The Capital Market And The Challenges Of Real Sector Financing In Nigeria.
[A STUDY OF THE PERIOD 2000-2009]

4.3 PRESENTATION/ANALYSIS USING REGRESSION OR CORRELATION

Regression is a statistical tool used in measuring the impact of one or more variables (otherwise known as independent variable or regresor) on another variable (the dependent variable or regresand). Research Hypothesis: Hypothesis 1 Null Hypothesis (Ho): Capital market operation does not enhance the productive sector development in Nigeria. Alternate Hypothesis (H1): Capital market operation enhances the productive sector development in Nigeria. Result Presentation Model: Mathematical function is; 

GDP = f(MKC)

The true regression line is y = a + bx, where y = GDP (Gross Domestic Product),

x = MKC (Market Capitalization of the NSE),

Here, the coefficient of regression is b = Σ(x - x) (y - y) / Σ(x - x) 2

Detail Regression / Correlation solution
Market Capitalization as a Percentage of GDP (N Billions/Trillions)
The regression equation is y = a + bx
Where

From the above, the value of the coefficient of regression is 1.52 x 10-6

The explicit regression equation is therefore, y = 7.85X1012 + 0.00000152x 93 This shows a slightly weak positive relationship between capital market operation and economic development.

CORRELATION

The correlation coefficient of the two sets of data, namely Market Capitalization and GDP at Current Domestic Price, is 0.8423. The correlation coefficient was computed by means of a computer.

The nearness of this correlation coefficient to unity shows that these two parameters are very closely related.

Hypothesis 2: Null Hypothesis (Ho): The Growth in the Value and Volume of Equity Financial Instruments for firms quoted on the Stock Exchange does not contribute to economic development.

Alternate Hypothesis (H1): The Growth in the Value and Volume of Equity Financial Instruments for firms quoted on the Stock Exchange contributes to economic development. Detail Regression / Correlation solution Share Capital (Equity) against Profit Before Tax (PBT) The regression equation is y = a + bx

Where

The above shows a strong positive relationship between Share Capital (Equity) and Profit before Tax (PBT).

CORRELATION

The correlation coefficient of the two sets of data, namely, Composite Share Capital and Composite PBT computed by a computer, is 0.67. This correlation coefficient means that values of Composite Share Capital and that of Composite PBT are not strongly similar.

4.4 ANALYSIS OF REGRESSION AND CORRELATION INTERPRETED USING ECONOMIC CRITERIA

In economics, an increase in market capitalization of the Nigerian Stock Exchange (NSE), brings about an increase in the capitalization of industries or firms, which in turn, results to an increase in investments. An increase in investment is a major determinant of a nation’s GDP. Therefore, an increase in market capitalization of the Nigerian Stock Exchange will result to an increase in the Gross Domestic Product (GDP) in Nigeria. The regression analysis shows the relationship between the two variables (Market Capitalization and Gross Domestic Product, GDP) of Nigeria. Here, the Gross Domestic Product is 96 the dependent variable while Market Capitalization is the independent variable. The regression coefficient (R2) and the coefficient of correlation under test of Hypotheses:

Hypothesis 1: Regression Value (R2) = 1.52 X 10-6 Coefficient of Correlation = 0.8423

Hypothesis 2: Regression Value (R2) = 13.6251 Coefficient of Correlation = 0.67. Decision Rule: From the calculations, the decision is to reject the Null Hypothesis (Ho) and accept the Alternate Hypothesis (H1) for the two tests of hypotheses as follows:

Hypothesis 1 Capital market operation enhances the productive sector development in Nigeria.

Hypothesis 2 The Growth in the Value and Volume of Equity Financial Instruments for firms quoted on the Stock Exchange contributes to economic development