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Economic Globalisation and Stock Market Returns in Nigeria

Author

Listed:
  • Akande, Folorunso Ilesanmi
  • Ogbebor, Peter Ifeanyi
  • Adebola, Peter Sunday

Abstract

The purpose of this study is to investigate the effect of economic globalization on stock market returns in Nigeria from 1986 to 2022, employing autoregressive distributed lag modeling and bound testing cointegration. Preliminary tests were conducted, including multicollinearity checks and unit root tests for stationarity. The findings reveal that, in the long run, several key variables of economic globalization significantly influence stock market returns. Notably, Foreign Portfolio Investment (FPI) has a substantial positive effect (coefficient = 0.076497, p-value = 0.0020), whereas Foreign Direct Investment (FDI) demonstrates a weak but positive impact (coefficient = 0.073460, p-value = 0.0676). Financial Liberalization (FIL) significantly enhances stock market returns (coefficient = 0.194983, p-value = 0.0095), while Net Capital Flow (NCF) shows an insignificant negative effect (coefficient = -0.278998, p-value = 0.7447). Interest Rate (INTR) positively influences returns (coefficient = 0.050224, p-value = 0.0000), but Credit to the Private Sector (LCPS) exhibits a significant negative effect (coefficient = -0.184135, p-value = 0.0015). In the short run, FDI presents a negative impact (coefficient = -0.105272, p-value = 0.0923), while FPI remains positively influential (coefficient = 0.138874, p-value = 0.0000). The study concludes that FPI and FIL significantly influence stock market returns. This implies that governments should implement robust financial reforms that would encourage sustainable FPI for stock market development.

Suggested Citation

  • Akande, Folorunso Ilesanmi & Ogbebor, Peter Ifeanyi & Adebola, Peter Sunday, 2025. "Economic Globalisation and Stock Market Returns in Nigeria," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 22(1), pages 57-67.
    • Handle: RePEc:oap:ijaefa:v:22:y:2025:i:1:p:57-67:id:2239
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