ABSTRACT

This study was carried out to determine the effect of stock market on capital
formation in Nigeria. The variables included in the model were, Gross Fixed
Capital Formation, value of share traded, interest rate, inflation rate, commercial
bank investment indicator, and Stock Market Capital. Data were sourced from
CBN statistical bulletin (2011). The study employed OLS technique to determine
the effect of stock market on capital formation. The empirical finding shows that
stock market capital, commercial bank investment indicator, inflation rate, interest
rate, value of share traded and Gross Fixed Capital Formation. Based on the
findings, the following recommendations were made. The total liberalization of
the financial sector and encouragement of Nigerians to take advantage of the stock
exchange.