Stock Market Development and Economic Growth in Emerging Economies of Nigeria, Brazil, Russia, India, China and South Africa: A Comparative Analysis

Abstract

The study undertake an investigation of the causality and impact of the Stock Market development and economic growth in Nigeria and BRICS (Brazil, Russia, India, China and South Africa) emerging economies using quarterly time series data for the period 1995Q1 to 2015Q4 sourced from World Bank Indicator. The granger causality test, ordinary least squares multivariate regression and panels least squares estimation methods were employed to determine how stock market development granger causes and impacts on economic growth of the emerging countries. Stationarity test was conducted using the Augmented Dickey Fuller test to ensure the regression result was devoid of spuriousness. Findings arising from the empirical estimations indicate that in BRICS, TVSTR Granger causes TR unidirectionally while bi-directional relationship flows between INFR and RGDPGR. In Nigeria, there exists no granger causality from stock market development to economic growth, and vice versa. However, there is causality flowing from TR to TVSTR. It is therefore suggested that the Nigerian government could profit largely by maintaining multi-lateral trade and co-operation to foster more flow of foreign direct investment and tap into the various national resources of each of the BRICS country.