STOCK MARKET DEVELOPMENT AND PERFORMANCE OF THE MANUFACTURING SECTOR: EVIDENCE FROM NIGERIA

Abstract

This study investigates the relationship between stock market development and the performance of Nigeria’s manufacturing sector from 1985 to 2023. Stock market development is measured using total new issues (TNI), the number of listed securities (NLS), and the all-share index (ASI), while manufacturing value added (as a percentage of GDP) serves as a proxy for manufacturing performance. The analysis draws on secondary data obtained from the Central Bank of Nigeria Statistical Bulletins, the Securities and Exchange Commission, and the World Bank. Using the Johansen and Jeselius cointegration framework, complemented by the Dickey-Fuller, Phillips-Perron, and Kwiatkowski–Phillips–Schmidt–Shin unit root tests, as well as a Vector Error Correction Model (VECM). The study finds that NLS exerts a positive and significant long-run effect on manufacturing performance, while TNI shows a limited but positive short-run impact. The ASI demonstrates a positive short-run effect but a negative and non-significant long-run influence. These results indicate that stock market indicators, except the ASI, play a meaningful role in shaping manufacturing sector performance in Nigeria. The study recommends policies aimed at strengthening manufacturing sector growth, enhancing savings mobilization and investment, and improving macroeconomic and financial management to reinforce the linkage between stock market development and manufacturing sector performance.