Assessing the Impact of Stabilization Policy on Capital Market Performance in Nigeria
Abstract
The study examined stabilization policy and capital market performance in Nigeria (1985- 2022). The objectives include the relationship between government expenditures and all share index; government revenue and all share index; monetary rate and all share index and treasury bill operations and all share index in Nigeria. The study data was sourced through secondary means. The data collected were sourced from publication of Central Bank of Nigeria, Annual report, Bullion and statistical bulletin. Error Correction Model was used to test the stated hypotheses for rejection or acceptance. The findings revealed that government expenditure has positive and significant impact on all share index; government revenue was found to exert negative influence on all share index; monetary policy rate has negative but significant impact on all share index. Treasury bill outstanding has a decreasing effect on capital market performance. The study also found out that combination of fiscal and monetary policies has significant impact on capital market performance in Nigeria thereby supporting theories such as Keynesian which requires government intervention in the financial market for improved performance. The study concludes that fiscal policy has more stabilizing effect on the capital market performance than monetary policy. The study recommended among others that government should increase its spending especially in the area of infrastructure development as this will help business to expand and lead to more investment at the capital market.
Keywords
Monetary PolicyFiscal PolicyCapital MarketECMNigeria
References
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