ANYAMAOBI, Chukwuemeka
Department of Banking and Finance
Rivers State University, Port Harcourt, Nigeria
chukwuemeka.anyamaobi@ust.edu.ng
OKEY-NWALA, Precious O.
Department of Banking and Finance
Rivers State University, Port Harcourt, Nigeria
preciousmodel1971@yahoo.com
ABSTRACT
This study examined capital market development and capital formation in Nigeria. The objective
is to examine the extent to which capital market development promote gross fixed capital
formation in Nigeria. Time series data sourced from Central Bank of Nigeria statistical bulletin
and Stock Exchange Factbook from 1990-2020 was used in the study. Gross fixed capital
formation was used as proxy for the dependent variables while market size, capital market
liquidity, capital market openness, market capitalization served as proxies for the independent
variable. The Ordinary Least Square (OLS) method of cointegration, Augmented Dickey Fuller
Unit Root, Granger Causality was used as data analysis technique. The study found that market
capitalization in terms of market size, market liquidity and market openness have positive effect
on capital formation. The study conclude that capital market development have positive and
significant relationship with capital formation through gross fixed capital formation; and
recommends that the capital market should further be reformed and its operational efficiency
deepened to enhance Nigeria’s capital formation.
Keywords: Capital formation, capital market development, capital market liquidity, capital
market openness