Impact of National Savings and Stock Market on Capital Formation in Nigeria

Abstract

The study analyzed the roles played by national savings and stock market on capital formation process in Nigeria. Data spanning four decades (1980-2020) was sourced from statistical publications of the Central Bank of Nigeria (CBN) and World Bank World Development Indicators (WDI). Autoregressive distributive lag (ARDL) technique was used for analysis. Findings of the study reveal that despite national savings and stock market having a positive and significant impact on capital formation, capital formation remains weak and below the minimum required for growth and development within the Nigerian economy. The overall implication of the research findings is that Nigeria's economic growth has been hampered by low level savings and ineffective performance of the Nigerian stock market. The Study recommends that policies should be geared toward increasing level of national savings in order to boost capital formation and growth. It also recommended that the Nigeria stock market be liberalized to create an atmosphere favorable for investment which will constitute a favorable interest rate.