Empirical Analysis of the Nexus Between Capital and Money Markets in Nigeria

This paper examined the relationship between money and capital markets in Nigeria from 1981 to 2019. Thus, correlation and pairwise Granger causality analytical techniques were applied to the annual times series data obtained from the Central Bank of Nigeria’s statistical bulletin. Empirical findings indicate the existence of a strong positive correlation between money and capital markets in Nigeria. The study also established evidence of a long-run relationship between money and capital markets in Nigeria. Furthermore, there is a bidirectional causality between money and capital markets in Nigeria in the study period. The study concludes that there is a complementary (positive) causal relationship between money market and capital market in Nigeria. Therefore, the need to encourage the formulation and implementation of policies geared towards greater synergy between the two markets in Nigeria.