IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF FINANCE AND INVESTMENT RESEARCH (WJFIR )

E-ISSN 2550-7125
P-ISSN 2682-5902
VOL. 8 NO. 1 2024
DOI: https://doi.org/10.56201/wjfir.v8.no1.2024.pg172.188

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External Debt and Stock Market Performance in Nigeria

B. O. Osuka , S.U. Chigbu and Lucky Anyike Lucky

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Abstract

This study examined the effect of external debt on the performance of Nigeria stock market. Time series data were sourced from Central Bank of Nigeria Statistical bulletin. Stock market performance was modeled as the function external debt with multilateral club of creditors and other sources of external debt. Ordinary least square methods of cointegration, Granger causality test, unit root test and error correction model was used. The study found that 40.1 percent variation in stock market performance was traced to external debt. External debt has positive and significant effect on stock market performance. From the findings, the study concludes that external debt has positive and significant effect on Nigeria stock market performance. It recommended that investment policies such as real investment of external debt should be formulated to enhance stock market performance and the regulatory authorities should diversify the sources of external debt beyond multilateral club of creditors to further enhance stock market performance.

keywords:

External Debt, Stock Market Performance, Multilateral Club of Creditors

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References:

Adesola, W. A, & Oka F. A (2017). Financial market performance and foreign portfolio inflows
to Nigeria: Autoregressive Distributive Lag Approach. International Journal of
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Agu, A. O, Ogu C, & Ezeanyeji C (2019). Foreign portfolio investment and stock market
returns in Nigeria. IOSR Journal of Economics and Finance, 10 (6), 1-9.

Agyapong, D., & Bedjabeng, K.O. (2022). External debt stock, foreign direct investment and
financial development Evidence from African economies. Journal of Asian Business
and Economic Studies, 6(4), 113-128.

Ajayi, L B. & Oke, M. O. (2012).Effect of external debt on economic growth and development
of Nigeria. International Journal of Business & Social Science, 3(12), 297-304.

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