IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v6y2022i8p761-770.html
   My bibliography  Save this article

Financial Sector Liberalisation and Capital Market Growth in Nigeria

Author

Listed:
  • Adeyefa, Felix Ademola

    (Department of Accountancy, Rufus Giwa Polytechnic, Owo, Ondo State, Nigeria)

Abstract

The study examined financial sector liberalisation and capital market growth in Nigeria from 1985 to 2021 with secondary data sourced from the Central Bank of Nigeria Statistical Bulletin. The two formulated hypotheses were tested with the Augmented Dickey-Fuller (ADF) and error correction mechanism. Findings from the study revealed that broad money supply and credit to private sector have a positive and significant effect on both market capitalisation and volume of transactions. Also, cash reserve requirements and exchange rate have negative and significant effects on both market capitalisation and volume of transactions. Interest rates have significant and positive effects on market capitalisation and significant negative effects on volume of stock transactions. Foreign direct investment has a positive and insignificant effect on market capitalisation and volume of transactions. The study recommended that the monetary authority in Nigeria must continually improve the monetary policy to control the money supply in the economy and reduce the interest rate to enhance capital market expansion. Also, the Nigerian government should encourage more exports to create a positive relationship between exchange rate and stock prices. This will make local currency depreciate and local firms will become more competitive, leading to an increase in stock prices.

Suggested Citation

  • Adeyefa, Felix Ademola, 2022. "Financial Sector Liberalisation and Capital Market Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(8), pages 761-770, August.
    • Handle: RePEc:bcp:journl:v:6:y:2022:i:8:p:761-770
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-6-issue-8/761-770.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/virtual-library/papers/financial-sector-liberalisation-and-capital-market-growth-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alberto Giovannini & Bart Turtelboom, 1992. "Currency Substitution," NBER Working Papers 4232, National Bureau of Economic Research, Inc.
    2. Cuddington, John T. & Cuddington, John T., 1983. "Currency substitution, capital mobility and money demand," Journal of International Money and Finance, Elsevier, vol. 2(2), pages 111-133, August.
    3. Uwe Corsepius, 1989. "Liberalisation of the capital markets in developing countries," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 24(5), pages 220-226, September.
    4. Arturo J. Galindo & Alejandro Micco & Guillermo Ordo�ez, 2002. "Financial Liberalization: Does It Pay to Join the Party?," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 231-262.
    5. Huw Pill & Mahmood Pradhan, 1995. "Financial Indicators and Financial Change in Africa and Asia," IMF Working Papers 1995/123, International Monetary Fund.
    6. R. Olowe, 1999. "Weak Form Efficiency of the Nigerian Stock Market: Further Evidence," African Development Review, African Development Bank, vol. 11(1), pages 54-68.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Akcay, O. Cevdet & Alper, C. Emre & Karasulu, Meral, 1997. "Currency substitution and exchange rate instability: The Turkish case," European Economic Review, Elsevier, vol. 41(3-5), pages 827-835, April.
    2. Fridman Alla & Verbetsky Aleksey, 2001. "Currency Substitution in Russia," EERC Working Paper Series 01-05e, EERC Research Network, Russia and CIS.
    3. Alagidede, Paul & Panagiotidis, Theodore, 2009. "Modelling stock returns in Africa's emerging equity markets," International Review of Financial Analysis, Elsevier, vol. 18(1-2), pages 1-11, March.
    4. Hilde Bjørnland, 2005. "A stable demand for money despite financial crisis: the case of Venezuela," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 375-385.
    5. Sulaiman, Saidu & Masih, Mansur, 2017. "Is liberalizing finance the game in town for Nigeria ?," MPRA Paper 95569, University Library of Munich, Germany.
    6. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    7. Alejandro Micco & Carmen Pagés-Serra, 2004. "Protección del empleo y flujo bruto de puestos de trabajo: un enfoque de diferencias en diferencias," Research Department Publications 4366, Inter-American Development Bank, Research Department.
    8. Kwan Wai Ko & Jagdish Handa, 2006. "Currency Substitution in a Currency Board Context: The Evidence for Hong Kong," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(1), pages 39-56.
    9. Carmen Pagés-Serra & Alejandro Micco, 2008. "Efectos económicos de la protección del empleo: Elementos de juicio a partir de datos internacionales a nivel de actividad económica," Research Department Publications 4497, Inter-American Development Bank, Research Department.
    10. Fong-Lin Chu & Jack Hou, 1998. "An extension of currency substitution into the near monies framework: a case for Canada," Applied Economics, Taylor & Francis Journals, vol. 30(7), pages 845-851.
    11. Siregar, Reza & Rajaguru, Gulasekaran, 2005. "Sources of variations between the inflation rates of Korea, Thailand and Indonesia during the post-1997 crisis," Journal of Policy Modeling, Elsevier, vol. 27(7), pages 867-884, October.
    12. Domac, Ilker & Martinez Peria, Maria Soledad, 2003. "Banking crises and exchange rate regimes: is there a link?," Journal of International Economics, Elsevier, vol. 61(1), pages 41-72, October.
    13. repec:icf:icfjmo:v:04:y:2006:i:4:p:48-63 is not listed on IDEAS
    14. Miguel Lebre de Freitas & Francisco José Veiga, 2006. "Currency substitution, portfolio diversification, and money demand," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 719-743, August.
    15. Lorenzo Bini-Smaghi & Silvia Vori, 1993. "Is there a “triffin dilemma” for the EMS?," Open Economies Review, Springer, vol. 4(2), pages 175-188, June.
    16. Roy, Saktinil & Kemme, David M., 2020. "The run-up to the global financial crisis: A longer historical view of financial liberalization, capital inflows, and asset bubbles," International Review of Financial Analysis, Elsevier, vol. 69(C).
    17. Mahmoud Haddad & Sam Hakim, 2015. "Can Banks Lead the Economic Recovery of the Arab Spring?," Working Papers 965, Economic Research Forum, revised Nov 2015.
    18. Jyh-Lin Wu & Yu-Hau Hu, 2007. "Currency substitution and nonlinear error correction in Taiwan's demand for broad money," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1635-1645.
    19. James Payne, 2003. "Post stabilization estimates of money demand in Croatia: error correction model using the bounds testing approach," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1723-1727.
    20. repec:zbw:bofrdp:1989_031 is not listed on IDEAS
    21. Robert Kelly & Kieran Mcquinn & Rebecca Stuart, 2011. "Exploring the Steady-State Relationship Between Credit and GDP for a Small Open Economy–The Case Of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 42(4), pages 455-477.
    22. Alejandro Micco & Carmen Pagés-Serra, 2004. "Employment Protection and Gross Job Flows: A Differences-in-Differences Approach," Research Department Publications 4365, Inter-American Development Bank, Research Department.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:6:y:2022:i:8:p:761-770. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.