EFFECTS OF DIGITAL FINANCIAL INCLUSION AND GOVERNANCE INDICATORS ON CAPITAL MARKET DEVELOPMENT IN NIGERIA

Abstract

This study examines the digital finance technology, governance indicator and capital market development in Nigeria

through the application of Augmented Dickey-Fuller technique in testing the unit root property of the series. Data

for the study were extracted from the World Governance Indicators, International Monetary Fund Survey and World

Federation of Exchanges for the period spanning from (2000 2025). Descriptive statistics, cointegration causality

test and regression analysis techniques were used to analyze the data. The results of unit root test indicated that all

the variables in the model are stationary difference which necessitate cointegration test in order to find out if there

are long relationship between the variables. The results reveal that trace statistic indicated tw cointegration between

the variables. A major policy implication of this result is that digital finance technology, and governance indicator is

function of capital market development in Nigeria. The findings reveal a strong long-run relationship between

digital finance, governance quality, and capital market development in Nigeria. The causality reveals significant

strong positive relation of Digital Financial Inclusion (FDI) on Capital Market Development Indicators (CMD),

Governance Indicators on CMDI, weak causality between of GOVI on DFI and No reverse causality from CMDI.

Therefore the study recommends that Central Bank of Nigeria (CBN) Should design and support policies that

promote digital financial innovations, strong governance framework is paramount for effective growth and

development, Fintech companies should be regulated in order to promote customers confidence and proactive

measures should be taken to minimize the rate of financial crimes within the system, banks should incorporate

financial technologies and innovation for better customers services, self-service, more access and low transaction

cost. Further studies should test the moderating effects of Digital Financial Technology and Governance Indicator

on Capital Market Development Using CMDI as dependent variable while Governance Index and Digital Financial

Index serve as Independent Variable. Also, other financial technology and governance indicators variables should be

on capital market development.