Effects of Globalization on Nigeria’s Stock Market Growth

Ajagbe Surajdeen Tunde, Abdulazeez Taofeeq O. and Hanafi Hikmat
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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

Timisoara Journal of Economics and Business, 2024, vol. 17, issue 2, 121-138

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.

Keywords: Globalization; Stock market; Growth; Trade openness; Interest rate; Inflation (search for similar items in EconPapers)
JEL-codes: G1 G2 O2 O4 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:timjeb:v:17:y:2024:i:2:p:121-138:n:1001

DOI: 10.2478/tjeb-2024-0006

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