Globalization, Monetary Policy, and Stock Market Performance in Nigeria

T.T. Ogunro, Sarafa Adeyemi Salami and Omolade Adeleke
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T.T. Ogunro: Lead City University, Ibadan
Sarafa Adeyemi Salami: Lead City University, Ibadan
Omolade Adeleke: Federal University Oye Ekiti

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 4, 5883-5895

Abstract: This study investigated the dynamic relationship between globalization, monetary policy, and stock market performance in Nigeria from 1985 to 2023 using the Auto Regressive Distributed Lag (ARDL) model. The research employed trade openness as a proxy for globalization, while key monetary policy indicators such as interest rate, exchange rate, and money supply are utilized to assess policy stance. Stock market performance is measured using the All Share Index. The ARDL approach is employed to account for the mixed order of integration among variables and to explore both short-run and long-run dynamics. The long-run findings indicated that trade openness, foreign direct investment (FDI), and exchange rate have a direct and significant impact on the stock market. Furthermore, the results revealed an inverse yet significant relationship between money supply (MS) and the stock market while the relationship between interest rate (INT) and the stock market is positive, it is not statistically significant. In the short-run, the results showed trade openness and exchange rate (OPEN) have a positive and significant impact on the stock market while foreign direct investment (FDI) has a significant but inverse relationship with the stock market, money supply (MS) exhibited a positive but insignificant connection, while interest rate (INT) has a negative but insignificant relationship with the stock market. The study provided empirical evidence supporting the need for coordinated monetary policies that consider global economic trends to enhance market stability and investor confidence. Policy implications suggested a strategic balance between openness and domestic macroeconomic management to foster a resilient financial market.

Date: 2025
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