CAPITAL MARKET DEVELOPMENT AND INDUSTRIAL SECTOR PERFORMANCE IN NIGERIA

Abstract

This study investigates the impact of capital market development on industrial sector performance in Nigeria from 1985 to 2023. Specifically, the study sought to ascertain the impact of all share price index on industrial sector performance in Nigeria and evaluate the impact of annual market capitalization on industrial sector performance in Nigeria. The study adopted the ordinary least’s squares econometric technique in its analysis. Findings from the estimated result revealed that all share price index (ASPI), one of the variables of interest has an inverse and significant relationship with industrial sector performance under the evaluation period. However, annual market capitalization (AMCAP), another variable interest, has a positive and significant relationship with industrial sector performance under the evaluation period.  Credits to the private sector (CPS) has a positive and significant relationship with industrial sector performance under the evaluation period, gross fixed capital formation (GFCF) has a positive and insignificant relationship with industrial sector performance under the evaluation period. Also, from the result, inflation rate (INF) has a negative and insignificant relationship with industrial sector performance under the evaluation period. Based on the findings, it was recommended that the government to reform and stabilize the stock market by strengthening the regulatory oversight of the Nigerian capital market to reduce speculative trading and enhance transparency. Also, government should continue to enhance the growth of market capitalization through facilitating policies that attract domestic and foreign investors to increase liquidity and deepen the capital market. In addition, government should continue to ensure that monetary authorities implement credit-enhancing policies that reduce borrowing costs and improve access to long-term finance for industrial firms. More so, government should focus on improving the quality and productivity of investments, especially in infrastructure, energy, and transportation that support industrialization. Furthermore, the monetary authority should maintain sound monetary policies that target low and stable inflation to preserve industrial production efficiency.