IMPACT OF THE NIGERIAN CAPITAL MARKET ON THE OUTPUT OF QUOTED MANUFACTURING FIRMS

Abstract

Using a micro-level approach and firm-level data, this paper assesses the role of the Nigerian Capital Market in the provision of funds to the manufacturing sector, by examining the relationships between the mobilization and allocation functions of the capital market and the output of the 24 manufacturing firms included in the study. The results showed that there was a positive but insignificant impact of funds raised on output and a positive and significant impact of funds supplied on output. This implies that the manufacturing firms did not access fresh funds from the capital market, even as the market showed the potential to supply funds to the manufacturing firms during the period under study. The negative but insignificant relationship between the capital market allocation function and output shows the market was generally illiquid and points to the inefficiency of the market to provide the information to effectively allocate funds to the manufacturing firms. The policy implication of these findings is that efforts should be geared at removing all identified impediments to capital market operations to make it more attractive and accessible to entrepreneurs.