International Journal of Business and Management Review (IJBMR)

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Macroeconomic Factors That Influence Stock Market Development in Nigeria


Stock markets provide channels for the mobilization and allocation of funds in the economy to be used by firms and others in fully exploiting their material, human and management resources for optimal output. The stock market itself can be influenced by macroeconomic factors prevalent in the economy. A co-integration and error correction model was employed on macroeconomic data from Nigeria and the results suggest that factors such as national savings rate, inflation rate, economic growth rates and financial intermediary development influenced stock market development during the period 1970-2011. Results from the Chow test suggested that there was no structural break in stock market development after the introduction of the Structural Adjustment Programme in 1986. It was recommended that stabilizing the financial and economic aggregates by the government for the overall growth of the economy will help to grow the stock market. JEL Classification: G20, G28, E44, O55

Keywords: Domestic Savings, Engle-Granger Co-Integration, Financial Intermediary Development, Inflation, Stock Market Development

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