FINANCIAL DEEPENING AND CAPITAL MARKET EFFICIENCY IN NIGERIA

ANYAMAOBI, Chukwuemeka
Department of Banking and Finance
Rivers State University
chukwuemeka.anyamaobi@ust.edu.ng
OKEY-NWALA, Precious O.
Department of Banking and Finance
Rivers State University
preciousemodel1971@yahoo.com
ABSTRACT
This study examined the effect of financial deepening and capital market efficiency in Nigeria. The objective
was to examine the effect of various measures of financial deepening and the effect on capital market
efficiency. The study employed time series data sourced from the publications of Central Bank of Nigeria
from 1987-2020. The null Hypotheses (H0) were tested at 0.05 level of significance. The F-statistics and
the probability indicate that the model is statistically significant while the Durbin Watson indicates that
there is no presence of serial autocorrelation among the variables. The study conclude that there is no
significant relationship between money supply and capital market efficiency in Nigeria, there is no
significant relationship between private sector credit and capital market efficiency in Nigeria, there is no
significant relationship between capital market development and capital market efficiency in Nigeria, there
is no significant relationship between interest rate spread and capital market efficiency in Nigeria and that
there is no significant relationship between interest rate spread and capital market efficiency in Nigeria.
The study recommends that the private sector should be encouraged to invest in capital market and that the
illiquidity status of the capital market should be improved to make it more viable for investors to invest,
and such overtures can contribute to economic growth.
Keywords: Banking sector development, broad money supply, financial deepening, capital market
deepening, capital market efficiency