Economic Growth Arguments: The Role of the Capital Market

The study has examined critically the vital role capital market can play at improving economic growth. The total market capitalization and all share index were used as proxies for the independent variables while gross domestic product was used as proxy for economic growth, serving as dependent variable. The study considered the activities at the capital market as having value chain consequences that encapsulate the wheel of growth of the economy. As such, to test the validity the OLS regression analysis technique was adopted for empirical analysis. The result indicates a statistically significant relationship with total market capitalization while all share index showed a statistically insignificant relationship. In all, more instruments were recommended to be introduced in the market if the capital market would fully perform its function as lubricating channel of economic growth.