Cost Drivers and Financial Algorithm in the Nigerian Capital Market

Olufemi Akinloye Oyedare
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Olufemi Akinloye Oyedare: Accounting and Finance Department, Ajayi Crowther University

East African Finance Journal, 2026, vol. 5, issue 2

Abstract: This study examines the interaction between cost drivers and financial algorithms in shaping capital market outcomes in Nigeria. Using a balanced panel dataset of fifteen listed deposit money banks over the period 2018–2023, the study employs panel econometric techniques, including fixed effects, random effects, and Hausman specification tests. Findings reveal that operating and financing costs exert significant negative effects on market performance, while strategic expenditure and financial algorithms positively influence valuation efficiency and investor responsiveness. The Hausman test confirms the suitability of the fixed effects model, indicating the presence of firm-specific heterogeneity. The study concludes that effective cost management combined with algorithmic financial integration enhances capital market efficiency in Nigeria. Policy implications emphasize improved cost control, increased digital investment, and strengthened regulatory frameworks to support algorithmic trading systems.

Keywords: Cost Drivers; Financial Algorithm; Capital Market; Nigeria; Market Efficiency (search for similar items in EconPapers)
JEL-codes: G14 G21 O33 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2026-18

DOI: 10.59413/eafj/v5.i2.4

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