Financial Market Instruments and Economic Development: A Dynamic Ordinary Least Square Approach

This study examined the relationship between financial market instruments and economic development in Nigeria using a dynamic Ordinary Least Square approach. The variables engaged are per capita income (a proxy for economic development), bonds/debentures, commercial papers, certificates of deposit, equities (stocks) and treasury bills. The result revealed that all variables are positively related to per capital income except commercial papers, equities (stocks), bonds and debentures. The result indicates that  is 0.634627 or 63 % meaning that when all else equal, the entire regression is 63 %. The Durbin-Watson value is 1.525566 and is close to 2 and is statistically significant at 5 % level of significance. The study concludes that financial market instruments have positive and significant effect on per capita income in Nigeria within the period under review and equally supports the view that financial market instruments plays more positive role in economic development of Nigeria financial system. The study recommends in line with the findings of the study that appropriate regulatory agencies in the financial market should be emphasized towards improving the efficacy and pellucidity of the market in order to advance investor’s self-confidence as these has acted as the foremost setback in the Nigerian financial environment. There is the need to ensure that the channels of financial market induced growth are built around effective systems.