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Rivers State University, Port Harcourt.
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| Title: | Effect of Monetary and Fiscal Policy Measures on Stock Market Performance in Nigeria |
| Author(s): | NWIKINA C. G., OZUZU C. S. & UZOR O. J. |
| Abstract: | This study empirically examined the effect of monetary and fiscal policy measures on stock market performance in Nigeria from 1985 to 2023. The study analysed the effect of monetary and fiscal policy measures (money supply, lending rate, liquidity ratio, government expenditure and government tax revenue) on the measures of stock market performance (stock market capitalization). In order to achieve the objectives of study, relevant annual time series data needed were sourced from Central Bank of Nigeria (CBN) statistical bulletin and Nigerian Exchange Group. The data obtained were tested for stationarity in order to establish if the time series has unit root using Augmented Dickey Fuller (ADF) approach. ARDL bounds cointegration test was used to established if the time series variables in the model were cointegrated or have long run relationship. Lastly, the study employed Autoregressive Distributed Lag Model (ARDL) to investigate the long-run and the short-run parameters among the variables. The major findings showed that money supply, government expenditure and government tax revenue have positive and significant effect on stock market capitalization in Nigeria in both short run and long run, lending rate has a negative and significant effect on stock market capitalization in Nigeria in both short run and long run while liquidity ratio has a negative and non-significant effect on stock market capitalization in Nigeria in both short run and long run. Based on the findings, the study concluded that monetary and fiscal policy measures play a vital role in improving stock market performance in Nigeria. It was recommended among others that Central Bank of Nigeria (CBN) should maintain a moderate and growth-aligned expansion of the money supply. A stable and predictable money supply will foster investor confidence and encourages participation in the capital market by ensuring adequate funds are available for trading and corporate financing. |
| Keywords: | Monetary Policy, fiscal policy, Stock Market, Exchange rate, Capital Market |
| Journal: | Journal of Economic Research and Development Studies Vol 2 No 1 |
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