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The Role of Foreign Direct Investment in Stock Market Development in Nigeria: A Test of Complementarity

Gbenga Babarinde ()

The Review of Finance and Banking, 2020, vol. 12, issue 2, 175-187

Abstract: This paper examines the role of foreign direct investment (FDI) in stock market development in Nigeria for the period 1981-2018 via Dynamic Ordinary Least Squares(DOLS) and pairwise Granger causality techniques. Empirical findings indicate that FDI plays a positive significant role in the development stock market in Nigeria. Also, a unidirectional causality flows from FDI to stock market development. This study concludes that FDI constitutes a catalyst to stock market development in Nigeria, which implies the complementary role of FDI in stock market. Therefore, Nigerian government should ensure investors-friendly macroeconomic framework and implement policies to encourage inflows of FDI in Nigeria.

Date: 2020
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The Review of Finance and Banking is currently edited by Victor Dragota; Bogdan Negrea

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Handle: RePEc:rfb:journl:v:12:y:2020:i:2:p:175-187