An Assessment of the Relationship between Stock market Development and Monetary Policy on Economic Growth in some selected African Countries

The stock market supplies equity and a direct form of finance to prospect investors for economic reasons. This function qualifies it to work as an essential long-term lubricant in the economic growth progress. The study examines the relationship between stock market development and monetary policy on economic growth in the major oil producing African countries namely Nigeria, Angola, Algeria and Libya. The panel unit root tests show that real gross domestic product, market capitalization and interest rate are integrated of order one while money supply is integrated of order zero. The fixed effect model shows that market capitalization, money supply and interest rate have positive and statistically significant effect on the real gross domestic product in Nigeria, Angola, Algeria and Libya. The study concludes that stock market development has a positive effect on economic growth in the selected African countries and monetary policy has a positive effect on economic growth in the selected African countries. The recommends that African countries especially Nigeria, Angola, Algeria and Libya should advance buying and selling of stock by encouraging more companies and securities to be listed in the stock exchange for more equity capitalization and finally this could lead to increase in economic growth in their region, expansionary monetary policy should implemented in African countries in order to boast economic variables and achieved higher economic growth.