Abstract
This study examined the effect of foreign portfolio investment on the performance of Nigerian capital market. The specific objectives are to investigate the impact of Net Foreign Portfolio Investment, Foreign Portfolio Investment in Equity, Foreign Portfolio Investment in Bonds, Foreign Portfolio in Government Securities and Nigerian Exchange Rate per US Dollar on the performance of Nigerian Capital Market. The required data were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin and Stock Exchange Annual Report. The study has All Share Price Index and Market Capitalization as proxy for Capital market performance while Net Foreign Portfolio Investment (NFPI), Equity Investment (PIE), Bond Investment (PIB), Portfolio Investment in Government Securities (PIGS) and Exchange Rate as predictors variables. The Ordinary Least Square multiple regressions with econometric view were used as data analysis techniques. Cointegration test, Granger Causality Test, Augmented Dickey Fuller Test and Error Correction Model were used to examine the variables and its relationship to the dependent variables. Model one revealed that foreign portfolio investment in bonds and foreign portfolio investment in government securities have negative relationship with All Share Price Index while Net Foreign Portfolio investment, foreign portfolio investment in equities and exchange rate have positive relationship with All Share Price Index. Model two revealed that Net Foreign Portfolio Investment, Portfolio Investments in Bonds and Government securities has negative relationship with market capitalization while equity investment and exchange rate have positive relationship with market capitalization. The study concludes that foreign portfolio investment have significant relationship with Nigerian capital market performance. It therefore recommends that policies should be devised to enhance the operational efficiency of the Nigerian capital market, to attract foreign investors.
Highlights
One of the aims of economic integration, partnership and multi-lateral investment treaties is the inflow and outflow of capital across national borders
To recall that the objectives of this study is to examine the relationship between Nigerian capital market indicators and inflow of foreign portfolio investment in Nigeria capital market, the data was sourced from Central Bank of Nigeria Statistical Bulletin
From the above the study concludes that the independent variables examined in the study have significant relationship with the performance of Nigerian capital market
Summary
One of the aims of economic integration, partnership and multi-lateral investment treaties is the inflow and outflow of capital across national borders. Foreign portfolio investment is a component of foreign private capital; it is an aspect of international capital flows, comprising transfer of financial assets, such as cash, stocks or bonds across international border in want of profit (Chukwuemeka, 2008). The inflow of foreign portfolio investment is determined by the development of the capital market, the market rate of return and the monetary policy of the country. First Yartey (2008) argues that economic activities in a country constitute the key drivers of the growth and development of the stock market. They opined that financing a country’s www.cribfb.com/journal/index.php/afbr
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
