Impact of Globalization on the Stock Market Growth in Nigeria (1981– 2016)

Abstract

The study examined the impact of globalization on stock market growth in Nigeria from 1981 to 2016. The specific objectives were to identify the relationship that exist between foreign direct investment as well trade openness on stock market growth. Six explanatory variables were specified for this study based on theoretical underpinning. The study employed ordinary least squares technique and secondary econometrics test such as Augmented Dickey Fuller (ADF) unit root test , co-integration test, granger causality test  while the model was estimated using the Vector Error Correction Model (VECM).The result of the analysis reveals that the coefficients of Trade Openness (TOP) and Exchange Rate had a positive linear relationship with Market Capitalization of the Nigeria Stock Exchange (MCAP) such that if the variables increase, then Nigerian Total Market Capitalization of the Nigeria Stock Exchange value (MCAP) will increase. The result also revealed that stock market growth in Nigeria is adequately explained by the variables used in the model for the period of 36 years (i.e.) from 1981 to 2016). Based on this, the study suggests for appropriate policy measures coordination that will have a good synergy with stock market growth in Nigeria.