top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
crossref
doi
open access

Published: 14 June 2019

Globalization and Capital Market Development in Nigeria

Samson Olusegun Akinwale, Oludayo Elijah Adekunle

Adekunle Ajasin University Akungba-Akoko, Ondo State, Nigeria

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf

doi

10.31014/aior.1992.02.02.95

Pages: 396-404

Keywords: Capital Market, Foreign Portfolio Investment, Foreign Direct Investment, Globalization, Trade Openness

Abstract

The Nigerian capital market has undergone different phases coupled with diverse challenges which impeded the growth of the market and its integration into the world financial market. This study investigated the effect of globalization on the capital market in Nigeria from 1986 to 2017 using secondary data from the Central Bank of Nigeria Statistical Bulletin. Augmented Dickey – Fuller (ADF), Bound Test and Autoregressive Distributed Lag were employed to evaluate the effect of trade openness, foreign direct investment, and foreign portfolio investment on market capitalization in Nigeria. The results of the unit root test revealed that both trade openness and market capitalization were stationary at first difference while foreign direct investment and foreign portfolio investment were stationary at level. Also, the long-run equilibrium relationship was found among the variables based. The ARDL revealed that both trade openness and foreign portfolio investment had a positive and significant effect on market capitalization both in short run and long run while foreign direct investment had a negative and insignificant effect on market capitalization in short run and long run. In line with findings, it was concluded that globalization had a significant effect on the economy through openness and the inflow of foreign capital. The study recommended that there is a need for total liberalization of the economy in order to reap the full benefits of globalization in the economy. The government should formulate a policy that will reduce or discourage the expatriation of profit by foreign investors to foreign countries. Finally, innovative financial instruments should be introduced in the market for the purpose of attracting foreign investors.

References

  1. Adeniran, O.A, Adeyemo, K.S. & Alade, S. (2015). Globalization, capital market, and economic development in Nigeria. Journal of Governance and Regulation, 4(1), 57-62

  2. Akinmulegun, S.O. (2018).  Capital market development and foreign portfolio investment inflow in Nigeria (1985-2016). Advances in Economics and Business, 6(5), 299-307.

  3. El-Nader, H.M. & Alraimony, A.D. (2012). The impact of macroeconomic factors on Amman stock market returns. International Journal of Economics and Finance, 4(12), 202-213.

  4. Faloye B.A. & Adekunle, O.E. (2016). The impact of capital market on economic growth of Nigeria. Nigeria Journal of Banking, Finance and Entrepreneurship Management, 2, 104 – 116.  

  5. Goel, K. & Gupta, R. (2011). Impact of globalization on stock market development in India. Delhi Business Review, 12(1), 68-84

  6. Guido B. & Adriana, A. (2001). Globalization and the role of the state: challenges and perspectives. United Nations World Public Sector Report.

  7. Jeelani, F., Mukhopadhyay, D. & Vashishtha, A. (2013). Globalization and the Indian capital market. International Journal of Management and Social Sciences Research 2(8), 167-174.

  8. Nwadike, G.C. & Nwibo, S.E. (2014). Effect of globalization on Nigeria stock exchange and capital market liberation on economic growth (1981 – 2011).  Journal of Business, Economics & Finance, 3(3), 357-370.

  9. Obadan, M. I. (1999). Managing the Nigerian economy into the next millennium: Strategies and policies. Journal of Economic Management, 5(1), 1-38.

  10. Oluwole, F.O. (2014). Globalization and stock market growth in Nigeria. European Scientific Journal, 10(31), 317-332.

  11. Onuoha, T.E. & Nwaiwu, J.N. (2016). Impact of global financial crisis on Nigerian stock market. An International Multidisciplinary Journal, 10(1), 166-177

  12. Pocious, V., Stungurienė, S. & Paškevičius, A. (2014). The factors of the attractiveness of the capital market of Lithuania. Procedia - Social and Behavioral Sciences 110, 1052 – 1062

  13. Tomaliwan, M.F.D. (2016). Does the Philippine stock market respond to domestic economic fundamentals and regional equities markets? An ARDL bound testing approach. Presented at the DLSU Research Congress, 4, 7-9.

bottom of page