Effect of Manufacturing Sector Growth on Stock Market Development in Nigeria (1986 - 2021)

This study examined the effect of manufacturing sector growth on stock market development in Nigeria. The study was motivated by the inconclusive debate on the effect of manufacturing sector growth on stock market development coupled with poor contribution of the manufacturing sector to growth of Nigerian economy. Specifically, this study ascertained the effect of manufacturing sector growth on stock market capitalization ratio to GDP, value of stock traded ratio to GDP and turnover ratio. Secondary data for the period 1986 to 2021 were collected from the Nigerian Stock Exchange and Central Bank of Nigeria annual reports of various editions. The study applied the Autoregressive Distributive Lag (ARDL) regression technique and causality analysis in which variations in stock market capitalization ratio to GDP, value of stock traded ratio to GDP and turnover ratio were regressed on manufacturing sector growth. The results revealed that manufacturing sector growth has no significant effect on stock market capitalization ratio to GDP and turnover ratio but showed a significant effect on value of stock traded ratio to GDP. In lieu of the findings, government should implement appropriate reform policies aimed at ensuring stability in the manufacturing sector by providing adequate infrastructure such as steady power supply, availability of forex for purchase of raw materials among others and adequate regulatory framework.