MACROECONOMIC DETERMINANTS OF STOCK MARKET PERFORMANCE IN NIGERIA, 1986-2013

Abstract

The paper is part of larger research agenda with the purpose of exploring some of the determinants of stock market in Nigeria for the periodl980-2013. The variables employed included market capitalization, per capita income, interest rate, exchange rate, inflation and the economy level of openness. The econometric methodology is error correction model and it was discovered that interest rate, inflation and past level of market capitalization were the major determining factors for trading activities at the NSE. However, the negative impact of inflation, interest rate and per capita income revealed by the study is beginning to assume a dangerous dimension. The paper therefore recommended that the monetary authority should ensure moderate interest rate that encourages investment even as the current double digit inflation in the economy should be checked.