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Derivative Securities and Its Impact on the Nigerian Stock Market

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  • Efanga, Udeme Okon

    (Department of Banking and Finance, Faculty of Management Sciences, University of Calabar, Nigeria)

  • Hanson, Uwem Effiong

    (Department of Banking and Finance, College of Management Science, Michael Okpara University of Agriculture, Umudike, Nigeria)

  • Ekanem, Boniface Christopher

    (Department of Insurance and Risk Management, University of Uyo, Uyo, Nigeria)

Abstract

This study was carried out to ascertain the impact of derivative securities on the Nigerian stock market between 2014 and 2019. Data employed for this study was elicited from Central Bank of Nigeria Statistical Bulletin of 2018 and Security and Exchange Commission statistical Bulletin of 2019. This study employed All Share Index and Market Capitalization as measure of productivity of the Nigerian stock market, while Foreign Exchange Derivative was employed as the regressor and Exchange Rate was employed as a controlled variable. This study employed Auto-Regressive Distributed Lag ARDL Model to analyze data. Inferential results pointed out that Foreign Exchange Derivative had positive impact on productivity of the Nigerian stock market within the period under review. The study recommended that monetary authorities in Nigeria should lay emphasis on the deepening of the Nigerian derivative market through the introduction and trading of derivative instruments such as swaps, options, futures and forwards amongst others as applicable in the financial systems of advanced countries. If this is done, the productivity of the Nigerian stock market would be greatly enhanced.

Suggested Citation

  • Efanga, Udeme Okon & Hanson, Uwem Effiong & Ekanem, Boniface Christopher, 2020. "Derivative Securities and Its Impact on the Nigerian Stock Market," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(9), pages 278-285, September.
    • Handle: RePEc:bjc:journl:v:7:y:2020:i:9:p:278-285
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    References listed on IDEAS

    as
    1. Luyali Newton Chanzu & Mouni Gekara, 2014. "Effects of Use of Derivatives on Financial Performance of Companies Listed in the Nairobi Security Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(4), pages 27-43, October.
    2. Olawale Luqman Samuel, 2015. "The effect of credit risk on the performance of commercial banks in Nigeria," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 4(1), pages 29-52.
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