Stock Market Behaviour on Production Output in Nigeria
Keywords:
Manufacturing sector output, Market capitalization, Government stock, Corporate Bonds, Equities.Abstract
This study examined the effect of capital market behavior on production output in Nigeria. To achieve this objective, relevant data used spanning from 1992-2022 were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin for the period under review. Descriptive statistics, Augmented Dickey Fuller (ADF) test, Granger causality and Ordinary Least Square (OLS) were the analytical tools for this study. Manufacturing sector output (MGDP) as a proxy for production output was used as the dependent variable while market capitalization (MCAP), government stock (GS), corporate bonds (CBs) and equities (EQS) as proxies for capital market behavior as the independent variables. Based on the analysis, the F- statistic of the regression output stood at 680.8176, this implies that the regression plane is statistically significant, R 2 = 0.990543 implies that about 99.05% of the total variation was accounted for by the independent variables, all the variables were stationary at their respective levels; the variables granger cause each other since there is uni-direction and bi- direction causality. Durbin-Watson statistic of approximately 1.77 showed a near absence of autocorrelation or serial correlation in the model specified. Base on the all the variables were statistically significant as the P-values of 0.0230, 0.0214, 0.0226, and 0.0230 for MCAP, GS, CBs, and EQS, respectively, were less than the intended 0.05 level of significance. Also, the overall level of significance, Prob.(F-Statistic) 0.000000 is less than the 0.05 level of significance, indicating that all the independent variables can jointly influence the dependent variable for the period under review. The study therefore concluded that that capital market behaviour had various levels of interaction with manufacturing sector output as a measure of production output in Nigeria. The study recommended that all the independent variables in this study are key players/major contributor to production output (manufacturing sector output) in Nigeria and as such should not be neglected by government and policy makers.