Effect of Global Meltdown on the Nigerian Stock Exchange Market: An Empirical Analysis, 1988-2015.
Journal Title: IOSR Journal of Humanities and Social Science - Year 2018, Vol 23, Issue 8
Abstract
This study examined the effect of the global financial meltdown on the Nigerian Stock Exchange, utilizing annual time series data covering the period from 1985 to 2015. The study adopted purely analytical methodology of modern econometric techniques such as the unit root test, co-integration test, ARDL approach, in the estimation of the relevant relationships in its investigation. The results of the co-integration test showed that there exists a long run equilibrium relationship among the variables. The result from the ARDL shows that all the four variables viz currency crisis, investment crisis (portfolio and foreign direct) and credit crisis have a significant effect on stock market performance in Nigeria within the period of review with interest rate having the most significant adverse effect. It was observed that Foreign Direct Investment exerted a positive influence on stock market performance, Though not statistically significant in the long run. Similarly, currency crisis (foreign exchange) is positively related to stock exchange market performance. This means that for every unit change in FOREX there is a corresponding change of 8.56% increase in stock market performance. In the same vein, it is revealed that credit crisis (interest rate) is negatively related to stock exchange market performance. This means that for every unit change in INTR there is a corresponding decrease 7.87% in stock market performance. The study therefore recommended that the CBN should set a favourable interest rate to attract foreign and local investors to the Nigerian Stock Exchange Market. Also, government should institute and implement policies that will ensure the swift transition of the economy into an industry based system to reduce overdependence on foreign economies; and the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), and other relevant regulatory authorities should use the financial stress index (FSI) to indicate early signals of financial crisis and guiding against such early enough.
Authors and Affiliations
Ewubare D. B, Ozuzu C. S.
Keywords
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- EP ID EP419637
- DOI 10.9790/0837-2308018488.
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