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Globalization, Monetary Policy, and Stock Market Performance in Nigeria

Author

Listed:
  • T.T. Ogunro

    (Lead City University, Ibadan)

  • Sarafa Adeyemi Salami

    (Lead City University, Ibadan)

  • Omolade Adeleke

    (Federal University Oye Ekiti)

Abstract

This study investigated the dynamic relationship between globalization, monetary policy, and stock market performance in Nigeria from 1985 to 2023 using the Auto Regressive Distributed Lag (ARDL) model. The research employed trade openness as a proxy for globalization, while key monetary policy indicators such as interest rate, exchange rate, and money supply are utilized to assess policy stance. Stock market performance is measured using the All Share Index. The ARDL approach is employed to account for the mixed order of integration among variables and to explore both short-run and long-run dynamics. The long-run findings indicated that trade openness, foreign direct investment (FDI), and exchange rate have a direct and significant impact on the stock market. Furthermore, the results revealed an inverse yet significant relationship between money supply (MS) and the stock market while the relationship between interest rate (INT) and the stock market is positive, it is not statistically significant. In the short-run, the results showed trade openness and exchange rate (OPEN) have a positive and significant impact on the stock market while foreign direct investment (FDI) has a significant but inverse relationship with the stock market, money supply (MS) exhibited a positive but insignificant connection, while interest rate (INT) has a negative but insignificant relationship with the stock market. The study provided empirical evidence supporting the need for coordinated monetary policies that consider global economic trends to enhance market stability and investor confidence. Policy implications suggested a strategic balance between openness and domestic macroeconomic management to foster a resilient financial market.

Suggested Citation

  • T.T. Ogunro & Sarafa Adeyemi Salami & Omolade Adeleke, 2025. "Globalization, Monetary Policy, and Stock Market Performance in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(4), pages 5883-5895, April.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-4:5883-5895
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    References listed on IDEAS

    as
    1. Emeka Nkoro & Aham Kelvin Uko, 2016. "Exchange Rate and Inflation Volatility and Stock Prices Volatility: Evidence from Nigeria, 1986-2012," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(6), pages 1-4.
    2. Halil Altintas & Kassouri Yacouba, 2018. "Asymmetric Responses of Stock Prices to Money Supply and Oil Prices Shocks in Turkey: New Evidence from a Nonlinear ARDL Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 8(4), pages 45-53.
    3. Simplice A. Asongu & Joseph Nnanna & Vanessa S. Tchamyou, 2020. "The comparative African regional economics of globalization in financial allocation efficiency: the pre-crisis era revisited," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-41, December.
    4. Ditimi Amassoma & O. Adeleke, 2018. "Testing for the Causality between Interest Rate and Stock Market Performance in Nigeria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 109-124.
    5. Wakilat BALOGUN & Jauhari. DAHALAN & Sallahuddin. HASSAN, 2016. "Stock Market Development, Liberalization And Financial Development In The Selected Sub-Saharan African Countries," Romanian Economic Business Review, Romanian-American University, vol. 11(2), pages 52-65, June.
    6. Muhammad Ali Nasir & Min Du, 2018. "Integration of Financial Markets in Post Global Financial Crises and Implications for British Financial Sector: Analysis Based on A Panel VAR Model," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(2), pages 363-388, June.
    7. Tiamiyu, Kehinde A., 2022. "Financial deepening and stock market development in Nigeria: evidence from recent data (1981-2019)," MPRA Paper 113224, University Library of Munich, Germany.
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