Do Monetary Policy Instruments Influence Capital Market Returns in Nigeria?
Keywords:
Capital Market, Monetary Policy, ARDL, Nigeria.
Abstract
This study concisely examined the relationship between monetary policy variables and performance of the Nigerian Capital Market, analyzed with appropriate econometric tools. After the analysis, the outputs revealed the following; the entire monetary policy variables employed only monetary policy rate has significant relationship with the performance of the capital market in Nigeria. It was also found that the previous information about the all share index has the capacity to predict future returns in capital market in Nigeria. On this note, the researchers are of the opinion to embark on prompt disclosure of the daily all share indexes by regulatory authorities, thereby refurbishing the efficiency of the Nigeria Capital Market. It is also suggested to adopt alternative means of disclosure apart from the national television stations and national daily newspapers because of our technological know-how in Nigeria.
References
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Godwin, C. O. (2010). Monetary policy and stock market returns: Evidence from Nigeria. Journal of Economics, 2(1), 13-21.
Hasan, A., & Javed, M. T. (2009). An empirical investigation of the causal relationship among monetary variables and equity market returns. Labar Journal of Economics, 14(1), 115-137.
Ibenta, S. N. (2005). Investment analysis and financial management strategy. Enugu: Institute of Development Studies.
Kamal A. E (2013). The development of stock markets: In search of a theory. International Journal of Economics and Financial Issues, 3(3), 606-624.
Kendall, M. G. (1953). The analysis of economic time series, Prices. Journal of the Royal Statistical Society, 96, 11–25.
Mbutor, O. M. (2007). The lending channel of monetary policy transmission in Nigeria; Vector Autoregressive (VAR) Verification. Central Bank of Nigeria Economic and Financial Review, 45(1).
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Octavio, F. A., Martin, L., & George, P. (2011). Monetary policy and its impact on stock market liquidity: Evidence from the Euro zone. International Journal of Development and Economic Sustainability, 6(4), 29-50.
Okpara, G. C. (2010). Monetary policy and stock market returns: Evidence from Nigeria. Journal of Economics, 1(1), 13-21.
Onoh, J. K. (2002). Dynamics of money, banking and finance in Nigeria: An emerging market. Aba: Astra Meridian Publishers.
Onoh, J.K. (2007). Dimension of Nigeria’s monetary and fiscal policies-Domestic and external. Lagos:Astra Meridian Publishers.
Onyeka, C. E. (2016). Impact of monetary policy on stock returns in Nigeria. Middle-East Journal of Scientific Research, 24(5), 1778-1787.
Osakwe, A. C & Chukwunulu, J. I. (2019). Monetary policy and stock market performance in Nigeria. EPRA International Journal of Research and Development, 4(5), 58-65.
Rifat, A. (2015). Impact of monetary policy on stock price: Evidence from Bangladesh. Journal of Investment and Management, 4(5), 273-284.
Ross, S. A., Westerfield, R. W., Jaffe, J. & Jordan, B. D. (2009). Modern financial management (8th edition). New Delhi: McGraw Hill.
Waud, R, (1970). Public interpretation of federal reserve discount rate changes: Evidence on the announcement effect. Econometrica, 38, 231-250.
Adekunle, O. A., Alalade, Y. S. A. & Okulenu, S. A. (2016). Macro-economic variables and its impact on Nigerian capital market growth. International Journal of Economics and Business Management, 2(2), 22-37.
Ahmed, U., & Igbinovia, L. E. (2015). Impact of inflation rate on stock returns in Nigeria stock market. International Journal of Business and Social Science, 6(11). 155-168.
Ajie, H. A. & Nenbee, S. G. (2010). An econometric analysis of monetary policy and stock prices in Nigeria. International Journal of Economic Development Research and Investment, 1(1), 175-192.
Aliyu, S.U. R. (2010). Does inflation has an Impact on stock returns and volatility? Evidence from Nigeria and Ghana. Munich Personal RePEc Archive(MPRA) Paper No. 30091.
Aliyu, S. U. R. (2009). Stock prices and exchange rate interaction in Nigeria: An intra-global financial crisis maiden investigation. MPRA Paper No 13283, 1-24.
Aliyu, S. U. R. (2013). Reactions of stock market to monetary policy shocks during the global financial crisis: The Nigeria case. CBN Journal of Applied Statistics, 3(1), 17-41.
Babaak, M., Navid, B., Shabriar, E., & Rozar, K. (2012). An empirical study of the relationship between monetary policy and stock market performance in Malaysia. Australian Journal of Basic and Applied Sciences, 6(2), 142-148.
Barakat, M. R., Elgazzar, H. S. & Hanafy, K. M. (2016). Impact of macroeconomic variables on stock markets: Evidence from emerging markets. International Journal of Economics and Finance, 8(1), 195-207.
Bhalla, V. K. (2011). Investment management: Security analysis and portfolio management. New Delhi: S Chad and Company Ltd.
Bissoon, R., Seetanah, B., Bhattu-Babajee, R., Gopy-Ramdhany, N. & Seetah, K. (2016). Monetary policy impact on stock return: Evidence from growing stock markets. Theoretical Economics Letters, 6, 186-1195.
Brealey, R. A. & Myers, S. C. (2003). Principles of corporate finance. New Delhi: McGraw Hill.
Chen, G., & Wu, M. (2013). How does monetary policy influence capital markets? Using a threshold regression model. Asia-Pacific Finance Markets, 20, 31-47.
Echekoba, F., Ananwude, A. & Lateef, O. (2017). Effect of monetary policy on the performance of the Nigerian capital market. Stylized Facts from ARDL Approach. Advances in Research, 14(6): 1-15.
Echekoba, F.N., Okaro, C.S., Ananwude, A.C. & Akuesodo, O.E. (2018). Monetary policy and capital market performance: An empirical evidence from Nigeria data. Research Journal of Economics, 2(1), 2-5.
Fama, E. F. (1981). Stock returns, real activity, inflation and money. American Economic Review, 71(4), 545-565.
Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. Journal of Finance, 25(1), 83-417.
Fisher, D. E. & Jordan, R. J. (2005). Security analysis and portfolio management. Delhi: Pearson Education.
Friedman, M. (1956). The quantity theory of money: A Restatement. Reprinted from Studies in the Quantity Theory of Money, University of Chicago Press.
Godwin, C. O. (2010). Monetary policy and stock market returns: Evidence from Nigeria. Journal of Economics, 2(1), 13-21.
Hasan, A., & Javed, M. T. (2009). An empirical investigation of the causal relationship among monetary variables and equity market returns. Labar Journal of Economics, 14(1), 115-137.
Ibenta, S. N. (2005). Investment analysis and financial management strategy. Enugu: Institute of Development Studies.
Kamal A. E (2013). The development of stock markets: In search of a theory. International Journal of Economics and Financial Issues, 3(3), 606-624.
Kendall, M. G. (1953). The analysis of economic time series, Prices. Journal of the Royal Statistical Society, 96, 11–25.
Mbutor, O. M. (2007). The lending channel of monetary policy transmission in Nigeria; Vector Autoregressive (VAR) Verification. Central Bank of Nigeria Economic and Financial Review, 45(1).
Nkoro, E. & Uko, A. K. (2016). Exchange rate and inflation volatility and stock price volatility: Evidence from Nigeria, 1986-2012. Journal of Applied Finance & Banking, 6(6), 57-70.
Nwakoby, C. & Alajekwu, U. B. (2016). Effect of monetary policy on Nigerian stock market performance. International Journal of Scientific Research and Management, 4(9),4530-4442.
Nwokoye E. S. 1 . & Otu, E. (2018). Impact of monetary policy on stock market development: Implications for the Nigerian economy. International Journal of Development and Economic Sustainability, 6(4), 29-50.
Octavio, F. A., Martin, L., & George, P. (2011). Monetary policy and its impact on stock market liquidity: Evidence from the Euro zone. International Journal of Development and Economic Sustainability, 6(4), 29-50.
Okpara, G. C. (2010). Monetary policy and stock market returns: Evidence from Nigeria. Journal of Economics, 1(1), 13-21.
Onoh, J. K. (2002). Dynamics of money, banking and finance in Nigeria: An emerging market. Aba: Astra Meridian Publishers.
Onoh, J.K. (2007). Dimension of Nigeria’s monetary and fiscal policies-Domestic and external. Lagos:Astra Meridian Publishers.
Onyeka, C. E. (2016). Impact of monetary policy on stock returns in Nigeria. Middle-East Journal of Scientific Research, 24(5), 1778-1787.
Osakwe, A. C & Chukwunulu, J. I. (2019). Monetary policy and stock market performance in Nigeria. EPRA International Journal of Research and Development, 4(5), 58-65.
Rifat, A. (2015). Impact of monetary policy on stock price: Evidence from Bangladesh. Journal of Investment and Management, 4(5), 273-284.
Ross, S. A., Westerfield, R. W., Jaffe, J. & Jordan, B. D. (2009). Modern financial management (8th edition). New Delhi: McGraw Hill.
Waud, R, (1970). Public interpretation of federal reserve discount rate changes: Evidence on the announcement effect. Econometrica, 38, 231-250.
Published
2020-05-06
How to Cite
Ogbonna, U. G., & Ejem, C. A. (2020). Do Monetary Policy Instruments Influence Capital Market Returns in Nigeria?. American Finance & Banking Review, 5(1), 50-61. https://doi.org/10.46281/amfbr.v5i1.562
Section
Research Paper/Theoretical Paper/Review Paper/Short Communication Paper
Copyright (c) 2020 Udochukwu Godfrey Ogbonna ,Chukwu Agwu Ejem
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