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Do Globalisation and Geopolitical Risks Matter for Stock Market Performance in Nigeria?

Author

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  • Elias Udeaja

    (Research Department, Central Bank, Abuja, Nigeria)

  • Peter Offum

    (Research Department, Central Bank, Abuja, Nigeria)

  • Kera Ifejimalu

    (Research Department, Central Bank, Abuja, Nigeria)

  • Samson Okafor

    (Research Department, Central Bank, Abuja, Nigeria)

Abstract

The integration of countries into the global economy comes with exposure to risks that can be assessed through empirical investigation to uncover their impact on the domestic economy. Thus, this study attempts to answer the question of whether globalisation and geopolitical risk matter for stock market performance in Nigeria, given the growing interaction with the rest of the world. In doing so, the paper employs the dynamic ordinary least squares (DOLS) technique to analyse annual time series data on relevant variables from 1985 to 2021. The main finding indicates that globalisation and geopolitical risks significantly dampen the performance of the Nigerian stock market, whether it is measured by market capitalisation or by an all-share index. Accordingly, the study recommends the implementation of policies aimed at mitigating the risks associated with the globalisation and geopolitics to enhance the performance of the financial market.

Suggested Citation

  • Elias Udeaja & Peter Offum & Kera Ifejimalu & Samson Okafor, 2024. "Do Globalisation and Geopolitical Risks Matter for Stock Market Performance in Nigeria?," Financial Economics Letters, Anser Press, vol. 3(3), pages 36-51, September.
    • Handle: RePEc:bba:j00007:v:3:y:2024:i:3:p:36-51:d:366
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    References listed on IDEAS

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    2. Julio, Brandon & Yook, Youngsuk, 2016. "Policy uncertainty, irreversibility, and cross-border flows of capital," Journal of International Economics, Elsevier, vol. 103(C), pages 13-26.
    3. Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
    4. Tomiwa Sunday Adebayo & Seyi Saint Akadiri & Husam Rjoub, 2022. "On The Relationship Between Economic Policy Uncertainty, Geopolitical Risk And Stock Market Returns In South Korea: A Quantile Causality Analysis," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-19, March.
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