E ISSN: 2583-049X
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International Journal of Advanced Multidisciplinary Research and Studies

Volume 2, Issue 4, 2022

Financial Market and Capital Allocation of Manufacturing Firms: Evidence from the Manufacturing Sector of the Nigerian Stock Exchange



Author(s): Lawrence Nnamdi Okeke, John Nonso Okoye, Amalachukwu Chijindu Ananwude, Onyinye Maria Eneh

Abstract:

The increasing government spending which seems as the more the government spend, the poorer the people has become a great problem to the society at large. There is no doubt that Nigeria is endowed with abundant natural resources, but why these resources have not translated into national prosperity remains an intractable question. This study therefore examines financial market and capital allocation of manufacturing firms in Nigeria from 2002-2021. The objective of the study is to examine of financial market on capital allocation of manufacturing firms in Nigeria. The data used were secondary in nature and carefully sourced from the Central Bank of Nigeria (CBN) and Nigerian Stock Exchange (NSE). The Autoregressive Distribute Lag (ARDL) complimented by the Granger Causality test were the technique employed in analysing the data. The findings showed that all share index has an insignificantly negative association with capital allocation of manufacturing firms, turnover ratio has a negative, non-significant association with capital allocation for manufacturing firms, and market capitalization, on the other hand, revealed a negligible positive correlation between capital allocation and manufacturing enterprises in Nigeria. In addition, the granger causality test revealed that financial market variables: all share index, market capitalization, and turnover ratio have no significant effect on capital allocation of manufacturing firms. In order for the Nigeria manufacturing firms to be pivotal force in Nigeria economic growth and development, government should develop the manufacturing sector by maintaining steady exchange rate, low inflation rate so as for firms to achieve an increase balance of payment. There is also the need to provide adequate infrastructures (electricity supply, communication, good roads, etc.) for firms to operate effectively and efficiently.


Keywords: Financial Market, Capital Allocation, Manufacturing Firms

Pages: 376-381

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