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Effects of Globalization on Nigeria’s Stock Market Growth

Author

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  • Ajagbe Surajdeen Tunde

    (Department of Finance, Faculty of Management Sciences, Al-Hikmah University, Ilorin, Nigeria)

  • Abdulazeez Taofeeq O.

    (Department of Finance, Faculty of Management Sciences, Al-Hikmah University, Ilorin, Nigeria)

  • Hanafi Hikmat

    (Department of Finance, Faculty of Management Sciences, Al-Hikmah University, Ilorin, Nigeria)

Abstract

Globalization is a complex phenomenon that has generated a variety of responses and interpretations. The Nigerian capital market has underperformed compared to its global counterparts, primarily due to government control over the economy and inadequate infrastructure. This study examines the impact of globalization on the growth of Nigeria’s stock market from 1986 to 2023. Utilizing a multiple regression model, the research explores the relationship between globalization and stock market growth. Various statistical methods, including the Granger Causality Test, Auto Regressive Distributed Lag (ARDL), and the Augmented Dickey-Fuller Test, were employed to assess the performance of the Nigerian stock market within the context of globalization. The findings reveal that foreign direct investment (FDI) is statistically insignificant, with a p-value of 0.6519. In contrast, trade openness (TOP) is significant at the 10% level, evidenced by a p-value of 0.0649. Additionally, the joint significance of TOP, FDI, and other control variables on market capitalization is confirmed, with an F-statistic probability value of 0.00000, indicating overall relevance. These results suggest that globalization has a small but positive effect on Nigeria’s stock market growth. The study recommends establishing a regulatory body to ensure compliance with market regulations, enhancing transparency, accountability, and fair practices. This regulatory framework would bolster investor confidence, improve financial responsibility, and strengthen the overall economy.

Suggested Citation

  • Ajagbe Surajdeen Tunde & Abdulazeez Taofeeq O. & Hanafi Hikmat, 2024. "Effects of Globalization on Nigeria’s Stock Market Growth," Timisoara Journal of Economics and Business, Sciendo, vol. 17(2), pages 121-138.
    • Handle: RePEc:vrs:timjeb:v:17:y:2024:i:2:p:121-138:n:1001
    DOI: 10.2478/tjeb-2024-0006
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    References listed on IDEAS

    as
    1. Kim, E Han & Singal, Vijay, 2000. "Erratum [Stock Market Openings: Experience of Emerging Economies]," The Journal of Business, University of Chicago Press, vol. 73(4), October.
    2. Odili Okwuchukwu, 2015. "Exchange Rate Volatility, Stock Market Performance and Foreign Direct Investment in Nigeria," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(2), pages 172-184, April.
    3. Kim, E Han & Singal, Vijay, 2000. "Stock Market Openings: Experience of Emerging Economies," The Journal of Business, University of Chicago Press, vol. 73(1), pages 25-66, January.
    4. Haejung Na & Soonho Kim, 2022. "The impact of globalization and the legal system on stock market quality," Applied Economics, Taylor & Francis Journals, vol. 54(36), pages 4203-4212, August.
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    Keywords

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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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