by promoting governance stability and investor confidence. Inflation demonstrates a mild positive effect, while the monetary policy rate shows an insignificant impact on growth. The short-run results indicate that moderate inflation and improvements in institutional conditions support temporary economic expansion, while persistent inflation constrains growth. Diagnostic tests confirm the robustness and reliability of the model, showing no issues of serial correlation or heteroskedasticity. The study concludes that stock market development is a critical catalyst for Nigeria’s economic growth and recommends policy reforms that enhance market efficiency, strengthen institutional frameworks, and encourage long-term investment participation.