Capital Market Performance and Industrial Sector Output Nexus in Nigeria: An ARDL Approach

A thriving industrial sector is a critical and indispensable engine of growth as well as a crucial antidote to the challenges of unemployment and poverty in any economy. Recent statistics indicate that the industrial sector’s contribution to GDP in Nigeria remains suboptimal, despite policy measures geared at enhancing the sector’s growth due to insufficient capital. This study examined the nexus between capital market development and industrial sector growth in Nigeria between 1990 and 2023. The study adopted the ARDL and error correction model using time series data sourced from the annual statistical bulletin of Central Bank of Nigeria and the world bank development indicator (WDI). The findings showed that Stock Market Capitalization, Gross Fixed Capital Formation and Exchange rate positively and significantly impact on industrial sector growth both in the short and long run, indicating that as increase market capitalization is industrial sector growth inducing. These findings empirically underscore the pivotal role the capital market plays in the industrial sector’s development by mobilizing and channelling resources efficiently. Based on these findings, the study recommends that financial regulators and policy makers should device means to improve stock market performance and protect its fragile image, have an interest rate that will encourage investment in the country's industrial sector, reduce the cost of raising capital by firms and the bureaucratic delays limiting capital market efficiency. The Securities and Exchange Commission (SEC) should also be more proactive in its surveillance role in order to check sharp practices which undermine capital market integrity and erode investors’ confidence.

Capital Market, Industrial Sector, Nigeria

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