Derivative Securities and Its Impact on the Nigerian Stock Market

Udeme Okon Efanga, Uwem Effiong Hanson and Boniface Christopher Ekanem
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Udeme Okon Efanga: Department of Banking and Finance, Faculty of Management Sciences, University of Calabar, Nigeria
Uwem Effiong Hanson: Department of Banking and Finance, College of Management Science, Michael Okpara University of Agriculture, Umudike, Nigeria
Boniface Christopher Ekanem: Department of Insurance and Risk Management, University of Uyo, Uyo, Nigeria

International Journal of Research and Scientific Innovation, 2020, vol. 7, issue 9, 278-285

Abstract: This study was carried out to ascertain the impact of derivative securities on the Nigerian stock market between 2014 and 2019. Data employed for this study was elicited from Central Bank of Nigeria Statistical Bulletin of 2018 and Security and Exchange Commission statistical Bulletin of 2019. This study employed All Share Index and Market Capitalization as measure of productivity of the Nigerian stock market, while Foreign Exchange Derivative was employed as the regressor and Exchange Rate was employed as a controlled variable. This study employed Auto-Regressive Distributed Lag ARDL Model to analyze data. Inferential results pointed out that Foreign Exchange Derivative had positive impact on productivity of the Nigerian stock market within the period under review. The study recommended that monetary authorities in Nigeria should lay emphasis on the deepening of the Nigerian derivative market through the introduction and trading of derivative instruments such as swaps, options, futures and forwards amongst others as applicable in the financial systems of advanced countries. If this is done, the productivity of the Nigerian stock market would be greatly enhanced.

Date: 2020
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