IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 11 NO. 4 2025
DOI: 10.56201/jafm.vol.11.no4.2025.pg191.202

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The Relationship between Stock Returns and Inflation in the Era of COVID-19 in Nigeria: A Test of Fisher’s Hypothesis

Ibrahim Oladipupo SHITTU, Anthony Olugbenga ADARAMOLA

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Abstract

The study examined the relationship between stock returns and inflation in Nigeria. It also put to test, the applicability of Fisher’s hypothesis during COVID-19 pandemic. Weekly time series data that covered the period between 27th February, 2020 and 26th February, 2021 were used for the analyses. Unit root test was conducted and results revealed that the variables are of different orders of integration. This justified the use of ARDL estimation technique. The ARDL bound test confirmed the existence of a long run relationship among the variables. Findings revealed that despite COVID-19 pandemic in Nigeria, inflation has positive and significant relationship with stock returns in the long run. The import of this is that, inflation can be used as a hedge against stock returns in Nigeria; hence, the study affirmed the relevance of Fisher’s hypothesis despite COVID-19 pandemic. It was therefore recommended that investors should put their investible funds in Nigerian stock market with or without COVID-19 pandemic.

keywords:

COVID-19 Pandemic, Stock Return, Inflation, Fisher’s hypothesis

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