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.pg64.84

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The Estimated Effect of Foreign Portfolio Investment on Stock Market Development: A Time Series Study from Nigeria

Dr. Ebi R. Odi and Dr. Greatness U. Oji

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Abstract

This study focused on the effect of foreign portfolio investment on the development of Nigeria stock market using time series data from 2005-2021. The required data were sourced from Central Bank of Nigeria Statistical Bulletin. Stock market development was modeled as the function of foreign portfolio investment in equity, security, money market and bonds. Ordinary least square methods were used. Unit root test, cointegration test, granger causality test and error correction estimates were used to study the dynamic effect of foreign portfolio investment on the development of Nigeria stock market. The study found that 50.6 percent variation in development of stock market was traced to foreign portfolio investment. The study concludes no significant relationship between foreign portfolio equity investment and the development of Nigeria stock market, significant relationship between foreign portfolio stock investment, foreign portfolio in bonds foreign portfolio in money market and the development of Nigeria stock market. From the findings, it is recommended that financial policies should be deepened by the financial sector regulatory committee to attract foreign portfolio investment in Nigeria.

keywords:

Foreign Portfolio Investment, Stock Market Development, Foreign Equity Investment

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References:

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