Stock Market Liquidity and Manufacturing Sector Performance: Evidence from Nigeria

The study examined the impact of stock market liquidity on manufacturing sector performance in Nigeria for the period 1981-2017. The research adopts multiple regression analysis in which Auto Regressive Distributed Lag (ARDL) model was utilized in the analysis. Data on manufacturing sector output (MSO), stock market liquidity proxied by the ratio of market capitalization (SML), All-Share Index (ASI), interest rate (INR) and exchange rate (EXCR) were analyzed in the study. The results revealed that stock market liquidity (LSML) has a positive and insignificant impact on manufacturing sector performance in Nigeria, while All-Share Index (LASI) has a positive and significant influence on manufacturing sector performance. Similarly, the results revealed that interest rate (INR) and exchange rate (LEXCR) have negative and insignificant impact on manufacturing sector performance in the economy. These results imply that any attempt to increase stock market liquidity and All-Share Index by 1% will lead manufacturing sector performance in Nigeria to increase by 0.134%, and 0.136%, respectively. Thus, the study recommends that government should as a matter of fact; intensify efforts in promoting stock market activities in the economy, as that will provide more liquidity needed for more investments in the country by investors thereby leading to improved capacity of the manufacturing sector to produce more goods and services supplied in the economy.