ABSTRACT
The 21st century has seen rising globalization, which has led to growing interdependence of world economies and population, induced by cross-border trade in goods and services and flows of investment, people and information. Against this backdrop, the study empirically investigated the impact of globalization, represented by gross capital formation and trade volume, on stock market growth, proxied by market capitalization, between 1981 and 2018. The study utilized error correction modelling (ECM) for cause-effect estimation. The results revealed that the variables became stationary at first-order difference and a long-run relationship exists between trade, gross capital formation and stock market capitalization. Additionally, the results showed that a percent rise in gross capital formation and trade corresponds to 0.54 % and 0.26% increase in stock market capitalization, which implies that globalization positively impacted stock market growth within sampled period. The study recommended the need for a broad-based enlightenment about the operations of the capital market and prospects of equity investment for the investing public.
