Functional Relationship between Growth of Capital Market and Economic Development of Nigeria : Methodological Analysis

The paper examined the empirical impact of the capital market on economic development in Nigeria using a time series data from 1986 to 2005. The co-integration estimation technique found support for the existence of long run relationship between the capital market and economic development. The empirical evidence supported the positive impact of the capital market on economic development in Nigeria proxied by Gross Fixed Capital Formation. It was then suggested interalia that new instruments such as asset-backed securities and derivatives should be facilitated by the necessary policy and legal framework that will deepen the market