Stock Market Performance and Sustainable Economic Growth in Nigeria: A Bounds Testing Co-integration Approach

Abstract

The objective of this study is to investigate the role of stock market development on economic growth in Africa. It uses annual data from a panel of 36 countries, of which 18 have stock markets, in Africa over the period 1980-2010. Panel data econometrics technique is used in data analysis. Our main findings are as follows: (i) countries with stock markets tend to grow faster compared to countries without stock markets, (ii) countries which are relatively developed and have stock markets tend to grow less faster compared to small countries with stock markets, (iii) Stock market development has a positive effect on economic growth, (iv) investment, human capital formation and openness positively influence economic growth in the Africa region, (v) macroeconomic instability (inflation) and government consumption impact economic growth negatively, and (vi) countries that are politically stable and less corrupt tend to grow faster. © 2014 Elsevier Inc.