Acta Universitatis Danubius. Œconomica, Vol 14, No 6 (2018)

Does Monetary Policy Determine Stock Market Development in Nigeria?

Samson Adeniyi Aladejare, Irinyang Joro Danjuma, Ishaku Rimamtanung Nyiputen


The aim of this study is to assess if monetary policy variables exert any sufficient effect on stock market development in Nigeria, for the time frame 1986-2015. By adopting the Johansen cointegration and error correction method (ECM) of analysis; it was found that long-term association prevails amongst monetary policy variables, and stock market development variables used in the study for Nigeria. However, going by the short-run result, this study submits that monetary policy has not significantly impacted on stock market development. This is because key monetary variables such as lending rate, deposit rate, and Treasury bills issued, do not show any sufficient effect on stock market development; either in the current or previous periods. Thus, implying that monetary policy in Nigeria should be geared towards repositioning the activities of the stock market in Nigeria, to bring about the desired growth and development in the economy.


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