Evaluation of stock market performance and selected macroeconomic indicators: A case study of Nigerian stock exchange
- Post by: airjournals
- April 30, 2022
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ABSTRACT
In this research piece, we evaluated the impact of macroeconomic indicators on stock market performance in Nigeria for the period, 1990 to 2020. This investigation helps to understand sensitive peculiarities in the Nigerian stock exchange market; being an emerging stock market. Findings revealed that money supply and gross domestic product positively and significantly affect the performance of the stock market while exchange rate, interest rate and inflation rate negatively and significantly affect stock market performance in the Nigerian stock exchange market. The study concludes that macroeconomic indicators significantly affect stock market performance in the Nigerian stock market at short run and long run. This study employed data on the all-share index, exchange rate, inflation rate, interest rate, money supply and gross domestic product from recent editions of the National Bureau of Statistics e-library/publication, and the Central Bank of Nigeria Statistical Bulletin. Autoregressive Distributed Lag (ARDL) bounds testing technique was adopted in this study as its estimation technique. Based on the findings of this study, it was imperative to recommend that as the performance of the Nigerian stock market is growth-driven, policies such as: reducing poverty and unemployment rates and increasing gross capital formation among others should be employed as they spur economic growth. Also, the study recommends that the Central Bank of Nigeria should adopt a deflationary fiscal policy as well as an Adaptive Stabilization Method of Exchange Rate policy such as (buy-up a foreign exchange for the reserves, plummeting the volume of foreign exchange and incentive to nudge owners of foreign currencies to acquire local currency-denominated assets) in achieving stable exchange rate. It further suggests that the banker’s bank should work in close association with other operators in the capital market in order to maintain meaningful conduct of macroeconomic indicators through policy measures, and also by building a formidable regulatory structure for the stock market.
Keywords: Stock Market; Selected Macroeconomic Indicators; Nigerian Stock Exchange
Authorship
1Chukwuani, Victoria Nnenna PhD. & 2Ugwu, Kelvin Okoh | FULL PDF