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Stock Prices And Demand For Money: Evidence From Nigeria

Author

Listed:
  • Anthony Enisan Akinlo
  • Mofoluwaso Emmanuel

Abstract

This paper investigates the relationship between stock prices and the real money demand for Nigeria using unit root test and the cointegration with structural break. There are five important results for narrow and broad money in Nigeria. First, there is cointegration between narrow and broad money and their determinants, income, interest rate, exchange rate and real stock prices. Second, stock prices are an important determinant since cointegration fails if real stock prices are left out. Third, economic and financial reforms did affect the stability of demand for money in Nigeria over the period 1986:1-2012:4. Fourth, the long run income elasticity is not significantly different from unity with the inclusion of real stock prices. Finally, the results show structural breakpoints and they look to match clearly with corresponding critical financial, economic and political incidents.

Suggested Citation

  • Anthony Enisan Akinlo & Mofoluwaso Emmanuel, 2017. "Stock Prices And Demand For Money: Evidence From Nigeria," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 8(1), pages 1-19.
    • Handle: RePEc:ibf:rbfstu:v:8:y:2017:i:1:p:1-19
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    More about this item

    Keywords

    Money Demand; Structural Break; Cointegration; Nigeria;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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