Many efforts have been made towards understanding the relationship between capital market and the economic development of Nigeria. The capital market of every economy is setup for the attainment of specific objective which includes economic growth and stability; Data were collected and analyzed using ordinary least square analysis. These include F-test, to determine the significance of the entire regression plan, T- test to test for the significance of the individual variables and the second order test, which include test for autocorrelation, normality test and heteroscedasticity. The result of the study shows that the capital market has a positive and significant impact on the country‟s economic development. On the strength of this evidence, this work recommends that government should introduce policies to motivate and encourage the market. If these recommendations are efficiently implemented, the effectiveness of the Nigerian capital market will be enhanced.

Every economy seeks to appropriate industrial base to move the economy from a traditional and low level of production to a more automated and efficient system of mass processing and the manufacturing of goods and services. For this level of development to be attained, there must be a sound financial system which would serve as the back bone of such an economy. If this is pursued, acquiring industrial capabilities would be easily attained since it is considered as the economic development. As a result of the importance of the financial system in developing industrial capabilities every economy seeks avenues to acquire them one of such avenues is raising funds through the capital market.

The capital market deals with instrument or long term securities with maturity period longer than one year such as bonds, debentures and equity stocks. The capital market in Nigeria has been a major source of finance to the government; industries etc. to meet their longer term capital requirements such as financing for fixed investments on buildings, plants bridges etc. The use of capital market reduces over reliance on the money market, assist in promoting a solvent and competitive financial sector as well as fostering a healthy stock market culture. The....

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