IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 2 2016

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Macro-Economic Variables and Its Impact on Nigerian Capital Market Growth

Adekunle, Olusegun A., Alalade, Yimka Samson A., Okulenu, Samuel A.

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Abstract

The purpose of this study is to investigate the impact of macroeconomic variables on capital market growth with particular emphasis on the effect of macroeconomic pricing variables such as interest rate, inflation rate, and exchange rate on capital markets growth. Multiple regression analysis of the ordinary least square was employed to determine the impact of interest rate as well as other macroeconomic variables such as inflation rate, exchange rate on capital market growth for the period between 1985 and 2013. Pooled data regression method was employed to estimate the specified model equations. Findings of the study revealed that interest rates have an adverse effect on capital market growth. The Regression analysis results reveal that a 1% increase in interest rate will lead to a 44% decrease in all share price index, this implies that as the rate of interest increases, the performance of the capital market deteriorates. Inflation rate and exchange rate are however not significant, especially at the 5 percent level of significance. The study revealed further that the negative linkage between interest rate and All Share Index sufficiently proved when independently examined, multiple regression with variables such as inflation rate and exchange rate, shows it dominance effect on the dependent variable. The capital market should be strategically position to exploit the opportunities in the market, by engaging professionals and setting mechanism that will enable it with challenges of macroeconomic variables

keywords:

Interest Rates, All Share Index, Inflation Rate, Exchange Rate, Capital Markets, Macroeconomic Variables

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