Capital Market Operations and Economic Performance of Nigeria and South Africa: A Comparative Analysis

Abstract

This study conducted a comparative investigation on the effect of capital market operations on the economic performance of economic performance of Nigeria, Egypt and South Africa spanning from 1991 to 2023. Data were obtained from the World Bank Development Index and statistical bulletins of the apex banks of the countries under study. The research adopts the Autoregressive Distributed Lag (ARDL) methodology to estimate country-specific models. The investigation centered on three key capital market operations measures: capital market capitalization, Total Value of Transactions, and Number of Listed Companies while real Gross Domestic Product (GDP) served as the proxy for economic performance. The empirical results revealed the following key findings. For Nigeria, stock market capitalization exerted a negative significant effect on economic performance, while both the total volume of transactions and the number of listed companies showed positive and negative effects respectively, though neither was significant. For South Africa, stock market capitalization and the number of listed companies both exhibited negative effects on economic development, while the total volume of transactions showed a positive effect; however, none of these relationships were statistically significant. Consequently, policymakers need to prioritize market efficiency, regulatory reforms, and investor confidence targeted towards improving the economic performance of Nigeria rather than depending solely on expanding market size or listings, to enhance the developmental role of capital markets.