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- Title
FOREIGN CAPITAL OUTFLOW AND STOCK MARKET PERFORMANCE IN NIGERIA.
- Authors
OGIEVA, OSAZEE FRANK; OSAYI, VALENTINE IGBINEDION
- Abstract
The study investigated the relationship and hence impact of foreign capital outflows on stock market performance in Nigeria for the period 1986 to 2021. Specifically, we examined how foreign direct investments outflow (FDIO), foreign portfolio investments outflow (FPIO), foreign remittances outflow (FRO), official development assistance outflow (ODAO), interest rate (INTR) and inflation rate (INFR) affected stock market performances (STMP) in Nigeria. The study employed the autoregressive distributed lags (ARDL) for the analysis of data. The Augmented Dickey fuller (ADF) Unit root tests were used to ascertain the series properties of the variables while the Correlation analysis was conducted to ascertain the degree of relationship between the dependent and independent variables. The results showed that, foreign direct investments outflow (FDIO) and other development assistance outflow (ODAO) have significant negative relationship with stock market performance in Nigeria while foreign portfolio investments outflow (FPIO) and interest rate (INTR) has a weak positive relationship with stock market performance in Nigeria. However, inflation rate (INFR) does not have any significant impact on stock market performance in Nigeria. The study therefore recommends that there is need to improve the investment climate in Nigeria because, one of the major factors that promotes foreign capital outflow is the risky investment climate. This can be done by formulating deliberate investment policies to strengthen the productivity of the monetary system especially the financial market which main goal is to move funds from the surplus unit of the economy to its deficit unit. Also, policies that will discourage capital outflow in the form of remittances outflow, such as capping the repatriation of a proportion of domestic earnings to reduce financial constraints, strengthen investment domestically as well as increase tax revenue, should be vigorously pursued by policy makers and the government.
- Subjects
NIGERIA; RATE of return on stocks; STOCKS (Finance); INTEREST rates; CAPITAL stock; INTERNATIONAL economic assistance; CAPITAL movements; FOREIGN investments
- Publication
Journal of Academic Research in Economics, 2024, Vol 16, Issue 1, p46
- ISSN
2066-0855
- Publication type
Article