Capital Market Development and Oil Revenue Generation in Nigeria: A Time-Series Analysis Using the Error Correction Model
Keywords:
Oil Revenue, All Share Index, Market Capitalisation, Error Correction Model, Time-Series AnalysisAbstract
This study examined the relationship between the capital market and oil revenue in Nigeria from 1980 to 2025. The main indicators are oil revenue, the all-share index, market capitalisation, the number of listed securities, turnover ratio, transaction volume, and the value of shares traded. Data were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin, and the analysis employed the Augmented Dickey-Fuller (ADF) unit root test for cointegration and the error-correction mechanism (ECM) model to ensure data stationarity and a robust examination of short-run relationships. The ECM result of -0.773420 (77%) indicates the speed of adjustment from the long run to short-run dynamics. Results also showed that R2 is 0.540173 (54%),, meaning that the independent variables explain 54% of the variation in the dependent variable (oil revenue) in the short run. The study concluded that policymakers should implement deliberate policies to encourage more oil companies to list on the Nigerian Stock Exchange and strengthen existing regulatory bodies, such as the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange, to improve transparency, reduce market volatility, and protect investor rights. Finally, policymakers should focus on improving the quality and efficiency of capital market transactions and their relationship to oil revenue.
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