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Anthony Akinlo and Mofoluwaso Emmanuel

Review of Business and Finance Studies, 2017, vol. 8, issue 1, 1-19

Abstract: This paper investigates the relationship between stock prices and the real money demand for Nigeria using unit root test and the cointegration with structural break. There are five important results for narrow and broad money in Nigeria. First, there is cointegration between narrow and broad money and their determinants, income, interest rate, exchange rate and real stock prices. Second, stock prices are an important determinant since cointegration fails if real stock prices are left out. Third, economic and financial reforms did affect the stability of demand for money in Nigeria over the period 1986:1-2012:4. Fourth, the long run income elasticity is not significantly different from unity with the inclusion of real stock prices. Finally, the results show structural breakpoints and they look to match clearly with corresponding critical financial, economic and political incidents.

Keywords: Money Demand; Structural Break; Cointegration; Nigeria (search for similar items in EconPapers)
JEL-codes: C12 E41 E44 (search for similar items in EconPapers)
Date: 2017
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