Effect of Foreign Direct Investment on Capital Market Development in Nigeria

Abstract

Reliance of Nigeria on mono-product export (oil) which is prone to price shock in international market has led to many years of instability in government revenue and has served as constraint to effective implementation of national development plans. The study examines effect of foreign direct investment on capital market development in Nigeria for duration of 20 years starting from 2002 – 2021. Secondary data was obtained from Central Bank Nigeria Statistical Bulletin and the data was analysed using ordinary least square regression techniques. Findings show that the relationship between foreign direct investment and capital market development is positive and significant in the short run. The study therefore concluded that foreign portfolio has significant effect on capital market development in Nigeria Since the exerts foreign portfolio investment has positive but significant effect on market capitalization in Nigeria, the study recommended that capital market regulators should apply all necessary tools and continue to encourage listing of private companies on the floor of stock exchange market.