This study examines the dynamic relationship between Stock Market All Share Index and Gross Fixed
Capital Formation in Nigeria. Annual data on market capitalization, value of shares traded, all share index,
average prime lending rate, inflation rate, national savings and gross fixed capital formation at current
purchaser’s value from 1980 to 2012 were sourced from the statistical bulletin of the Central Bank of Nigeria
and the Nigerian Stock Exchange Fact Book various issues. The ordinary least square (OLS) regression
technique was employed in the data analysis and the error correction mechanism (ECM) was used to study the
short-run dynamics as well as long-run relationship between the stock market and gross fixed capital formation
in Nigeria. The result revealed that all share index of the Nigerian stock market has significant effect on gross
fixed capital formation. It further shows that though the capital market has the potential of influencing gross
fixed capital formation its’ effect has not been fully realized due to illiquidity and low level of development of
the Nigerian capital market. It is recommended that appropriate policy measures been taken to deepen the
market and strengthen the structure of the market to ensure that long term funds are used to finance long-term
investments.
Capital Market and Economic Growth Nexus: Evidence from Nigeriaiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications
The document provides an overview of foreign capital in India. It discusses the different types of foreign capital including foreign aid, private foreign investment, foreign direct investment, and foreign portfolio investment. It notes that foreign capital plays an important role in the early stages of a country's industrialization by increasing resources, undertaking risks, providing technical know-how, setting high standards, facilitating marketing and exports, reducing trade deficits, and increasing competition. The document also discusses India's pre-liberalization period and the need for foreign capital to supplement domestic investment and speed up economic development.
The document analyzes investment trends and policies in India. It finds that while domestic investment is rising due to government stimulus measures, public and private savings are not high enough. Foreign direct investment has grown steadily since the 1990s reforms, reaching $30 billion in 2009-2010, though India still lags China in FDI and infrastructure development. The document recommends improving infrastructure, developing skilled labor, enhancing special economic zones, strengthening intellectual property rights protection, and better coordinating central and state investment policies to attract more high-quality foreign investment to India.
Tax Incentives and Foreign Direct Investment in Nigeriaiosrjce
Given the significance of Foreign Direct Investment (FDI) to economic growth and the use of tax
incentives as a strategy among government of various countries to attract FDI, this study examines the influence
of tax incentives in the decision of an investor to locate FDI in Nigeria. Data were drawn from annual statistical
bulletin of the Central Bank of Nigeria and the World Bank World Development Indicators Database. The work
employs a model of multiple regressions using static Error Correction Modelling (ECM) to determine the time
series properties of tax incentives captured by annual tax revenue as a percentage of Gross Domestic Product
(GDP)and FDI. The result showed that FDI response to tax incentives is negatively significant, that is, increase
in tax incentives does not bring about a corresponding increase in FDI. Based on the findings, the paper
recommends, amongst others, that dependence on tax incentives should be reduced and more attention be put on
other incentives strategies such as stable economic reforms and stable political climate.
Foreign capital inflows in India and emerging economiesZeenal Mehta
This document is a project report submitted as a partial requirement for completing a post-graduate degree in commerce. It discusses foreign capital inflows in India and emerging economies. The introduction provides background on the benefits of foreign direct investment for developing countries like India, such as providing necessary capital and technology. It also notes some potential macroeconomic effects like inflation from large capital inflows. The report will examine trends and policies related to foreign capital flows in India and various sectors like automotive, technology and banking. It will also discuss the political impacts and limitations of foreign investment.
Foreign Direct Investment (FDI) Flows in Nigeria: Pro or Economic Growth Averse?iosrjce
This study investigates the empirical relationship between Foreign Direct Investment and economic
growth in Nigeria. The work covered a period of 1981-2009 using an annual data from Central Bank of Nigeria
statistical bulletin. A growth model via the Ordinary Least Square method was used to ascertain the relationship
between FDI and economic growth in Nigeria. The study also added Gross Fixed Capital Formation with a
view to capture theeffect of domestic investment on the growth of the economy for the period under review.
Interest Rate and exchange rate were also added as control variables in the model. Granger causality test was
also employed to determine the direction of causality between FDI and economic growth in Nigeria. The result
of the OLS techniques indicates that FDI has a positive and insignificant impact on the growth of Nigerian
economy for the period under study. GFCF which was used as a proxy for domestic investment has a positive
and significant impact on economic growth.Interest rate was found to be positive and insignificant while
exchange rate positively and significantly affects the growth of Nigeria economy. Therefore, government should
provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by
addressing the security challenges in the country, providing investment friendly environment by improved
regulatory framework as well as encourage domestic investment.
This document discusses foreign direct investment (FDI) in Africa. It defines FDI and outlines the two main forms it takes - greenfield investments that create new assets, and mergers and acquisitions that involve transferring ownership of existing assets. The document notes that most FDI in Africa has been through acquisitions rather than new investments. It also discusses why African countries view attracting FDI as important for economic development, highlighting their efforts to provide incentives and promote investment. However, it cautions that the costs and benefits of FDI depend on whether it is greenfield or acquisitions. The document concludes by recommending African countries implement policies to maximize the benefits of FDI.
This document discusses foreign capital inflows and their impact on the Indian economy. It begins by defining capital inflows and explaining how they help finance domestic investment needs and current account deficits. It then outlines the components of capital account transactions, including foreign investments like FDI, FII, and loans. Graphs show trends in total capital inflows and the components of foreign investment and loans from 2007-2013. The document analyzes the impact of foreign investments on sectors, employment, and economic growth. It concludes by recommending measures to attract more stable capital inflows while strengthening macroeconomic stability and competitiveness.
Capital Market and Economic Growth Nexus: Evidence from Nigeriaiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications
The document provides an overview of foreign capital in India. It discusses the different types of foreign capital including foreign aid, private foreign investment, foreign direct investment, and foreign portfolio investment. It notes that foreign capital plays an important role in the early stages of a country's industrialization by increasing resources, undertaking risks, providing technical know-how, setting high standards, facilitating marketing and exports, reducing trade deficits, and increasing competition. The document also discusses India's pre-liberalization period and the need for foreign capital to supplement domestic investment and speed up economic development.
The document analyzes investment trends and policies in India. It finds that while domestic investment is rising due to government stimulus measures, public and private savings are not high enough. Foreign direct investment has grown steadily since the 1990s reforms, reaching $30 billion in 2009-2010, though India still lags China in FDI and infrastructure development. The document recommends improving infrastructure, developing skilled labor, enhancing special economic zones, strengthening intellectual property rights protection, and better coordinating central and state investment policies to attract more high-quality foreign investment to India.
Tax Incentives and Foreign Direct Investment in Nigeriaiosrjce
Given the significance of Foreign Direct Investment (FDI) to economic growth and the use of tax
incentives as a strategy among government of various countries to attract FDI, this study examines the influence
of tax incentives in the decision of an investor to locate FDI in Nigeria. Data were drawn from annual statistical
bulletin of the Central Bank of Nigeria and the World Bank World Development Indicators Database. The work
employs a model of multiple regressions using static Error Correction Modelling (ECM) to determine the time
series properties of tax incentives captured by annual tax revenue as a percentage of Gross Domestic Product
(GDP)and FDI. The result showed that FDI response to tax incentives is negatively significant, that is, increase
in tax incentives does not bring about a corresponding increase in FDI. Based on the findings, the paper
recommends, amongst others, that dependence on tax incentives should be reduced and more attention be put on
other incentives strategies such as stable economic reforms and stable political climate.
Foreign capital inflows in India and emerging economiesZeenal Mehta
This document is a project report submitted as a partial requirement for completing a post-graduate degree in commerce. It discusses foreign capital inflows in India and emerging economies. The introduction provides background on the benefits of foreign direct investment for developing countries like India, such as providing necessary capital and technology. It also notes some potential macroeconomic effects like inflation from large capital inflows. The report will examine trends and policies related to foreign capital flows in India and various sectors like automotive, technology and banking. It will also discuss the political impacts and limitations of foreign investment.
Foreign Direct Investment (FDI) Flows in Nigeria: Pro or Economic Growth Averse?iosrjce
This study investigates the empirical relationship between Foreign Direct Investment and economic
growth in Nigeria. The work covered a period of 1981-2009 using an annual data from Central Bank of Nigeria
statistical bulletin. A growth model via the Ordinary Least Square method was used to ascertain the relationship
between FDI and economic growth in Nigeria. The study also added Gross Fixed Capital Formation with a
view to capture theeffect of domestic investment on the growth of the economy for the period under review.
Interest Rate and exchange rate were also added as control variables in the model. Granger causality test was
also employed to determine the direction of causality between FDI and economic growth in Nigeria. The result
of the OLS techniques indicates that FDI has a positive and insignificant impact on the growth of Nigerian
economy for the period under study. GFCF which was used as a proxy for domestic investment has a positive
and significant impact on economic growth.Interest rate was found to be positive and insignificant while
exchange rate positively and significantly affects the growth of Nigeria economy. Therefore, government should
provide an enabling environment that will encourage foreign investors to invest in Nigeria economy by
addressing the security challenges in the country, providing investment friendly environment by improved
regulatory framework as well as encourage domestic investment.
This document discusses foreign direct investment (FDI) in Africa. It defines FDI and outlines the two main forms it takes - greenfield investments that create new assets, and mergers and acquisitions that involve transferring ownership of existing assets. The document notes that most FDI in Africa has been through acquisitions rather than new investments. It also discusses why African countries view attracting FDI as important for economic development, highlighting their efforts to provide incentives and promote investment. However, it cautions that the costs and benefits of FDI depend on whether it is greenfield or acquisitions. The document concludes by recommending African countries implement policies to maximize the benefits of FDI.
This document discusses foreign capital inflows and their impact on the Indian economy. It begins by defining capital inflows and explaining how they help finance domestic investment needs and current account deficits. It then outlines the components of capital account transactions, including foreign investments like FDI, FII, and loans. Graphs show trends in total capital inflows and the components of foreign investment and loans from 2007-2013. The document analyzes the impact of foreign investments on sectors, employment, and economic growth. It concludes by recommending measures to attract more stable capital inflows while strengthening macroeconomic stability and competitiveness.
Modelling the Long Run Determinants of Foreign Portfolio in NigeriaMoses Oduh
1) This study examines the long-run determinants of foreign portfolio investment in Nigeria from 1981-2010 using time series analysis.
2) It finds that foreign portfolio investment has a positive long-run relationship with market capitalization and trade openness in Nigeria.
3) The study aims to help policymakers pursue policies that can attract more foreign portfolio investment in the long run, such as efforts to improve and sanitize the Nigerian capital market.
Capital Market and Economic Growth in Nigeria 1981 - 2010 Samuel Udeji
This document provides an introduction and background to a study examining the relationship between capital markets and economic growth in Nigeria. It discusses Nigeria's various development plans and the importance of finance and capital markets for economic growth. The author notes there is debate around the impact of capital markets on growth. While some research finds a positive relationship, others find negative or no relationship. The document outlines the specific objectives and hypotheses that will guide the empirical analysis in later chapters. It also provides an overview of the methodology and organization of the upcoming study.
The document summarizes India's foreign investment policy and the role of foreign capital in India. It discusses how India liberalized its foreign investment policies after 1991 to allow 100% foreign ownership in many sectors. It outlines the advantages of foreign capital such as economic development, job creation, and access to new technologies. However, it also notes disadvantages like risk from political changes, impact on exchange rates, and increased foreign dependence. The document provides an overview of India's historical approach to foreign investment dating back to policies established by Nehru and changes over time.
Abstract: Nigeria is one of the economies with great demand for goods and services and has attracted some foreign direct investment over the years. The amount of foreign direct investment inflow in to Nigeria has reached US $ 2.23 billion in 2003 and it rose to US $ 5.31 billion in 2004 (a 138 % increase), this figure rose again to US $ 9.92 billion (an 87% increase) in 2005. The figure however declined slightly to US $ 9.44 in 2006 while it has been on astronomical fall since 2006 till date. (CBN, 2011). The question that comes to mind is, do these for actually contribute to economic growth in Nigeria? If foreign direct investment actually contribute to growth, then, the sustainability of foreign direct investment is a worthwhile activity and a way of achieving this sustainability is by identifying the factors contributing to its growth with a view to ensuring its enhancement. The nose driving this research is to determine the short run impact of FDI on economic growth, OLS with ward test analysis was employed to determine the short run analysis of impact of FDI on economic growth. The result shows that all the explanatory variables such as Gross Fixed capital formation (GFCF), Total labour force (TLBF), Foreign Direct Investment (FDI) Lending rate and Average Manufacturing Capacity Utilization (AMCU) grossly affect economic growth in Nigeria. The result also implies that there exist a singleton (short run) impact of FDI on economic growth, recommendation was made that government must put in place all the pull factors such as good road, stable power supply and most essentially security of life and property of foreign investors in order to reduce the level of unemployment which serves as impediment to sustainable development in the Nation Nigeria.
This document is a research paper from the UTMS Journal of Economics that analyzes India's foreign direct investment (FDI) by looking at its current status, issues, and policy recommendations. Some key points:
- India has seen a large increase in FDI inflows in recent decades but still receives less than China. FDI is dominated by investments from Mauritius, Singapore, the US, and UK.
- While FDI can benefit an economy, it also poses issues like threats to domestic businesses and potential exploitation of resources. India needs policies to ensure FDI contributes to long-term development goals.
- The paper aims to analyze FDI trends in India, identify reasons for lower inflows
Foreign capital inflow in india- analysis , impact , measure , wayforwardAman Sindhwani
Foreign Investment In India ,Need for foreign capital, factors affecting foreign Inflows , Capital Flows in India , impact , Measures and a way forwards
1) The document discusses capital market liberalization in Uganda and its potential to promote sustainable economic growth. It provides historical context on Uganda's economic reforms and development of its financial system.
2) It analyzes trends in Uganda's investment climate, sources of investment capital, and weaknesses in its financial system compared to other African nations. Capital market liberalization could help attract more domestic and foreign investment, but risks must be carefully mitigated.
3) The document concludes that a well-regulated implementation of capital market liberalization may produce slow but steady growth in Uganda by diversifying financial instruments and increasing access to capital, especially for small businesses, but social factors must also be considered.
Capital Inflows and Economic Growth A Comperative Studyiosrjce
This study examines the impact of capital inflows on economic growth of developing* economies; the
case of Nigeria Ghana and India from 1986-2012. This is necessitated by the doubts being raised as whether the
huge inflows of foreign capita! in developing economies over the years have transmitted to real economic
growth. Augmented Dickey Fuller unit root test was employed to evaluate the stationarity of the data, while
Johansen Co-integration was used to estimate the long-run equilibrium relationship among the variables. The
casual relationship was tested using Granger Causality, and Ordinary Least Square method was used to
estimate the model. The finding reveals that capital inflows have significant impact on the economic growth of
the three countries. In Nigeria and Ghana, foreign direct and portfolio investment and foreign borrowings have
significant and positive impact on economic growth. Workers' remittances significantly and positively related to
the economic growth of the three countries. The enabling environment should be created in the Developing
Countries to encourage more inflow of foreign investments and workers remittances while India specifically
should channel their foreign aids to productive ends. This will help in dosing the savings-investment gap and
encourage economic growth in these countries. The study signifies that capital inflows is indispensable in
dosing the savings-investment gap required for economic growth of developing countries.
FDI role and performance of economy by Aakash TiwariAAKASH TIWARI
Foreign direct investment plays an important role in India's economic development by helping to fulfill the gap between domestic savings and investment. It provides access to new technologies and skills that boost productivity and efficiency. While historically Britain was a major investor, post-liberalization India saw increasing FDI from countries like Japan, the US, and Singapore. The sectors receiving the most FDI are services, telecommunications, and software/hardware. Government policies have increasingly liberalized FDI norms over time to encourage more foreign investment and position India as one of the top global destinations for investment.
Relation Between Inflow Of FDI and The Development Of India's EconomyIJTEMT
1) The document examines the relationship between foreign direct investment (FDI) inflows and economic development in India. It discusses how FDI has increased in India since economic reforms began in 1991, with sectors like services, telecommunications and software attracting significant investment.
2) The paper aims to analyze the impact of FDI on India's GDP as a measure of economic development. It also examines how economic reforms have affected FDI in India and constraints to increasing FDI.
3) The document provides context on the growth of FDI globally and its potential benefits, like increasing employment, productivity, and technology transfer. However, it notes that some studies have struggled to find a definitive causal link between FDI and economic
Foreign Investment and Its Effect on the Economic Growth in Nigeria: A Triang...iosrjce
Evidence abound about the registered increase in foreign investment inflows in recent years. While
proponents emphasize that these inflows could engender economic growth, critics express concern that there
could be destabilizing effect on the economy if not well managed. This study therefore, attempts to examine the
effect of foreign investments (disaggregated into foreign direct investment and foreign portfolio investment)
inflows on economic growth in Nigeria with a view to ascertaining the better contributor, using time series data
from 1987-2012. The OLS and the Granger causality procedures were employed in analyzing the data. The
result displays that both foreign direct investment and foreign portfolio investment have positive and significant
effect on economic growth though the partial correlation coefficients show that foreign portfolio investment is
the better contributor. Based on the result, government should pursue policies that encourage both foreign
direct investment and especially foreign portfolio investment.
The document discusses foreign direct investment (FDI) and foreign institutional investment (FII) in India. It provides an overview of types of foreign investment including wholly owned subsidiaries, joint ventures, acquisitions, and portfolio investments. Benefits of foreign investment are described such as job creation, technological advancement, and economic growth. Factors affecting foreign investment in India and growth trends over time are also examined. The document focuses on FDI in India's retail sector and the potential advantages it may provide.
External Financing and Economic Growth in Nigeria 1986 2017ijtsrd
External financing has become a veritable resort to remedying the common problems of low productivity, low productivity, low savings and high dependent on consumption from exports in most less developed economies. The use of external finance is believed to have the capacity to close wide gap between domestic savings and investment and provide the complementary funds to facilitate economic activities necessary for growth in Nigeria. This study aimed to investigate the effect of external financing on economic growth in Nigeria between 1986 and 2017. External financing was captured using five variables of external debt stock EDS , foreign direct investment FDI , official development assistance ODA , remittance RMT and foreign portfolio investment FPI , as the independent variables, regressed on economic growth represented by annual growth rate of gross domestic product GDPR as the dependent variable. Data for these variables were obtained from World Development Indicator, and analyzed based on the Autoregressive Distributive Lag ARDL approach. The findings revealed that, in the long run, EDS and FDI had a negative and a positive, significant effects, respectively, while others had no effect on growth in the short run, all the external financing variables EDS, FDI, FPI, ODA, and RMT had no significant effect on economic growth in Nigeria. The study averred that FDI is a veritable source of financing that can bring about economic sustainability to Nigeria. The study recommended, among others, that government should deploy external debts for regenerative projects that will eventually liquidate themselves in the long run. Ekwunife, Ifeanyi Jude | Dr. J. J. E. Ikeora "External Financing and Economic Growth in Nigeria: 1986-2017" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29388.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/29388/external-financing-and-economic-growth-in-nigeria-1986-2017/ekwunife-ifeanyi-jude
Major sources of foreign capital for India include foreign direct investment, external commercial borrowings, and foreign institutional investments. Foreign capital is necessary for India to sustain high investment levels, develop infrastructure, and address financing gaps. While India welcomes foreign capital, some business constraints like bureaucracy, taxation complexity, and corruption can dampen investment enthusiasm. The government is taking steps to liberalize rules and ease business conditions to attract more foreign participation in India's growth.
This document provides a summary of a project report on international capital movements. It begins with an introduction and acknowledgements. It then discusses different types of international capital movements including foreign direct investment, portfolio investment, official flows, and external commercial borrowing. It analyzes determinants and role of foreign capital as well as its impacts and drawbacks. It also examines foreign capital flows to developing economies and India specifically. The report provides an overview of international capital movements and their significance for economic development.
institutional investment in infrastructure development in developing countriesArslan Shani
This document discusses the potential for institutional investors to help fill the infrastructure financing gap in developing countries. It finds that while infrastructure projects could deliver long-term returns for institutional investors, investments in emerging markets require careful structuring. The document analyzes the types of institutional investors and their current limited allocations to emerging market infrastructure. It also examines challenges to increasing such allocations, like sovereign risk and a lack of investable projects. Finally, it considers models for institutional investor involvement in infrastructure in developing countries.
This document analyzes the determinants of foreign direct investment (FDI) in Malaysia's manufacturing industry from 1980-2002. It finds:
1) Malaysia received substantial FDI over this period, which was an important driver of its economic growth and industrialization.
2) An econometric analysis using cointegration and fully-modified least squares methods found that increases in education, infrastructure, market size, and current account balance led to increases in FDI, while increases in inflation and exchange rate led to decreases.
3) Major sources of FDI in Malaysia's manufacturing sector included the US, Japan, Germany, and Singapore, with electrical/electronics, petroleum, and chemicals as top recipient industries.
Analytical study of foreign direct investment in indiasachin gadekar
The document is a dissertation report submitted by Sachin Gadekar to the University of Pune in partial fulfillment of an MBA degree. It analyzes foreign direct investment in India. The report includes an acknowledgment, declaration, index, and introduction section providing background on FDI, definitions, and types of FDI. It discusses India's efforts to liberalize FDI policy and make the country an attractive destination for foreign investment.
Foreign direct investment (FDI) refers to investments made by companies located in one country into companies based in another country. India has pursued several initiatives to attract more FDI to help accelerate economic growth and development. FDI provides capital, technology, managerial skills and competitive pressure that benefit India's economy. Major sectors that receive FDI include services, infrastructure, insurance and broadcasting. Some examples of large FDI investments in India include deals between BP and Reliance, Vodafone's acquisition of Hutchison's India business, and Daiichi Sankyo's purchase of Ranbaxy Laboratories. The Indian government aims to continue liberalizing FDI policies to further economic development.
Do government expenditure and debt affect stock market development in nigeriaAlexander Decker
Government expenditure and debt levels can impact stock market development. This study examines the effect of government spending and debt on the Nigerian stock market from 1981-2012. It finds:
1) Government capital expenditure had a significant negative short-run and long-run effect on stock market transaction values.
2) Government recurrent spending, domestic debt, and external debt did not have statistically significant effects on transaction values in the short-run or long-run.
3) The study uses an error correction model and cointegration analysis to assess the short-run and long-run effects. It finds the variables are cointegrated, indicating a long-run equilibrium relationship between government spending/debt and stock market development in
Modelling the Long Run Determinants of Foreign Portfolio in NigeriaMoses Oduh
1) This study examines the long-run determinants of foreign portfolio investment in Nigeria from 1981-2010 using time series analysis.
2) It finds that foreign portfolio investment has a positive long-run relationship with market capitalization and trade openness in Nigeria.
3) The study aims to help policymakers pursue policies that can attract more foreign portfolio investment in the long run, such as efforts to improve and sanitize the Nigerian capital market.
Capital Market and Economic Growth in Nigeria 1981 - 2010 Samuel Udeji
This document provides an introduction and background to a study examining the relationship between capital markets and economic growth in Nigeria. It discusses Nigeria's various development plans and the importance of finance and capital markets for economic growth. The author notes there is debate around the impact of capital markets on growth. While some research finds a positive relationship, others find negative or no relationship. The document outlines the specific objectives and hypotheses that will guide the empirical analysis in later chapters. It also provides an overview of the methodology and organization of the upcoming study.
The document summarizes India's foreign investment policy and the role of foreign capital in India. It discusses how India liberalized its foreign investment policies after 1991 to allow 100% foreign ownership in many sectors. It outlines the advantages of foreign capital such as economic development, job creation, and access to new technologies. However, it also notes disadvantages like risk from political changes, impact on exchange rates, and increased foreign dependence. The document provides an overview of India's historical approach to foreign investment dating back to policies established by Nehru and changes over time.
Abstract: Nigeria is one of the economies with great demand for goods and services and has attracted some foreign direct investment over the years. The amount of foreign direct investment inflow in to Nigeria has reached US $ 2.23 billion in 2003 and it rose to US $ 5.31 billion in 2004 (a 138 % increase), this figure rose again to US $ 9.92 billion (an 87% increase) in 2005. The figure however declined slightly to US $ 9.44 in 2006 while it has been on astronomical fall since 2006 till date. (CBN, 2011). The question that comes to mind is, do these for actually contribute to economic growth in Nigeria? If foreign direct investment actually contribute to growth, then, the sustainability of foreign direct investment is a worthwhile activity and a way of achieving this sustainability is by identifying the factors contributing to its growth with a view to ensuring its enhancement. The nose driving this research is to determine the short run impact of FDI on economic growth, OLS with ward test analysis was employed to determine the short run analysis of impact of FDI on economic growth. The result shows that all the explanatory variables such as Gross Fixed capital formation (GFCF), Total labour force (TLBF), Foreign Direct Investment (FDI) Lending rate and Average Manufacturing Capacity Utilization (AMCU) grossly affect economic growth in Nigeria. The result also implies that there exist a singleton (short run) impact of FDI on economic growth, recommendation was made that government must put in place all the pull factors such as good road, stable power supply and most essentially security of life and property of foreign investors in order to reduce the level of unemployment which serves as impediment to sustainable development in the Nation Nigeria.
This document is a research paper from the UTMS Journal of Economics that analyzes India's foreign direct investment (FDI) by looking at its current status, issues, and policy recommendations. Some key points:
- India has seen a large increase in FDI inflows in recent decades but still receives less than China. FDI is dominated by investments from Mauritius, Singapore, the US, and UK.
- While FDI can benefit an economy, it also poses issues like threats to domestic businesses and potential exploitation of resources. India needs policies to ensure FDI contributes to long-term development goals.
- The paper aims to analyze FDI trends in India, identify reasons for lower inflows
Foreign capital inflow in india- analysis , impact , measure , wayforwardAman Sindhwani
Foreign Investment In India ,Need for foreign capital, factors affecting foreign Inflows , Capital Flows in India , impact , Measures and a way forwards
1) The document discusses capital market liberalization in Uganda and its potential to promote sustainable economic growth. It provides historical context on Uganda's economic reforms and development of its financial system.
2) It analyzes trends in Uganda's investment climate, sources of investment capital, and weaknesses in its financial system compared to other African nations. Capital market liberalization could help attract more domestic and foreign investment, but risks must be carefully mitigated.
3) The document concludes that a well-regulated implementation of capital market liberalization may produce slow but steady growth in Uganda by diversifying financial instruments and increasing access to capital, especially for small businesses, but social factors must also be considered.
Capital Inflows and Economic Growth A Comperative Studyiosrjce
This study examines the impact of capital inflows on economic growth of developing* economies; the
case of Nigeria Ghana and India from 1986-2012. This is necessitated by the doubts being raised as whether the
huge inflows of foreign capita! in developing economies over the years have transmitted to real economic
growth. Augmented Dickey Fuller unit root test was employed to evaluate the stationarity of the data, while
Johansen Co-integration was used to estimate the long-run equilibrium relationship among the variables. The
casual relationship was tested using Granger Causality, and Ordinary Least Square method was used to
estimate the model. The finding reveals that capital inflows have significant impact on the economic growth of
the three countries. In Nigeria and Ghana, foreign direct and portfolio investment and foreign borrowings have
significant and positive impact on economic growth. Workers' remittances significantly and positively related to
the economic growth of the three countries. The enabling environment should be created in the Developing
Countries to encourage more inflow of foreign investments and workers remittances while India specifically
should channel their foreign aids to productive ends. This will help in dosing the savings-investment gap and
encourage economic growth in these countries. The study signifies that capital inflows is indispensable in
dosing the savings-investment gap required for economic growth of developing countries.
FDI role and performance of economy by Aakash TiwariAAKASH TIWARI
Foreign direct investment plays an important role in India's economic development by helping to fulfill the gap between domestic savings and investment. It provides access to new technologies and skills that boost productivity and efficiency. While historically Britain was a major investor, post-liberalization India saw increasing FDI from countries like Japan, the US, and Singapore. The sectors receiving the most FDI are services, telecommunications, and software/hardware. Government policies have increasingly liberalized FDI norms over time to encourage more foreign investment and position India as one of the top global destinations for investment.
Relation Between Inflow Of FDI and The Development Of India's EconomyIJTEMT
1) The document examines the relationship between foreign direct investment (FDI) inflows and economic development in India. It discusses how FDI has increased in India since economic reforms began in 1991, with sectors like services, telecommunications and software attracting significant investment.
2) The paper aims to analyze the impact of FDI on India's GDP as a measure of economic development. It also examines how economic reforms have affected FDI in India and constraints to increasing FDI.
3) The document provides context on the growth of FDI globally and its potential benefits, like increasing employment, productivity, and technology transfer. However, it notes that some studies have struggled to find a definitive causal link between FDI and economic
Foreign Investment and Its Effect on the Economic Growth in Nigeria: A Triang...iosrjce
Evidence abound about the registered increase in foreign investment inflows in recent years. While
proponents emphasize that these inflows could engender economic growth, critics express concern that there
could be destabilizing effect on the economy if not well managed. This study therefore, attempts to examine the
effect of foreign investments (disaggregated into foreign direct investment and foreign portfolio investment)
inflows on economic growth in Nigeria with a view to ascertaining the better contributor, using time series data
from 1987-2012. The OLS and the Granger causality procedures were employed in analyzing the data. The
result displays that both foreign direct investment and foreign portfolio investment have positive and significant
effect on economic growth though the partial correlation coefficients show that foreign portfolio investment is
the better contributor. Based on the result, government should pursue policies that encourage both foreign
direct investment and especially foreign portfolio investment.
The document discusses foreign direct investment (FDI) and foreign institutional investment (FII) in India. It provides an overview of types of foreign investment including wholly owned subsidiaries, joint ventures, acquisitions, and portfolio investments. Benefits of foreign investment are described such as job creation, technological advancement, and economic growth. Factors affecting foreign investment in India and growth trends over time are also examined. The document focuses on FDI in India's retail sector and the potential advantages it may provide.
External Financing and Economic Growth in Nigeria 1986 2017ijtsrd
External financing has become a veritable resort to remedying the common problems of low productivity, low productivity, low savings and high dependent on consumption from exports in most less developed economies. The use of external finance is believed to have the capacity to close wide gap between domestic savings and investment and provide the complementary funds to facilitate economic activities necessary for growth in Nigeria. This study aimed to investigate the effect of external financing on economic growth in Nigeria between 1986 and 2017. External financing was captured using five variables of external debt stock EDS , foreign direct investment FDI , official development assistance ODA , remittance RMT and foreign portfolio investment FPI , as the independent variables, regressed on economic growth represented by annual growth rate of gross domestic product GDPR as the dependent variable. Data for these variables were obtained from World Development Indicator, and analyzed based on the Autoregressive Distributive Lag ARDL approach. The findings revealed that, in the long run, EDS and FDI had a negative and a positive, significant effects, respectively, while others had no effect on growth in the short run, all the external financing variables EDS, FDI, FPI, ODA, and RMT had no significant effect on economic growth in Nigeria. The study averred that FDI is a veritable source of financing that can bring about economic sustainability to Nigeria. The study recommended, among others, that government should deploy external debts for regenerative projects that will eventually liquidate themselves in the long run. Ekwunife, Ifeanyi Jude | Dr. J. J. E. Ikeora "External Financing and Economic Growth in Nigeria: 1986-2017" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29388.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/29388/external-financing-and-economic-growth-in-nigeria-1986-2017/ekwunife-ifeanyi-jude
Major sources of foreign capital for India include foreign direct investment, external commercial borrowings, and foreign institutional investments. Foreign capital is necessary for India to sustain high investment levels, develop infrastructure, and address financing gaps. While India welcomes foreign capital, some business constraints like bureaucracy, taxation complexity, and corruption can dampen investment enthusiasm. The government is taking steps to liberalize rules and ease business conditions to attract more foreign participation in India's growth.
This document provides a summary of a project report on international capital movements. It begins with an introduction and acknowledgements. It then discusses different types of international capital movements including foreign direct investment, portfolio investment, official flows, and external commercial borrowing. It analyzes determinants and role of foreign capital as well as its impacts and drawbacks. It also examines foreign capital flows to developing economies and India specifically. The report provides an overview of international capital movements and their significance for economic development.
institutional investment in infrastructure development in developing countriesArslan Shani
This document discusses the potential for institutional investors to help fill the infrastructure financing gap in developing countries. It finds that while infrastructure projects could deliver long-term returns for institutional investors, investments in emerging markets require careful structuring. The document analyzes the types of institutional investors and their current limited allocations to emerging market infrastructure. It also examines challenges to increasing such allocations, like sovereign risk and a lack of investable projects. Finally, it considers models for institutional investor involvement in infrastructure in developing countries.
This document analyzes the determinants of foreign direct investment (FDI) in Malaysia's manufacturing industry from 1980-2002. It finds:
1) Malaysia received substantial FDI over this period, which was an important driver of its economic growth and industrialization.
2) An econometric analysis using cointegration and fully-modified least squares methods found that increases in education, infrastructure, market size, and current account balance led to increases in FDI, while increases in inflation and exchange rate led to decreases.
3) Major sources of FDI in Malaysia's manufacturing sector included the US, Japan, Germany, and Singapore, with electrical/electronics, petroleum, and chemicals as top recipient industries.
Analytical study of foreign direct investment in indiasachin gadekar
The document is a dissertation report submitted by Sachin Gadekar to the University of Pune in partial fulfillment of an MBA degree. It analyzes foreign direct investment in India. The report includes an acknowledgment, declaration, index, and introduction section providing background on FDI, definitions, and types of FDI. It discusses India's efforts to liberalize FDI policy and make the country an attractive destination for foreign investment.
Foreign direct investment (FDI) refers to investments made by companies located in one country into companies based in another country. India has pursued several initiatives to attract more FDI to help accelerate economic growth and development. FDI provides capital, technology, managerial skills and competitive pressure that benefit India's economy. Major sectors that receive FDI include services, infrastructure, insurance and broadcasting. Some examples of large FDI investments in India include deals between BP and Reliance, Vodafone's acquisition of Hutchison's India business, and Daiichi Sankyo's purchase of Ranbaxy Laboratories. The Indian government aims to continue liberalizing FDI policies to further economic development.
Do government expenditure and debt affect stock market development in nigeriaAlexander Decker
Government expenditure and debt levels can impact stock market development. This study examines the effect of government spending and debt on the Nigerian stock market from 1981-2012. It finds:
1) Government capital expenditure had a significant negative short-run and long-run effect on stock market transaction values.
2) Government recurrent spending, domestic debt, and external debt did not have statistically significant effects on transaction values in the short-run or long-run.
3) The study uses an error correction model and cointegration analysis to assess the short-run and long-run effects. It finds the variables are cointegrated, indicating a long-run equilibrium relationship between government spending/debt and stock market development in
Modeling the effect of capital market empirical evidence from nigeria.Alexander Decker
This study examines the relationship between capital market activities and economic growth in Nigeria from 2001 to 2010. The capital market variables of annual market capitalization and total volume of transactions were analyzed in relation to gross domestic product as a proxy for economic development. The findings revealed a positive but not statistically significant relationship between capital market activities and GDP. It is recommended that building investor confidence through transparency, fair trading, political stability, and adequate publicity of the capital market could make the impact of the capital market on the economy more significant.
Capital Market and Economic Growth in Nigeria A Causal Analysis 1987 – 2021ijtsrd
The study investigated the effect of capital market on economic growth in Nigeria. It also determined the causal relationship between capital markets on economic growth. The study covered the liberalised economic era in Nigeria starting from 1987 to 2021. The study employed new issues, market size, market liquidity, market volatility and bond market size as proxies for capital market to determine the nexus with economic growth. Data were obtained from the Central Bank of Nigeria statistical bulletin and analysed using the ARDL regression and granger causality tests. The results showed that 1 New Issues has no significant long and short run effects on economic growth but economic growth granger causes new issues, 2 Stock Market Size has a negative long run significant effect a mixed short run effect of positive in the initial period and negative in later years but no causal relationship with economic growth, 3 Stock Market liquidity has significant and positive long run and short run effects but no causal relationship with economic growth, 4 Stock Market Volatility has insignificant negative long run effect a mixed positive and then negative effect in the short run but no causal relationship with economic growth, and 5 Bond Market Size has significant and negative long run and short run effects but no causal relationship with economic growth in Nigeria. The study concluded that capital market follows the demand following hypothesis as economic growth determines one of the capital market variables new issues . The capital market size, liquidity and volatility have no causal relationship with economic growth which depicts the neutrality hypothesis that the financial market nee capital market and economic growth has no recourse to each other in development. The recommendations put forward by the study include that existing firms in Nigeria should be encouraged to assess the capital market for business financing and the need for effective supervision of stock market activities. The outcome of the study contributed immensely to new knowledge in capital market and economic growth nexus by debunking the sought after finance led theory in support that the development of the capital market should drive economic growth. Ike, Ngozi Ann | Chukwunulu, Jessie Ijeoma "Capital Market and Economic Growth in Nigeria: A Causal Analysis (1987 – 2021)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-6 , October 2022, URL: https://www.ijtsrd.com/papers/ijtsrd51909.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/51909/capital-market-and-economic-growth-in-nigeria-a-causal-analysis-1987-–-2021/ike-ngozi-ann
Does Bank Credit Have Any Impact on Nigeria’s Domestic Investment?iosrjce
There is an extensive literature on the role of the bank lending and credit facilities in Nigeria but
most of these literature concentrate on its impact on the gross domestic product. This study focuses on the
impact of Nigeria’s banking sector on domestic investment from 1980 to 2012 bearing in mind that funding is
one of the major challenges of domestic entrepreneurs in Nigeria. A domestic investment model was adopted
and the unit root test was first applied to the data set. All the data are stationary and the ordinary least square
method was used to identify the impact of capital market activities on domestic investment in Nigeria using the
cointegration technique. Findings reveal that bank credit negatively though significantly impacted on domestic
investment in the long run while its short run impact is both positive and significant. This is an indication that
financial intermediation (captured by bank credit to private sector) is a strong driver of domestic investment in
Nigeria only in the short run. The study thus recommends amongst others, the strengthening of Nigeria’s
banking system with more funds and supervisions as well as the encouragement of both foreign and domestic
investments through government’s creation of a more conducive political and economic climate.
Foreign Portfolio Investment and Human Capital Development in Nigeria 1987 2018ijtsrd
As a result of low savings that characterize their economies, most developing economies scramble for international capital inflows to fill the void in their domestic savings. The international capital can take the form of Foreign Portfolio Investment. There are mixed and conflicting results in past studies on the effect of Foreign Portfolio Investment on Human Capital Development in Nigeria which this study will attempt to resolve. Foreign portfolio investment FPI is an aspect of international capital inflows and involves the transfer of financial assets such as cash, stock or bonds across international borders in want of profit. The main objective of this study is to explore, determine, assess, examine and ascertain the effect of FPI on human capital development in Nigeria. The specific objectives of this study are to explore, determine, assess, examine and ascertain the effects of foreign portfolio investment, market capitalization, exchange rate and interest rate respectively on human capital development in Nigeria. The study adopted ex post facto research design and sourced data sourced data from the Central Bank of Nigeria Statistical Bulletin and Annual Reports and the World Bank Development Indicators which were analyzed using Descriptive Statistics, Augmented Dicker Fuller tests for unit roots and Autoregressive Distributive Lag ARDL for the hypothesis.The study concluded that foreign portfolio investment has both short run and long run positive and significant effects on human capital development. Hence, it is recommended that government should strengthen and deepen the capital market system in Nigeria to sustain existing foreign portfolio investment and attract new ones. Mbanefo Patrick Amaechi "Foreign Portfolio Investment and Human Capital Development in Nigeria: 1987-2018" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-2 , February 2022, URL: https://www.ijtsrd.com/papers/ijtsrd49231.pdf Paper URL: https://www.ijtsrd.com/management/management-development/49231/foreign-portfolio-investment-and-human-capital-development-in-nigeria-19872018/mbanefo-patrick-amaechi
The Capital Market and Its Impact on Ndustrial Production in NigeriaIOSR Journals
The possession of industrial capabilities by an economy is considered an important potential for improved economic development. Indeed one of the distinguishing factors between developed and developing economies is the acquisition of industrial know-how. The emerging pattern of the institutional framework for the Nigeria which brought the capital market into existence has through the succeeding centuries continued to support the institution and justify its existence. The capital market is viewed as a major catalyst to industrial growth and indeed economic development. The benefit of appropriate industrial base for an economy lies in its combination of suitable technology management techniques and other resources in order to move the economy from a traditional and low level of production to a more automated and efficient system of mass processing and manufacture of goods and services. Unfortunately, the problem with industrial growth in Nigeria is largely due to the inability of firms to access long-term funds which the Nigerian capital marked should be providing. This unfortunately is stemmed from the fact that the Nigerian capital market has not been fully developed to adequately provide enough of such funds to the needy organizations. It was in line with the above that the study sought to determine the impact of the Nigerian capital market on the industrial sector component of the Nigerian gross domestic product, ascertain the impact of the Nigerian capital market on industrial loans issued by stock exchange and determine the impact of the Nigerian capital market on average capacity utilization rates of the Nigerian manufacturing sector. An ex-post facto research design was adopted using secondary data to determine the level of impact on the growth of the Nigerian industrial sector for the period 1990 – 2009. The ordinary least square (OLS) estimation technique was adopted using SPSS version 16.0) statistical computers software to evaluate the three objectives. The results showed (i) a positive significant impact of the market capitalization on industrial sector component of the gross domestic product and (ii) a positive significant impact of the market capitalization on average capacity utilization rates of the manufacturing sector. The result however showed (iii) a positive but non- significant impact of the annual market capitalization on industrial loans of the stock exchange. It was therefore concluded that every effort must be made by government and market operators to make the market viable and result oriented to further improve the economy
Foreign financial resources inflows and stock market development empirical ev...Alexander Decker
This study empirically investigates the effects of foreign financial resource inflows on stock market development in Nigeria and Ghana between 1988-2011 for Nigeria and 1991-2011 for Ghana. Using market capitalization to GDP ratio as a proxy for stock market development and multiple linear regression analysis, the study finds that foreign direct investment, foreign portfolio investment, personal remittances, and official development assistance were positively related to stock market development in Nigeria, though official development assistance was insignificant. In Ghana, foreign direct investment, personal remittances, and external debt were negatively related to stock market development, while official development assistance was positively related. The study aims to contribute to existing literature by investigating the effects of multiple components of foreign financial inflows on stock
This document examines the relationship between capital market development and economic growth in Nigeria from 2008 to 2018. It uses market capitalization, interest rate, and inflation rate as proxies for capital market development and GDP as the measure of economic growth. Multiple regression analysis is employed to analyze the data. The results suggest that the stock market has a positive but insignificant effect on economic growth in Nigeria. It is recommended that capital market regulators be more flexible to promote innovation without compromising investor protection. The government should also improve infrastructure to create a better business environment and boost productivity and economic activity.
Impact of Accounting Information on Stock Price Volatility (A Study of Select...inventionjournals
This document summarizes a research study that examined the impact of accounting information on stock price volatility of selected quoted manufacturing companies in Nigeria from 2005-2014. The study used annual report data from 5 manufacturing companies, including earnings per share, book value per share, price-earnings ratio, and dividend per share. The results of the analysis found that accounting information has a strong positive significant impact on stock price volatility. Therefore, reliable accounting information is important for investors to make informed decisions and for companies to have less volatile stock prices. The study recommends proper regulation of accounting information disclosure to increase transparency.
Effects of the nigerian capital market on the micro, small and medium scale e...Alexander Decker
This document summarizes a research study on the effects of the Nigerian capital market on micro, small, and medium-scale enterprises (MSMEs) in Nigeria. The study aims to analyze the financial incentives available to MSMEs through the capital market. It finds that MSMEs in Nigeria face significant financial constraints, including lack of access to appropriate financing from both money markets and capital markets. Listing requirements in the capital market also present difficulties for MSMEs seeking to raise capital. The research recommends creating a dedicated stock exchange for MSMEs to help address the "missing middle" of financing for these businesses.
An empirical assessment of the effect of corporate restructuring in the banki...Alexander Decker
This document summarizes a study that empirically assessed the effect of corporate restructuring in Nigeria's banking industry on economic growth from 1990-2009. The study found that foreign direct investment, aggregate capital to the private sector, pre-tax profits for all banks, and number of bank employees significantly influenced economic growth in Nigeria. It recommends that the Central Bank of Nigeria encourage banks to invest profits in the real economy to boost productive capacity and growth. The introduction provides background on banking industry restructuring through mergers and acquisitions in Nigeria and their theoretical drivers of economic growth.
Performing Online Survey’s “An Added Advantage” Over Advertisementijtsrd
In this article we try to study about the importance of performing surveys and they have an added advantage over advertisement. In earlier years manual surveys were done often door to door but off late surveys are being done online all over the world. Most of the nations conduct online surveys and use this as a great strategy to create good products and provide good services to the people and avoid spending heavily on advertisements. Surveys offer many benefits and therefore have become famous for their convenience, comfort and accurate feedback from the consumers. This article is based on the recent trends observed in various sectors where surveys are done and advertisements are offered to the consumer. After doing the marketing research by the companies and the changes in consumer behaviour observed the following conclusion is drawn. Dr. Mamta Bansal | Mr. Mandeep Narang "Performing Online Survey’s “An Added Advantage” Over Advertisement" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38607.pdf Paper Url: https://www.ijtsrd.com/management/marketing/38607/performing-online-survey’s-“an-added-advantage”-over-advertisement/dr-mamta-bansal
Financial Openness and Capital Market Development in Sub Saharan African Coun...ijtsrd
This study examined the nexus between financial openness and capital market development in Sub Saharan African Countries for 30 years period ranging from 1990 2019. Okafor, Martin Emeka | Nwakoby, Clement Ikechukwu Ndukaife | Adigwe, Patrick Kanayo | Ezu, Gideon Kasie "Financial Openness and Capital Market Development in Sub-Saharan African Countries" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38568.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38568/financial-openness-and-capital-market-development-in-subsaharan-african-countries/okafor-martin-emeka
Working capital management and the performance of selected quoted manufacturi...Alexander Decker
This study examines the relationship between working capital management and the performance of selected quoted manufacturing companies in Nigeria from 2000-2009. Secondary data was collected from annual reports of 60 companies and analyzed using descriptive and inferential statistics. The results showed that average collection period and average payment period were positively related to profitability, while inventory turnover days and cash conversion cycle were negatively related. This implies reducing cash conversion cycle, inventory days, and net trading cycle can increase profits, while increasing average collection and payment periods can also boost profits. In conclusion, efficient working capital management affects the performance of manufacturing firms in Nigeria.
An examination of the unit trust scheme mutual fund as a veritable vehicle of...Alexander Decker
This document examines unit trust/mutual funds as an investment vehicle in the Nigerian stock market. It begins with an abstract that provides background on Nigeria's economy and the growth of its capital markets in the 1990s and 2000s. It then discusses how many individual investors lacked skills and diversification during the global financial crisis, resulting in large losses. The document aims to examine unit trusts as a suitable investment option for small savers and less sophisticated investors. It finds there is a lack of awareness and poor patronage of unit trusts in Nigeria and that more education is needed. The document also notes that unit trusts could help mobilize funds and the economy would benefit from strengthened legal/accounting frameworks around these types of investments.
Effect of foreign direct investment and stock market development on economic ...Alexander Decker
This document analyzes the effect of foreign direct investment and stock market development on economic
growth in Nigeria from 1980 to 2009. It finds that both foreign direct investment and lagged stock market
development have a small but statistically significant positive effect on economic growth. The trends show
that foreign direct investment and stock market development experience cyclical movements. Lagged
exchange rate appreciation also enhances economic growth in Nigeria. The study aims to examine trends in
foreign investment and stock markets, and establish their relationship to economic growth, in order to guide
policymakers.
Similar to Evidence on the Dynamic Relationship between Stock Market All Share Index and Gross Fixed Capital Formation in Nigeria (20)
An Examination of Effectuation Dimension as Financing Practice of Small and M...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Does Goods and Services Tax (GST) Leads to Indian Economic Development?iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Childhood Factors that influence success in later lifeiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Emotional Intelligence and Work Performance Relationship: A Study on Sales Pe...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Customer’s Acceptance of Internet Banking in Dubaiiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study of Employee Satisfaction relating to Job Security & Working Hours amo...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Consumer Perspectives on Brand Preference: A Choice Based Model Approachiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Student`S Approach towards Social Network Sitesiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Broadcast Management in Nigeria: The systems approach as an imperativeiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study on Retailer’s Perception on Soya Products with Special Reference to T...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study Factors Influence on Organisation Citizenship Behaviour in Corporate ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Consumers’ Behaviour on Sony Xperia: A Case Study on Bangladeshiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Design of a Balanced Scorecard on Nonprofit Organizations (Study on Yayasan P...iosrjce
1. The document describes a study that designed a balanced scorecard for a nonprofit organization called Yayasan Pembinaan dan Kesembuhan Batin (YPKB) in Malang, Indonesia.
2. The balanced scorecard translated YPKB's vision and mission into strategic objectives across four perspectives: financial, customer, internal processes, and learning and growth.
3. Key strategic objectives included donation growth, budget effectiveness, customer satisfaction, reputation, service quality, innovation, and employee development. Customers perspective had the highest weighting, suggesting a focus on public service over financial growth.
Public Sector Reforms and Outsourcing Services in Nigeria: An Empirical Evalu...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Media Innovations and its Impact on Brand awareness & Considerationiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Customer experience in supermarkets and hypermarkets – A comparative studyiosrjce
- The document examines customer experience in supermarkets and hypermarkets in India through a survey of 418 customers.
- It finds that in supermarkets, previous experience, atmosphere, price, social environment and experience in other channels most influence customer experience, while in hypermarkets, previous experience, product assortment, social environment and experience in other channels are most influential.
- The study provides insights for retailers on key determinants of customer experience in each format to help them improve strategies and competitive positioning.
Social Media and Small Businesses: A Combinational Strategic Approach under t...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Secretarial Performance and the Gender Question (A Study of Selected Tertiary...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Implementation of Quality Management principles at Zimbabwe Open University (...iosrjce
This document discusses the implementation of quality management principles at Zimbabwe Open University's Matabeleland North Regional Centre. It begins with background information on ZOU and the importance of quality management in open and distance learning institutions. The study aimed to determine if quality management and its principles were being implemented at the regional centre. Key findings included that the centre prioritized customer focus and staff involvement. Decisions were made based on data analysis. The regional centre implemented a quality system informed by its policy documents. The document recommends ensuring staffing levels match needs and providing sufficient resources to the regional centre.
Organizational Conflicts Management In Selected Organizaions In Lagos State, ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.AnnySerafinaLove
This letter, written by Kellen Harkins, Course Director at Full Sail University, commends Anny Love's exemplary performance in the Video Sharing Platforms class. It highlights her dedication, willingness to challenge herself, and exceptional skills in production, editing, and marketing across various video platforms like YouTube, TikTok, and Instagram.
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Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...Neil Horowitz
On episode 272 of the Digital and Social Media Sports Podcast, Neil chatted with Brian Fitzsimmons, Director of Licensing and Business Development for Barstool Sports.
What follows is a collection of snippets from the podcast. To hear the full interview and more, check out the podcast on all podcast platforms and at www.dsmsports.net
Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
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Evidence on the Dynamic Relationship between Stock Market All Share Index and Gross Fixed Capital Formation in Nigeria
1. IOSR Journal of Business and Management (IOSR-JBM)
e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 17, Issue 1.Ver. I (Jan. 2015), PP 85-94
www.iosrjournals.org
DOI: 10.9790/487X-17118594 www.iosrjournals.org 85 | Page
Evidence on the Dynamic Relationship between Stock Market All
Share Index and Gross Fixed Capital Formation in Nigeria
Okwuchukwu Odili, PHD1;
Ugwu Paul Ede2
Department of Banking and Finance, College of Management Sciences, Michael Okpara University of
Agriculture Umudike, P.M.B. 7267, Umuahia, Abia State, Nigeria.
Department of Banking and Finance,College of Management Sciences, Michael Okpara University of
Agriculture Umudike, P.M.B. 7267, Umuahia, Abia State, Nigeria.
Abstract: This study examines the dynamic relationship between Stock Market All Share Index and Gross Fixed
Capital Formation in Nigeria. Annual data on market capitalization, value of shares traded, all share index,
average prime lending rate, inflation rate, national savings and gross fixed capital formation at current
purchaser’s value from 1980 to 2012 were sourced from the statistical bulletin of the Central Bank of Nigeria
and the Nigerian Stock Exchange Fact Book various issues. The ordinary least square (OLS) regression
technique was employed in the data analysis and the error correction mechanism (ECM) was used to study the
short-run dynamics as well as long-run relationship between the stock market and gross fixed capital formation
in Nigeria. The result revealed that all share index of the Nigerian stock market has significant effect on gross
fixed capital formation. It further shows that though the capital market has the potential of influencing gross
fixed capital formation its’ effect has not been fully realized due to illiquidity and low level of development of
the Nigerian capital market. It is recommended that appropriate policy measures been taken to deepen the
market and strengthen the structure of the market to ensure that long term funds are used to finance long-term
investments.
Keywords: Nigerian stock market, all share index, gross fixed capital formation, error correction mechanism,
liquidity.
JEL – Classification: E21, E22, E44, O16
I. Introduction
The general theme of capital formation lies at the very centre of the problem of development in
developing countries. The so-called developing countries, as compares with developed countries, are less
equipped with capital in relation to their population and natural resources.
Gross fixed capital formation is essentially net investment. It is a component of the Expenditure
method of calculating gross domestic product. To be more precise Gross fixed capital formation measures the
net increase in fixed capital.
Gross fixed capital formation includes spending on land improvements (Fences, ditches, drains, and so
on); plant, machinery, and equipment purchases; the construction of roads, railways, private residential
dwellings, and commercial and industrial buildings. Disposal of fixed assets is taken away from the total.
Gross Fixed Capital Formation can be classified into gross private domestic investment and gross
public domestic investment. The gross private domestic investment is equivalent to gross fixed capital formation
plus net change in the level of inventories. The gross public investment includes investment by government and
public enterprises.
Economic theory as well as empirical experience confirm that the significant differences in the level of
economic development and rates of economic growth among countries or in the same country over time are, to
a great extent, interrelated with the differences that exist in the level and composition of the capital stock,
Bakare (2011). Ideally, capital stock is build-up by the accumulation of capital assets regularly done. Therefore
economists have for a long time used the estimate of capital formation as well as capital stock in their analysis
of the results of productive activity. Estimate of the gross stock of capital assets and capital formation are
frequently used in determining the magnitude of and changes in productive capacity.
According to Al-Faki (2006), the capital market is a network of specialized financial institutions, series
of mechanisms, process and infrastructure that in various ways, facilitate the bringing together of suppliers and
users of medium to long-term capital for investment in developmental projects.
The primary aim of the Nigerian capital market is therefore to mobilize long-term funds from
individuals, investors and corporate bodies and channel the funds to productive activities for economic
advancement. The Nigerian Stock Exchange (NSE) is the centre point of the capital market while the security
and Exchange commission (SEC) serves as the apex regulatory body. To enable small as well as large-scale
enterprises gain access to public listing, the NSE operates the main Exchange for relatively large enterprises,
2. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 86 | Page
and the Second – Tier Security Market (SSM) where listening requirements are less stringent for small and
medium – scale enterprises.
The importance of the capital market lies in its financial intermediation role of linking the deficit unit
with the surplus unit of any economy. The inability of the capital market to perform this role deprives the
economy of much needed financial resources for investment and production of goods and services, (Ewah et al.,
2009; Odili and Ezeudu, 2014). The capital market was therefore constituted or established to facilitate the
mobilization and channeling of funds into productive investments.
Osaze (2000), sees the capital market as the driver of any economy to growth and development because
it is essential for the long-term growth in gross fixed capital formation. It is critical in fund mobilization and
allocation for profitable investment projects and production of goods and services. The institutional framework
of the capital market has to be put in place to effectively perform its core function of fund mobilization and
allocation to ensure that the expectations of investors and fund users are met to induce savings and capital
formation (Oke and Adensi, 2012).
Equity markets in developing countries until the mid – 1980‟s generally suffered from the classical
defects of bank dominated economies that was characterized by shortage of foreign institutional investors, and
lack of investors confidence in the stock market (Adebiyi, 2005). Before the eighties, corporate savings were the
most important component of gross resource mobilization by the private corporate sector and reliance on
external resources was limited. The investment behaviour of a firm depends crucially on its financial structure
since apart from technology, managerial and demand problems the only completely exogenous constraint on the
diversified firm is the stock market via its impact on company valuation and cost of capital. In a developing
country, the constraint is more serious because of imperfections in the capital market. The functioning of the
capital market affects liquidity, acquisition of information about firms, risk diversification, savings mobilization
and corporate control (Anyanwu, 1998). Altering the quality of these services can alter the rate of economic
growth through the functioning of the capital market.
In 1986; Nigeria policy markers pursued a structural adjustment program which shifted emphasis from
public sector to private sector. The goal was to encourage private domestic investment and capital formation in
order to enhance economic prosperity. This gave birth to privatization and commercialization of state
enterprises. But unfortunately, the initial objectives for setting up privatization and commercialization
programmes have not been achieved.
Ariyo and Adelegan (2005) contend that the liberalization of capital market led to the growth of the
Nigerian capital market but its impact at the macro-economy has been negligible. It is increasingly being
recognized that the growth process of the Nigerian economy which depends to a great extent on crude oil
revenue and marginally on the provision of long-term funds for gross private domestic and public investment as
well as funds for the small and medium – scale enterprises (SMEs) which are the engine of growth in any
developing or emerging market economy is very slow. These sectors have been grossly deprived of the need
financial resources due to low level of national savings and hence low level of gross fixed capital formation in
Nigeria. This study therefore examines the relationship between the all share index of the Nigerian capital
market and the gross fixed capital formation and its‟ effectiveness in mobilizing and allocating financial
resources for fixed capital investment. It will seek to resolve the perennial problem of inadequate investment in
fixed capital through the capital market. It will also proffer policy recommendations for efficient mobilization
and allocation of funds in the Nigerian capital market.
The rest of this paper is organized as follows: Section 2 presents the literature review and theoretical
framework. The methodology of the study is discussed in section 3. In section 4, we carry out the data analysis
and discuss the findings while section 5, draws conclusion and makes policy recommendations.
II. Theoretical Framework
Gross fixed capital formation consists of additions to the assets of producers of tangible reproducible
goods which have an expected lifetime of use of one year or more. The producers in question may be industries,
producers of Government services and producers of private non-profit services to household. The capital goods
may be purchased or produced on own account. Sales less purchase of second-hand fixed assets and sales of
scrapped fixed assets by producers should be deducted from gross fixed capital formation. The development of
stock market is necessary to achieve full efficiency of capital formation. Back and Levine (2003) shows that
positive link exist between stock market development and capital formation. The stock market assists corporate
entities to raise long term funds for investments. The capital market constitutes an important institution for
massive financial resources needed for increased fixed capital in the economy.
Capital market according to Ekezie (2002) is the market for dealings (that is, Lending and Borrowing)
in long-term loan-able funds. The development of the capital market provides opportunities for greater funds
mobilization, improved efficiency in resource allocation and provision of relevant information for appraisal
(Inanga and Emenuga, 1997). The cheap source of funds from the capital market remains a critical element in
3. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 87 | Page
the sustainable development of the economy (Okereke – Onyiuke, 2000; Odili and Ezeudu, 2014). She
enumerated the advantages of capital market financing to include long repayment period as funds are held in
medium and long-term basis or in perpetuity, fund to state and local government without pressures and ample
time to repay loans.
Mckinnon (1973) theories on finance and development criticized the dominant neo-classical monetary
theories and the Keynesian counter arguments. The neo-classical monetary growth models postulate that high –
positive interest rate have a direct impact on savings and investment. Within this school of thought, money is
regarded as a substitute for physical assets and productive investments. Keynesian economists on the other hand
agree that low interest rate increases investment, income and eventually savings.
Pardy (1992), contends that macroeconomic and fiscal environment are the building blocks which
determine the success or otherwise of securities market. Conducive macroeconomic environment promotes the
profitability of business which propels them to a stage where they can access securities for sustained growth
(Akingunola et al., 2012).
Interest rate is a financial price for credit and affects resource allocation, production levels, prices and
profitability. Fluctuations in the interest rates reflect in share price. For instance, lowering of interest rate in
demand and savings deposits will improve returns to investing on the stock exchange relative to investing in
deposit money banks (DMBs) holding factors such as risk, transaction costs etc. constant. This will therefore
increase the demand and share price of affected equities on the exchange thereby affecting its performance
(Akingunola et al., 2012).
Prime lending rate also has significant effects on stock market prices much in the same way as interest
rate: Agenor (2000) captures these views by stating that interest rate, high inflection, large fiscal deficits and
real exchange rate over-valuation are often key symptoms of macroeconomic instability which constraints
private and public sectors investment and savings and results in inefficient allocation of resources on the
exchange thereby affecting its performance.
The theoretical basis for this study is therefore anchored on Harrod – Domar model, which emphasized
the key role of investment in economic growth process. It describes the economic mechanism by which more
investment leads to more growth. For a country to develop and grow, it must direct part of its resources from
current consumption needs and invest them in fixed capital. Diversion of resources from current consumption is
called savings. According to Harrod (1960) and Domar (1946) investment creates income (demand effect) and
increases the capital stock for expansion of productive base. The model explains a long-run steady state of
capital – output and savings – investment flow equilibrium for increased productivity in an economy.
The model holds that national saving(s) mobilization and capital formation in one period (t) is the
source of output (y) in the next period (t+1). That is, capacity of the economy for increased productivity in
future.
It – Yt+1 > 0 _____________________________ (1)
Y/I >0 = growth _____________________________ (2)
Increase or change in savings – output ratio
S divided by a lower capital - output
Y
Ratio K or I, magnifies economic growth.
Y
In a two sector model Y = C + I
:. Y – C = I
Also Y=C+S
Y – C = S
This implies that S = I, savings – investment identity __________ (3)
S = I, savings – output ratio __________ (4)
Y Y
Investment (I) is defined as the change in capital stock K
I = K _____________________ (5)
Therefore K/Y = I/Y = capital – output
Ratio K ____________________________________________ (6)
4. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 88 | Page
But since the total stock, K, bears a direct relationship to total national income, or output Y, as expressed by the
capital – output ratio K, then it follows that:
K = K __________________________ (7)
Dividing equation (4) by equation (6) gives the growth rate (g) of the economy
G = s/y = s/y x y/k = s/k ______________ (8)
k/y
Harrod – Domar model draws from the experience of Keynesian growth model. While the Keynesian model is a
short-run analysis, the Harrod – Domar model is a long – run analysis. The demand for invisible financial
resources from the capital market is a derived demand for the production of goods and services in the economy.
National savings and hence Net Investment (i.e. gross fixed capital formation) is supposed to be proportional to
changes in output of the economy.
2.1 Empirical Literature
The role of capital market in corporate fund mobilization seems insignificant and questionable over the
years especially in developing and emerging market economies. Levine and Zervos (1998) used pooled crossed
country time series regression of 47 countries from 1976 to 1993 to evaluate whether stock market liquidity is
related to growth, capital accumulation and productivity. They towed the line of Demiurgue-kunt and Levine
(1996) by conglomerating measures such as stock market size, liquidity and integration with world market, into
index of stock market development. The rate of Gross Domestic Product (GDP) per capital was regressed on a
variety of variables designed to control for initial conditions, political instability, investment in human capital
and macroeconomic condition and then included the conglomerated index of stock market development. They
found empirically that the measures of stock market liquidity were strongly related to growth, capital
accumulation and productivity while stock market size does not seem to correlate to economic growth.
A study by Bencivenga et al., (1996), considered empirically how the efficiency of an economy‟s
capital market or equity market – as measured by the costs of transacting in them – affect the economy‟s
efficiency in producing physical capital and, through this channel, final goods and services. They followed the
line of thinking of Hicks (1969) that emphasized the role of equity markets in providing liquidity to holders of
long-term and inherently illiquid capital. Their research showed that as the efficiency of an economy‟s capital
market increases (i.e. transaction costs fall) the general effect is to cause agents to make longer-term, and more
transactions – intensive investments. This results in a higher rate of return on savings and investments as well as
a change in their composition.
Kofi (1998) in his study titled analysis of factors affecting the development of an emerging capital
market: The case of the Ghana stock market, established that the Ghanaian capital market has not yet played its
role in capital mobilization though if properly organized it could be a source of the much needed capital
necessary for economic growth. Engberg (1975) recognized the need for capital markets even for less –
developed country. The study contends that capital markets can sufficiently raise the level of domestic savings
and contribute to a more efficient allocation of such savings among competing uses.He emphasized that through
the capital market, a variety of financial assets, carrying different risks, yield and liquidity is added to the
traditional types of financial assets such as demand and savings deposits.
Caporale et al., (2004) in their study provided the evidence that an organized and well managed stock
market stimulate investment opportunities by recognizing and financing productive projects that lead to
economic activity, mobilize domestic savings, allocate capital efficiently, help to diversify risks, and facilitate
exchange of goods and services.
Ezeoha, et al. (2009), examined the nature of relationship that exists between stock market
development and the level of investment (domestic private investment and foreign private investment) flows in
Nigeria. Their finding shows that stock market development contributes positively to domestic private
investment but has not significantly contributed to the flow of foreign private investment.
Mishra et al, (2010) appraised the effect of capital market efficiency on economic growth in India
using multiple regression and time series data on capitalization, total market turnover and stock price index over
the period spanning from the first quarter of 1991 to the first quarter of 2010. Their findings show that the
capital market in India has the potential of contributing to the economic growth of the economy.
Adeusi, et al., (2013), examined the impact of capital market development on economic growth and
development since the liberalization policy in 1986 to 2010 in Nigeria using ordinary least square (OLS) and
Johansen co-integration estimation techniques. The result of this findings shows that capital market
development has not impacted positively on Nigeria economic growth and development due to the relative small
size of the market despite its development as a result of the liberalization policy.
5. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 89 | Page
Ajao, (2011) examined the impact of stock market development on capital formation and growth in
Nigeria, using a time series data, for the period 1981 to 2009. His result shows that positive and significant
relationship exists between gross fixed capital formulation and gross domestic product as well as industrial
production index. However, his analysis shows an inverse relationship between gross fixed capital formation
and market capitalization as well as new issues of instruments, this indicates that the Nigerian stock market in its
many years of existence has contributed marginally to long-term capital formation in Nigeria.
Owolabi and Adegbite (2012) examined the effects of capital market operations on Nigerian economy.
Covering the period 1990 to 2010, and Using a multiple regression analysis, Gross Domestic Product, All share
index, market Turnover, inflation, Transaction cost, and market capitalization were all found to have significant
effects on the Economic Growth with Adjusted R2
of 99%. They concluded that the Nigerian capital market has
tremendous influence on the growth rate of the economy and the performance in terms of capital mobilization
and accessibility to savers and users of funds with the aim of mobilizing and allocating productive resources to
aid national economic development. This is contrary to the findings of Ewah et al., (2009) who appraised the
impact of the capital market efficiency on economic growth of Nigeria using time series data from 1963 to 2004.
They found that the capital market in Nigeria has the potential of growth inducing but has not contributed
meaningfully to the economic growth of Nigeria because of low market capitalization, illiquidity,
misappropriation of funds among others.
Okafor and Arowoshegbe (2011), investigates the Impact of the Nigerian capital market performance
on the gross fixed capital formation using ordinary least square (OLS) regression models. The result revealed
that due to high level of buy-hold attitude of Nigerian investors, the stock market has not financed significantly
the gross fixed capital formation.
The inconsistency in the result of the researchers on the impact of capital market indices on gross fixed
capital formation therefore partly motivates the study.
III. Methodology
This study provides empirical evidence on the effectiveness of the Nigeria capital market in mobilizing
and allocating funds for fixed capital investment. The data were source from the Central Bank of Nigeria
statistical bulletin and the Nigerian stock exchange fact book, various issues. The study hypothesized that the
Nigeria‟s capital market has no significant effect on gross fixed capital formation. The study employed the
ordinary least square (OLS) estimation technique to assess the short run effects of the independent variables,
market capitalization, value of shares traded, all share index, average prime lending rate, inflation rate and
national savings on the dependent variable (GFCF) using an annual time series data from 1980 to 2012. The
Augmented Dickey fuller unit root test is used to test the stationarity of the data and Johansen co-integration test
to ascertain the long-run equilibrium relationship among variables in the model. Error correction model (ECM)
was employed to correct possible problem of non-stationarity of data.
3.1 Model Specification
The model adopted in this study is based on the modification of the model used by Ajao, (2011). Our
model specifies the dependent variable (GFCF) as a function of market capitalization, value of shares traded, all
share index, average prime lending rate, inflation rate and national savings. Several models have been used to
empirically establish the relationship between stock market index and Gross fixed capital formation. They
include mean adjusted return, the market model, the modified market model and the Auto-regressive distributive
lag (ARDL) model. This study uses a multiple linear regression model due to its predictive and informative
ability about the direction of relationship between the dependent and independent variables.
The functional form on which the econometric model is based is given as:
Y= F(x1, x2, x3, x4, x5, x6)
Where:
Y is the gross fixed capital formation (GFCF) the depended variables,
X1 to x6 are independent variables, F represents the functional notation.
This can be specifically stated as;
GFCF = F (MCAP, VST, ASI, AVPLR, INFR, NS)
The linear regression equation based on the above functional relation is thus:
Y= a0 + a1x1 + a2x2 + a3x3 + a4x4 + a5x5 + a6x6 + e - __________ (1)
GFCF = a0+ a1MCAP + a2VST + a3ASI + a4AVPLR
+ a5 INFR + a6NS + e _______________ (2)
Where:
GFCG = Gross fixed capital formation
MCAP = Market capitalization
6. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 90 | Page
VST = value of share trade
AS1 = All share index
AVPLR = Average prime lending rate
INFR = Inflation rate
NS = National savings
ao = Intercept of relationship in the model/constant
a1 to a6 = Coefficient of each of the independent variables
e = Stochastic disturbance (Error Term). By log Linearization, the model becomes
Log(GCFC) = a0 + a1Log(MCAP) + a2log(VST) + a3log(ASI) + a4Log(AVPLR) + a5Log(INFR) + a6Log(NS) +
e __________________ (3)
Where:
Log = Natural Log
From Equation 3, the model can be specified in a time series form as:
Log(GFCF)t = ao + a1Log(MCAP)t + a2log(VST)t + a3log(ASI)t + a4log (AVPLR)t + a5log(INFR)t + a6Log(NS)t
+ et _________________ (4)
A prior expectation
Our a prior expectation is that MCAP, VST, ASI, and NS have direct relationship with GFCF while
INFR and AVPLR have inverse relationship with GFCF. This can be expressed mathematically as:
a1, a2, a3, a4, a6 >0, while, a4, a5<o.
IV. Data Analysis And Interpretation Of Results
The descriptive statistics over the sample period which are expressed in Nigerian currency are reported
in table 4.1. The Gross domestic product (GDP), range from 139,085.3 to 29,205312. The data showed a
progressive increase in GDP within the period investigated with annual average of 8,022,540. The all share
index range from 233.60 to 57990.20. Over this period all share index averaged 1,320.27 while the time series
data is approximately symmetric with skewness and kurtosis of 1.05 and 2.69 respectively.
Accordingly, Jarque-Bera statistic shows that the data is not significantly difference from a normal series.
Table 4.1 Descriptive Statistics of all variables
GDP MCAP VST ASI AVPLR INFR NS
Mean 8022540 2379007. 314041.2 13203.27 22.35217 1130.243 1130.243
Median 3194015 300000.0 14027.40 6992.100 12.90000 277.7000 277.7000
Maximum 29205312 13294600 2379143. 57990.20 72.80000 6183.800 6183.800
Minimum 139085.3 10000.00 136.2000 233.6000 6.600000 23.20000 23.20000
Std. Dev. 9266172. 3863476. 647137.8 14403.71 19.51875 1822.321 1822.321
Skewness 1.054184 1.664839 2.421268 1.455689 1.274815 1.882585 1.882585
Kurtosis 2.686306 4.470484 7.655499 5.110959 3.348181 5.227660 5.227660
Jarque-Bera 4.354301 12.69703 43.24366 13.74924 6.345929 18.34152 18.34152
Probability 0.113364 0.001749 0.000000 0.001034 0.041879 0.041879 0.000104
Observations 23 23 23 23 23 23 23
Unit Root Test
The first stage is to test for the stationarity properties of the variables by employing the unit root test.
Non-stationary data produces spurious regression hence the result may be misleading. The Augmented Dickey-
Fuller (ADF) Unit root test is used to establish stationarity of data. The decision rule is that the ADF test statistic
value must be greater than the Mackinnon critical value at 5% in absolute terms.
The table below shows the summary of unit root test conducted on the parameter at level.
Table 4.2 ADF Unit Root Test at Level
Variables ADF Test Statistic Value Mackinnon critical value at 5% Remark
Y1 1.801832 -3.0114 Presence of unit Root
X1 -0.471301 -3.0114 Presence of unit Root
X2 -2.043914 -3.0114 Presence of unit Root
X3 -1.363503 -3.0114 Presence of unit Root
X4 -2.242906 -3.0114 Presence of unit Root
X5 -2.361789 -3.0114 Presence of unit Root
X6 -1.876434 -3.0114 Presence of unit Root
From the Table above, it can be deduced that all the variables are non-stationary because they have
their Augmented Dickey Fuller (ADF) statistic less than Mackinnon critical value at 5%. This led to the testing
for stationarity at first difference.
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Table 4.3: ADF Unit Root Test at First Difference
Variables ADF Test Statistic Value Mackinnon critical Value at 5%/10% Remark
Y1 -4.549685 -3.0294/ -2.6502 No Unit root
X1 -4.673951 -3.0294/ -2.6502 No Unit root
X2 -6.762005 -3.0294/ -2.6502 No Unit root
X3 -4.562377 -3.0294/ -2.6502 No Unit root
X4 -5.821030 -3.0294/ -2.6502 No Unit root
X5 -3.924789 -3.0294/ -2.6502 No Unit root
X6 -2.694784 -3.0294/ -2.6502 No Unit root
ECM -4.3858 -3.0294/-2.6502 No unit root
All the variables are stationary at first difference because they have their respective ADF statistics greater than
Mackinnon critical value at 5%. Except National savings that is stationary at 10%. It also shows that the
variables are co-integrated in the same order.
Co-integration
The essence of co-integration test is to ascertain if a long-run equilibrium relationship exist among
variables of the model.
Decision Rule: The trace statistic must be greater than 5% critical ratio at one Hypothesized (None**
)
The table below shows the summary of result from analysis conducted on the specified model.
Table 4.4: Presentation Of Johansen Co-integration Result
Series: GFCF, MCAP, VST, ASI, AVPLR, INFR, NS
Lags Interval: 1 to 1
Eigen value Trace
statistic
5percent
critical value
1percent
critical
value
max 5% critical
value
1% critical
value
Hypothesized
No. of CE(s)
0.968326 143.37467 124.24 133.57 59.80161 45.28 51.57 None **
0.959097 106.53483 94.15 103.18 48.94153 39.37 45.10 At most 1 *
0.876953 78.78325 68.52 76.07 34.67835 33.46 38.77 At most 2
0.674176 55.20112 47.21 54.46 28.20143 27.07 32.29 At most 3
0.550305 23.14314 29.68 35.65 17.34568 20.97 25.52 At most 4
0.545007 8.30467 15.41 20.04 6.44307 14.07 18.63 At most 5
0.945061 0.89316 3.76 6.65 0.79326 3.76 6.65 At most 6
Trace and max-eigen value tests indicates 4 cointegrating equation at the 0.05 level.
*denotes rejection of the null hypothesis at the 0.05 level. The first row of the trace tests, shows a statistics of
143.37467 which considerably exceeds the critical value at 95 percent and so the null of no cointegrating
vectors is rejected. This continues, until we do not reject the null hypothesis of at most four cointegrating
vectors at 5% level. The max text confirms this result. The co-integration equation is specified below:
GFCF= 66502 - 0.02MCAP – 0.65VST + 41 ASI – 6836.28AVPLR
(0.0763) (0.2105) (10.4386) (12222.51)
+ 896.72 INFR + 559.00NS
(3081.41) (74.70)
The standard error statistics are in parenthesis.
It can be deduced from the result that the constant parameter in the long-run is positive. This implies
that if all the explanatory variables are held constant, GFCF will increase by 66502 units. The result also
indicates that coefficient of MCAP is negative (-0.02). This implies that there exist, a negative relationship
between MCAP and GFCF in the long-run. A 1% increase in MCAP leads to a decrease in GFCF by 2.0%.
Likewise the coefficient of NS and AVPLR are -0.65, and -6836 respectively. This implies that each of these
variables share a negative relationship with GFCF in the long-run. Any attempt to increase any of them in the
long-run will lead to a decrease in GFCF. ASI, INFR and NS indicate a coefficient of 40.99, 892.72, and 556.80
respectively. This implies that there exists, a positive relationship between ASI, INFR, NS and GFCF in the
long-run. An increase in any of these variables will lead to an increase in GFCF. Multiple correlation coefficient
(R), of 0.984243364 indicates a strong positive linear relationship between the independent variables and the
dependent variables since the value is close to 1. R2
with a value of 0.968735 indicates that about 96.87% of the
variation in the dependent variables is due to MCAP, VST, ASI, AVPLR, INFR and NS. From the F-
distribution table, the critical value obtained at = 0.05, d.f.n = 6, and d.f.d = 22 is 2.53. Since F (=82.6249) is
8. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 92 | Page
greater than the critical value (=2.44), and also since, the P-value (=0.000) is less than (=0.05), it implies that
there is a significant relationship between the dependent variable GFCF and the six independent variables in the
long run.
ERROR CORRECTION MODEL (ECM)
Given the presence of co-integration, we estimated an ECM of the form in Equation 5 in order to tackle
the problem of spurious regression. The attractiveness of the ECM is that it provides a framework for
establishing links between the short-run and long-run approaches to econometric modeling.
_________ (5)
The error correction mechanism involves developing two models: the over-parameterized model (ECM1) and
the parsimonious model (ECM2). ECM1 involves leading and lagging of the variables while ECM2 introduces
short-run dynamism into the long-run equilibrium.
Table 4.5: Over – Parameterized error correction mechanism (ECM1)
Dependent variable: D (GFCF2)
Variable Coefficient Std. error t-statistic Prob.
D(GFCF(-1),2) -1.6922 0.3719 -4.5496 0.0003
D(MCAP 2) -0.7889 0.5573 -1.4155 0.0850
D(MCAP(-1),2) -0.9109 0.4840 -1.8820 0.0314
D(VST 2) 4.6642 3.0652 1.5217 0.3765
D(VST(-1),2) 1.2497 2.4108 0.5184 0.0006
D(ASI 2) 9.6509 49.546 0.1948 0.0025
D(ASI(-1),2) 13.2251 43.9816 0.3007 0.1008
D(AVPLR 2) -3396.37 858479 -0.39563 0.0265
D(AVPLR(-1),2) -2605.03 8517.11 -0.30585 0.0296
D(INFR 2) 277.209 2615.37 0.1059 0.9750
D(INFR(-1),2) 1006.91 3025.70 0.3328 0.3058
D(NS2) 1666.09 1090.67 1.5276 0.2502
D(NS(-1),2) -738.14 1299.64 -0.5680 0.0588
ECM (-1) -0.82193 0.38952 -5.7430 0.0467
C 66502.02 299038.3 0.222386 0.8268
R2
0.634265
Adjusted R2
0.588548
F – Statistic 13.87376 (0.000320)
Durbin-Watson 2.249460
S.E of Regression 293382.9
Table 4.6: Parsimonious error correction model (ECM2)
Dependent Variable: D (GFCF 2)
Variable Coefficient Std. Error T-Statistic Prob.
D(GFCF(-1),2 0.6006 0.29000 2.070916 0.0549
D(MCAP (-1),2 -0.017714 0.076253 -0.232311 0.8192
D(VST, 2) -0.649683 0.210481 -3.086666 0.0071
D(ASI(-1), 2) 40.99254 10.43856 3.927030 0.0012
D(AVPLR,2) -6836.282 12222.51 0.559319 0.5837
D(IMFR(-1),2) 896.7215 3081.411 0.291010 0.7748
D(NS,2) 559.9969 74.70051 7.496561 0.0000
ECM (-1) -0.83181 0.41092 -5.87324 0.0027
R2
0.968735
Adjusted R2
0.957010
9. Evidence On The Dynamic Relationship Between Stock Market All Share Index And Gross Fixed…
DOI: 10.9790/487X-17118594 www.iosrjournals.org 93 | Page
F-statistic 82.6249(0.000)
D-W Statistic 2.047899
S.E of Regression 232447.7
AIC 27.79651
SIC 28.14209
The regression results shows that the speed of adjusted on the ECM term is significant at 1% and carries the
expected negative sign. The coefficient () shows that 83.2% of the adjustment to equilibrium condition occurs
within the first period. This implies that the present value of GFCF adjust rapidly to changes in MCAP, VST,
ASI; AVPLR, INFR and NS. The lagged value of ECM given also shows an adjustment of 83.2% from the
previous period disequilibrium of the present level of GFCF in the determination of causality between the past
level of GFCG and the present and past level of the explanatory variables.
Implications of Findings
The implication of some of the explanatory variables is to tell their effect on Gross fixed capital
formation in Nigeria through the stock market.
MCAP and VST are negatively related to GFCF. This implies that as MCAP and VST increases, the
GFCF reduces in the short and long run. This is due to the fact that market capitalization and VST increases as
total new issues increases as a result of increased domestic savings being channeled into short-term investments
instead of long term (fixed capital) investments. Improved liquidity in the secondary market is needed for
Gross fixed capital formation rather than increase in market capitalization and the value of shares traded. All
share index and inflation are positively related to Gross Fixed Capital Formation in the long run. This implies
that as the ASI and INFR increases the GFCF also increases. The implication of this is that the increase in
transactions in the Nigeria Stock Exchange which lead to the positive relationship in the GFCF is largely due to
speculative reasons rather than long term investment in capital projects and fixed assets thereby necessitating
positive relationship between inflation and Gross fixed capital formation.
Average prime lending rate is negatively related to the gross fixed capital formation. This implies that
as AVPLR decreases the GFCF increases. This is in line with a prior expectation and theoretical postulations.
Low cost of capital encourages long term investment especially in capital projects and fixed assets.
Lastly the national savings is positively related to the gross fixed capital formation. An increase in
national savings leads to an increase in GFCF in the short and long run. Theoretically, capital accumulation
reduces cost of capital (interest rate) and encourages investment especially in fixed capital.
V. Conclusion And Recommendations
This study analyses the dynamic relationship between all share index of Nigeria‟s capital market and
gross fixed capital formation. The result of the error correction model corroborates the theoretical predictions of
the relationship between stock market and the gross fixed capital formation. The level of national savings,
Average prime lending rate and all share index are correctly signed and in line with the theory while value of
shares traded, inflation and market capitalization though showed significant relationship with gross fixed capital
formation, were inversely related.
The speed of adjustment on the ECM term was significant at 1% and carries the expected negative sign.
The findings have significant policy implications in relations to fund mobilization and allocation
function of the stock market. The results revealed that most funds mobilized in the capital market were invested
in short term investment projects. Long term funds are used to finance short term investments and this lead to
the significant negative relationship between market capitalizations, value of shares traded and gross fixed
capital formation. Given the fact that capital market investors in Nigeria are speculative in nature and adopt the
attitude of buy and hold instead of trading on shares, inflation also recorded positive and significant relationship
with gross fixed capital formation.
Optimal policy measures are therefore required to manage fund mobilization and allocation in the
Nigerian stock market to ensure that long-term funds are employed in long-term investment. In line with this,
the results also suggest the need for policy makers to design policies that will deepen capital market and
strengthen the structure to increase the liquidity of the market and to provide the needed financial resources to
finance fixed capital investments.
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