IIARD International Institute of Academic Research and Development

RESEARCH JOURNAL OF PURE SCIENCE AND TECHNOLOGY (RJPST )

E-ISSN 2579-0536
P-ISSN 2695-2696
VOL. 7 NO. 1 2024
DOI: https://doi.org/10.56201/rjpst.v7.no1.2024.pg2016.237

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Foreign Portfolio Investment and Stock Market Capitalization in Nigeria

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

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Abstract

This study examined the effect of foreign portfolio investment on stock market capitalization in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical bulletin. Stock market capitalization was modeled as the function foreign equity investment, bonds, securities and money market investment. Ordinary least square methods of cointegration, granger causality test, and unit root test and error correction model was used. The study found that 64 percent variation in stock market capitalization was traced to foreign portfolio investment in Nigeria. Foreign equity investment, bonds, securities have positive effect while money market have negative effect. From the findings, the study conclude that foreign portfolio investment have significant effect on stock market capitalization in Nigeria. The study recommended as part of its stabilization policy, the Nigeria’s capital market regulatory authorities should give boost to the market, most importantly in the area of international competitive coupon rates and improved external reserve so that foreign portfolio investment inflow to Nigeria will experience boost by foreign investors who seek higher investment.

keywords:

Foreign Portfolio Investment, Stock Market Capitalization, Stock Investment, Equity Investment, Bond Investment

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References:

Adebisi, A.W & Arikpo, O.F. (2017). Financial market performance and foreign portfolio inflows
to Nigeria: Autoregressive distributive lag approach. International Journal of Research
Granthaalayah, 5(6), 673-688.

Adewoyin, K.O. (2004). The Nigerian financial system: Money and capital market. Osun : New
deal Publication Limited.

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