LIQUIDITY OF THE NIGERIAN STOCK MARKET AND THE NIGERIAN ECONOMY

This paper examines the Nigerian stock market liquidity and relationship between stock market liquidity Indicators and GDP in Nigeria, specially to find out how Nigerian stock market liquidity affects the economy. The study uses two stock market development indicators, namely stock market turnover ratio and stock market value traded ratio against real GDP. The results of this study show that all data set used in this are stationary and indicate long run relationship between the variables can be sustained. The regression result indicates that there is no significant relationship between stock market turnover ratio and the GDP when value traded ratio remained constant. The value traded ratio has no significant relationship with the GDP when turnover ratio constant. Therefore, it can be inferred that the both the two liquidity indicators have no significant relationship with the GDP. The findings of the study suggest the need for the implementation of effective regulations that can contribute to transparency, effectiveness of the Nigerian stock market activities and make the environment more enabling for investment. Also the infrastructure has to be improved for efficient trading activities. These will attract more international investors and also restore investors’ confidence.