Abstract
This study examined the effect of macroeconomic determinants of stock price movements in Nigeria. To achieve this objective, data were gathered on macroeconomic variables such as gross domestic product, exchange rate, inflation, interest rate and absolute stock price were captured for the purpose of analysis. The autoregressive distributive lag (ARDL) model was used in analyzing the macroeconomic determinants of stock price movement in Nigeria. The augmented Dickey-Fuller (ADF) unit root test was also engaged in order to ascertain the stationarity or otherwise of the variables. The ADF unit root test revealed that only interest rate was stationary at levels while the remaining variables became stationary when differenced once. The ARDL findings revealed that the determinants variables (GDP, EXCHR, INTR, and INFL) were not jointly co-integrated with the dependent variable, ASTP, hence, no existence of a long run relationship. Conclusively, there was no long run relationship between macroeconomic determinants and stock price movements in Nigeria. It was recommended that, government should create conducive business environment, strengthen the real sector to stimulate the economy, boost savings and stock investment. Finally, government should fine tune its policies on exchange rate determination and setup a consistent policy plan to stimulate investment in the capital market.
Highlights
Emerging market like Nigeria is characterized by high volatility and inherent dynamics which are a reflection of the stock price movement on the Nigerian Stock Exchange (NSE) floor
After the 2007/2008 global economic crisis, the stock market has faced a substantial fluctuation and shock that emanates from the subprime mortgage crisis in U.S This is a proof that the Nigerian stock market had significantly responded to movements in exchange rate, global oil price changes and other macroeconomic uncertainties between 2010 and 2015 (Kelikume, 2009)
This study centered on examining macroeconomic determinant of stock price movement in Nigeria
Summary
Emerging market like Nigeria is characterized by high volatility and inherent dynamics which are a reflection of the stock price movement on the Nigerian Stock Exchange (NSE) floor. Seyyed (2010) in his study of the emerging stock market performance and the Iranian economic growth in 2010, showed empirical examination of the linkage between the variables within the vector autoregressive (VAR) model He argued that the main reason behind movement in stock prices is macroeconomic activity in the long run and the leading role played by stock market as critical economic indicator of the growth of the economy of Iran in the future in the short run. According to Foley (1991) who studied the role played by the Karachi stock market in facilitating the stock market development in Pakistan, engaged the Granger causality method and submitted the absence of any relationship among the variables used They recommended that government of Pakistan should be more interested in political stability of the nation which they identified as a key determinant in order to achieve significant growth in gross domestic product. Revealed the existence of long run association between share price and these variables and their statistical significance in the short run
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
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.
