Stock Market Indicators and Human Development in Nigeria: An Econometric Analysis

This study examined the effect of stock market performance indicators on Human development in Nigeria from 1993 to 2024. The study utilized stock market indicators such as the logarithm of the number of listed companies, market capitalization-to-GDP ratio, value of shares traded-to-GDP ratio, and stock market turnover ratio, while human development was measured using the Human Development Index (HDI). Secondary data were sourced from the World Bank World Development Indicators and the United Nations Development Programme (UNDP). The study employed descriptive statistics, KPSS unit root tests, ARDL bounds cointegration tests, ARDL short and long-run estimation, and post-diagnostic tests for analysis. The KPSS results showed mixed order of integration. The ARDL bounds test confirmed the existence of a long-run relationship among the variables. The findings reveal that, in the short run, the lagged number of listed companies, market capitalization-to-GDP ratio, and stock market turnover ratio have statistically significant positive effects on HDI. The results indicate that the benefits of stock market development to human development occur with a time lag. However, the long-run coefficients of the examined stock market indicators are statistically insignificant. The error correction term is negative, confirming the existence of adjustment toward long-run equilibrium. Overall, the study concludes that strengthening Nigeria’s capital market, particularly by expanding market participation, increasing market depth, and improving liquidity, can contribute to improvements in human development. The study therefore recommends sustained capital-market reforms alongside broader investments in social and human development.