This document summarizes a research article that examined the determinants of stock price movements in Nigeria from 1985 to 2010. The researchers used cointegration tests and regression analysis to analyze the relationship between stock prices and various macroeconomic variables, including monetary policy factors like interest rates, exchange rates, and money supply as well as inflation and political instability. The results showed no long-run relationship between the variables, but inflation was found to be a major determinant of stock price movements in Nigeria. The study recommends that monetary authorities pay attention to changes in money supply and inflation given their impact on stock prices.
Abstract The main purpose of this paper is to investigate whether stock prices and exchange rates are related to each
other or not. Both the short term and the long term association between these variables are discovered. The study applies
monthly and quarterly data on two gulf countries, including Kingdom Saudi Arabia (KSA) and United Arab Emirate (UAE)
for the period January 2008 to December 2009. The results of this study in the short term found that the exchange rate
influence positively on the stock market price index for United Arab Emirate and there is no association between them for
Kingdom Saudi Arabia. Moreover the study in the long term found that the exchange rate influence negatively on stock
market price index for the United Arab Emirate. While no association between these variables in Kingdom Saudi Arabia.
Effect of Investor Sentiment on Future Returns in the Nigerian Stock Marketijtsrd
Study investigated the effect of investor sentiment on future returns in the Nigerian stock market for a period covering first quarter of 2008 to fourth quarter of 2015.The OLS regression and granger causality techniques were employed for data analyses. The results showed that (1) investor sentiment has a significant positive effect on stock market returns even after control for fundamentals such as Industrial production index, consumer price index and Treasury bill rate; (2) there is a uni-directional causality that runs from change in investor sentiment (?CCI) to stock market returns (Rm). Derived finding showed that the inclusion of fundamentals increased the explanatory power of investor sentiment from 3.96% to 33.05%, though at both level, investor sentiment (?CCI) has low explanatory power on stock market returns. The study posits existence of a dynamic relationship between investor sentiment and the behaviour of stock future returns in Nigeria such that higher sentiment concurrently leads to higher stock prices. Udoka Bernard Alajekwu* | Cyprian Okey Okoro | Dr. Michael Chukwumee Obialor | Prof. N. S. Ibenta"Effect of Investor Sentiment on Future Returns in the Nigerian Stock Market" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-1 | Issue-5 , August 2017, URL: http://www.ijtsrd.com/papers/ijtsrd2256.pdf http://www.ijtsrd.com/management/marketing-management/2256/effect-of-investor-sentiment-on-future-returns--in-the-nigerian-stock-market/udoka-bernard-alajekwu
Abstract The main purpose of this paper is to investigate whether stock prices and exchange rates are related to each
other or not. Both the short term and the long term association between these variables are discovered. The study applies
monthly and quarterly data on two gulf countries, including Kingdom Saudi Arabia (KSA) and United Arab Emirate (UAE)
for the period January 2008 to December 2009. The results of this study in the short term found that the exchange rate
influence positively on the stock market price index for United Arab Emirate and there is no association between them for
Kingdom Saudi Arabia. Moreover the study in the long term found that the exchange rate influence negatively on stock
market price index for the United Arab Emirate. While no association between these variables in Kingdom Saudi Arabia.
Effect of Investor Sentiment on Future Returns in the Nigerian Stock Marketijtsrd
Study investigated the effect of investor sentiment on future returns in the Nigerian stock market for a period covering first quarter of 2008 to fourth quarter of 2015.The OLS regression and granger causality techniques were employed for data analyses. The results showed that (1) investor sentiment has a significant positive effect on stock market returns even after control for fundamentals such as Industrial production index, consumer price index and Treasury bill rate; (2) there is a uni-directional causality that runs from change in investor sentiment (?CCI) to stock market returns (Rm). Derived finding showed that the inclusion of fundamentals increased the explanatory power of investor sentiment from 3.96% to 33.05%, though at both level, investor sentiment (?CCI) has low explanatory power on stock market returns. The study posits existence of a dynamic relationship between investor sentiment and the behaviour of stock future returns in Nigeria such that higher sentiment concurrently leads to higher stock prices. Udoka Bernard Alajekwu* | Cyprian Okey Okoro | Dr. Michael Chukwumee Obialor | Prof. N. S. Ibenta"Effect of Investor Sentiment on Future Returns in the Nigerian Stock Market" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-1 | Issue-5 , August 2017, URL: http://www.ijtsrd.com/papers/ijtsrd2256.pdf http://www.ijtsrd.com/management/marketing-management/2256/effect-of-investor-sentiment-on-future-returns--in-the-nigerian-stock-market/udoka-bernard-alajekwu
This paper analysed the forecasting ability of yield-curve as a predictor of the short-run fluctuations in economic activities in Namibia. The study employed the techniques of unit root, cointegration, impulse response functions and forecast error variance decomposition on the quarterly data covering the period 1996 to 2015. The results revealed a negative relationship between the term structure of interest rates and economic activities, though statistically insignificant. This suggests that the yield-curve has no forecasting ability as a predictor of economic activity in Namibia.
Macroeconomic Variables on Stock Market Interactions: The Indian ExperienceIOSR Journals
To examine the effect of macroeconomic variables on the stock price movement in Indian Stock Market. Six variables of macro-economy (inflation, exchange rate, Industrial production, MoneySupply, Goldprice, interest rate) are used as independent variables. Sensex, Nifty and BSE 100are indicated as dependent variable. The monthly time series data are gathered from RBI handbook over the period of April 2008 to June 2012. Multiple regression analysis is applied in this paper to construct a quantitative model showing the relationship between macroeconomics and stock price. The result of this paper indicates that significant relationship is occurred between macroeconomics variable’s and stock price in India.
Asymmetric Analysis of Exchange Rates Volatility: Evidence from Emerging EconomyIOSRJBM
The primary objective of this study is to empirically establish the level of volatility persistence and ascertain the presence of asymmetric effect on the three segment of the Nigerian foreign exchange market (Inter-bank Foreign Exchange Market (IFEM), bureau de change (BDC) and Wholesale Dutch Auction System (WDAS)). Asymmetric Threshold Generalized Authoregressive Conditional Heteroscadasticity (TGARCH) approach was adopted in the research methodology for the empirical analysis to capture the simultaneous estimation of the mean and the conditional variance in 1,262 sample observations. Generally, this study produced some interesting findings: first, it reveals that naira to US dollar nominal exchange rate volatilities were found to be persistent in all the market segments. Second, the exchange rate volatility in the interbank is persistent and explosive; while the volatilities in the BDC and WDAS market are high and moderate, respectively. This means that the BDC segment of the Nigerian foreign exchange market is less volatile than the interbank market segment even when the interbank segment of the market is more funded with foreign exchange from autonomous and official sources. Additionally, it is evident that interbank segment reacts more to past shocks of the foreign exchange market. Finally, the study also confirms the existence of asymmetric effect in the Nigerian foreign exchange market. The practical implication of these findings is that it raises a policy concerns for the regulators of interbank foreign exchange transaction because the finding of this study signals liquidity squeeze in the market and it is a disincentive to international investors and market players. This is not unconnected to trend seeking and round tripping behavior.
An interest rate is the quantity of interest due per period as a proportion of the amount lent, deposited or borrowed. The first aim of this study is to know about the interest rates prevailing with countries and to analyze the impact of interest rate towards international currency pairs. For this purpose, the currencies of four countries have been taken and they were compared with the interest rate to know their impact. The conclusion clearly reveals that the interest rate changes has an impact towards the market in mid and long term basis with all the currencies taken for the study. Monetary policy is the mechanism by which the monetary authority of a country regulates the supply of money to ensure the price stability and general trust in the currency. The second aim of the study is to analyze the impact of monetary policy and its impact on international markets. The study is all about analyzing the volatility of Forex market in different GMT’S. The need of the study is to know about the price variations in different timings of the market when there is day shift process accordingly. This type of research design has been undertaken for analytical design since the pricing movements of bullion markets are analyzed.
Causal Relationship between Stock market and Real Economy in India using Gran...sammysammysammy
This paper uses Granger Causality test to check whether Stock market (that are Sensex30 and Nifty50 Indices) affects Real GDP of India or vice versa happens. This is a research dissertation paper that I wrote for my Graduation degree.
Impact of Accounting Information on Stock Price Volatility (A Study of Select...inventionjournals
This study examined the impact of accounting information on stock price volatility on selected quoted manufacturing companies in Nigeria for a period of ten years (2005-2014). This research work was necessitated by the fact that quoted manufacturing companies on the Nigerian Stock Exchange has undergone many turbulent times caused by the crumbling interest of investors in quoted manufacturing companies with volatile stock prices. This study adopted an ex-post facto research design as it relied on secondary source of data extracted from the annual reports of five quoted manufacturingcompanies and daily stock prices for these companies were sourced from the Nigerian Stock Exchange for the stated period. The population for this study was the manufacturing companies listed on the Nigerian Stock Exchange. Data from the annual report were basically drawn from the statement of comprehensive income and statement of financial position. The data collected for this study were analyzed using Ordinary Least Square method of data estimation with the help of econometric views (E-views) software. The results of cross section fixed effect model show that accounting information has a strong positive significant impact on stock price volatility. It was therefore concluded that since accounting information has been found as one of the causes of stock price volatility, it is therefore the responsibility of management to ensure proper preparation and presentation of accounting information to enable potential investors make economic and investment decisions, as this will lead to less volatile stock price. This study recommends that proper regulation of accounting information should be put into place as accounting information has the ability to cause either an increase or decrease in the stock price of a company.
This paper analysed the forecasting ability of yield-curve as a predictor of the short-run fluctuations in economic activities in Namibia. The study employed the techniques of unit root, cointegration, impulse response functions and forecast error variance decomposition on the quarterly data covering the period 1996 to 2015. The results revealed a negative relationship between the term structure of interest rates and economic activities, though statistically insignificant. This suggests that the yield-curve has no forecasting ability as a predictor of economic activity in Namibia.
Macroeconomic Variables on Stock Market Interactions: The Indian ExperienceIOSR Journals
To examine the effect of macroeconomic variables on the stock price movement in Indian Stock Market. Six variables of macro-economy (inflation, exchange rate, Industrial production, MoneySupply, Goldprice, interest rate) are used as independent variables. Sensex, Nifty and BSE 100are indicated as dependent variable. The monthly time series data are gathered from RBI handbook over the period of April 2008 to June 2012. Multiple regression analysis is applied in this paper to construct a quantitative model showing the relationship between macroeconomics and stock price. The result of this paper indicates that significant relationship is occurred between macroeconomics variable’s and stock price in India.
Asymmetric Analysis of Exchange Rates Volatility: Evidence from Emerging EconomyIOSRJBM
The primary objective of this study is to empirically establish the level of volatility persistence and ascertain the presence of asymmetric effect on the three segment of the Nigerian foreign exchange market (Inter-bank Foreign Exchange Market (IFEM), bureau de change (BDC) and Wholesale Dutch Auction System (WDAS)). Asymmetric Threshold Generalized Authoregressive Conditional Heteroscadasticity (TGARCH) approach was adopted in the research methodology for the empirical analysis to capture the simultaneous estimation of the mean and the conditional variance in 1,262 sample observations. Generally, this study produced some interesting findings: first, it reveals that naira to US dollar nominal exchange rate volatilities were found to be persistent in all the market segments. Second, the exchange rate volatility in the interbank is persistent and explosive; while the volatilities in the BDC and WDAS market are high and moderate, respectively. This means that the BDC segment of the Nigerian foreign exchange market is less volatile than the interbank market segment even when the interbank segment of the market is more funded with foreign exchange from autonomous and official sources. Additionally, it is evident that interbank segment reacts more to past shocks of the foreign exchange market. Finally, the study also confirms the existence of asymmetric effect in the Nigerian foreign exchange market. The practical implication of these findings is that it raises a policy concerns for the regulators of interbank foreign exchange transaction because the finding of this study signals liquidity squeeze in the market and it is a disincentive to international investors and market players. This is not unconnected to trend seeking and round tripping behavior.
An interest rate is the quantity of interest due per period as a proportion of the amount lent, deposited or borrowed. The first aim of this study is to know about the interest rates prevailing with countries and to analyze the impact of interest rate towards international currency pairs. For this purpose, the currencies of four countries have been taken and they were compared with the interest rate to know their impact. The conclusion clearly reveals that the interest rate changes has an impact towards the market in mid and long term basis with all the currencies taken for the study. Monetary policy is the mechanism by which the monetary authority of a country regulates the supply of money to ensure the price stability and general trust in the currency. The second aim of the study is to analyze the impact of monetary policy and its impact on international markets. The study is all about analyzing the volatility of Forex market in different GMT’S. The need of the study is to know about the price variations in different timings of the market when there is day shift process accordingly. This type of research design has been undertaken for analytical design since the pricing movements of bullion markets are analyzed.
Causal Relationship between Stock market and Real Economy in India using Gran...sammysammysammy
This paper uses Granger Causality test to check whether Stock market (that are Sensex30 and Nifty50 Indices) affects Real GDP of India or vice versa happens. This is a research dissertation paper that I wrote for my Graduation degree.
Impact of Accounting Information on Stock Price Volatility (A Study of Select...inventionjournals
This study examined the impact of accounting information on stock price volatility on selected quoted manufacturing companies in Nigeria for a period of ten years (2005-2014). This research work was necessitated by the fact that quoted manufacturing companies on the Nigerian Stock Exchange has undergone many turbulent times caused by the crumbling interest of investors in quoted manufacturing companies with volatile stock prices. This study adopted an ex-post facto research design as it relied on secondary source of data extracted from the annual reports of five quoted manufacturingcompanies and daily stock prices for these companies were sourced from the Nigerian Stock Exchange for the stated period. The population for this study was the manufacturing companies listed on the Nigerian Stock Exchange. Data from the annual report were basically drawn from the statement of comprehensive income and statement of financial position. The data collected for this study were analyzed using Ordinary Least Square method of data estimation with the help of econometric views (E-views) software. The results of cross section fixed effect model show that accounting information has a strong positive significant impact on stock price volatility. It was therefore concluded that since accounting information has been found as one of the causes of stock price volatility, it is therefore the responsibility of management to ensure proper preparation and presentation of accounting information to enable potential investors make economic and investment decisions, as this will lead to less volatile stock price. This study recommends that proper regulation of accounting information should be put into place as accounting information has the ability to cause either an increase or decrease in the stock price of a company.
Macroeconomic Variables and Stock Price Changes in Emerging Stock Market Evid...ijtsrd
This study investigated macro economic variables and stock price changes in emerging stock market evidence from Nigeria. The main objective of the study was to ascertain the major macroeconomic variables that are determinants of stock prices in Nigerian Stock market. Secondary data was collected from CBN Statistical bulletins and used. The co integration technique was used for the data analysis. The results of the study or findings revealed that Exchange rate has a positive effect on stock prices Real GDP has a positive effect on stock prices money supply has negative effect on stock prices on the long run while interest rate, inflation rate, have no significant effect on stock prices. Based on the findings, it is thus recommended as follows more attention should be paid to credit control and long term supply of money by monetary authorities to stabilize stock prices instead of adopting price stabilization measures. Concerned authorities should tame inflation and interest rates, check stock prices manipulations, ensure the production and promotion of export products agents of stock market can also predict stock prices by observing trend of output growth consistently of a particular industry and Nigeria government and entrepreneurs should engage in the production of tradable goods rather than only crude oil to create more export for the country and hence boost stock market trading with more investors. Matthew Osedebamhen Moni | Steve Nkem Ibenta | Victor Ike Okonkwo "Macroeconomic Variables and Stock Price Changes in Emerging Stock Market Evidence from Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-1 , December 2021, URL: https://www.ijtsrd.com/papers/ijtsrd47503.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/47503/macroeconomic-variables-and-stock-price-changes-in-emerging-stock-market-evidence-from-nigeria/matthew-osedebamhen-moni
Fluctuations of Equity Share Price of the Selected Banks in Omanjournal ijrtem
ABSTRACT: Since Oman is experiencing a fall in the crude oil prices leading to the decline in share prices, there is a fear of an economic slowdown. Oman being heavily dependent on oil to fund its national budget, it may experience a crisis due to this situation. Capital Market Authority is the regulator or the governmental body which is responsible for governing the trading of securities in the Sultanate. Muscat Securities Market is the exchange where all the listed securities are traded. The Central Bank of Oman is in charge of keeping up the internal and external worth of the national money. It is also the single coordinated controller of Oman's finance related services industry. In this report we examine the equity shares price behaviour of six banks of Oman. These banks are listed in the MSM. A clear comparison between these will help to forecast their future prices. This will benefit the shareholders in understanding and also to make decisions regarding which bank to invest in to get maximum returns. Keywords: Stock Market, Behaviour of Equity Share Prices, Conventional and Islamic Banks.
This study modeled volatility and daily exchange rate movement in Nigeria with daily exchange rate between Nigeria Naira and US Dollar from January 2, 2001 to May 20, 2019 collected from the Central Bank of Nigeria (CBN). The results of the estimated models revealed that conditional variance (volatility) has positive and significant relationship with exchange rate returns between Nigeria Naira and US Dollars, which corroborates the theory that predicts positive relationship between return and volatility for risk averse investors. Also found that exchange rate volatility between Naira / US Dollar is persistent. It was also discovered that goods news produces more volatility than bad news of equal magnitude. The researchers therefore suggested that the Central Bank of Nigeria should always proffer timely intervention to reduce the volatility persistence. This will go a long way to counteract or moderate the excess volatility between Naira and US Dollar transactions.
This study examined the nature of the relationship between the macroeconomic variables and share prices using the Nairobi Securities Exchange All Share Index (NASI). The study used four macroeconomic variables namely; interest rate, inflation, exchange rate and gross domestic product (GDP) for the period January 2008 to December 2014. The study found a positive relationship between GDP and NSE share prices. Exchange rate was found to have an insignificant positive relationship with share prices while interest rates had negative relationship with share prices. Inflation rate was found to have significant negative relationship with share prices due to its effect on purchasing power. The study concluded that the four macroeconomic variables combined had strong positive and significant relationship with share prices. The macroeconomic variables accounted for 86.97% of changes in share prices. The study recommended that capital markets regulators and other government regulatory bodies should promote a stable macroeconomic environment in the country for optimal performance of shares and stock market at large.
Effect of Changes in Earning on Stock Prices of Listed Healthcare Sector of t...ijtsrd
Nowadays, information on stock price movement has become paramount in making an investment decision and a good knowledge of the factors that determine stock prices and the ability to predict stock prices are added advantages in the developing economies. Therefore, this study seeks to determine the impact of earnings on the stock price of healthcare firms in Nigeria. The study relied on the linear panel modeling approach of fixed effect and random effect while the Hausman test was applied for the model selection. The panel data set used for the study was sourced from the NSE annual fact book for the periods 2011 to 2020. The result of the random effect model estimated revealed that earnings per share EPS , dividend yield DDY and firm size FSZ have no significant impact on the stock price of healthcare firms in Nigeria. The only exception is book value per share BVPS which is positive and had a significant impact on the stock prices of healthcare firms in Nigeria at the 0.01 significant levels. This study, therefore, concludes that BVPS is the perfect predictor of stock price movement in the healthcare sector. As a result, the study recommends among other findings that Book Value per Share should be considered when making investment decisions in the healthcare firms in Nigeria. Aniedozie Obiamaka Mercy | Prof Alphonsus S. Anichebe | Dr. Emeka-Nwokeji, N. A "Effect of Changes in Earning on Stock Prices of Listed Healthcare Sector of the Nigerian Stock Exchange" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-4 , June 2022, URL: https://www.ijtsrd.com/papers/ijtsrd50335.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/50335/effect-of-changes-in-earning-on-stock-prices-of-listed-healthcare-sector-of-the-nigerian-stock-exchange/aniedozie-obiamaka-mercy
Does Economic Growth Affect Capital Market Development In Nigeria? 1985 – 2016AJHSSR Journal
The goal of this paper is to assess the impact of economic growth affects capital market
development in Nigeria using annualised data from 1986-2016. We employed that Johansen cointegration
technique to determine if our variables are cointegrated. The error correction model (ECM) was employed to
estimate our dynamic short and long-run model. Various diagnostic tests were also conducted to confirm the
validity of our results. The results indicate that there is a long-run relationship between economic growth and
capital market development. The baseline estimator further showed that economic growth has significant
positive influence on capital market development. We also found that inflation has significant negative impact
on the capital market while money supply was found to have insignificant effect on the dependent variable. The
error correction term showed evidence of slow speed of adjustment toward long-run equilibrium, with deviation
from equilibrium corrected at the speed of 2.3 percent on annual basis. We conclude that economic growth
indeed drives capital market development in Nigeria. And were recommend that policies aimed at facilitating
economic activities should be pursued by the monetary authorities, the government and policymakers to further
enhance the development of Nigerian capital market
Volatility in Indian Stock Market: A study to assess volatility, persistence ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Impact of Macroeconomic Factors on Share Price Index in Vietnam’s Stock Markettheijes
This paper investigates the macroeconomic determinants of share price in the stock market of Vietnam. The investigation was conducted by using a VECM econometric methodology and revealed thatVietnam’s stock market prices are chiefly determined by economic activities: market price index, inflation, money supply and exchange rate. An increase in market price index and money supply makes share price, while the increase of inflation (CPI) and exchange rate reduces share price. The study’s result showed that Vietnam’s stock market can be replaced by investors of foreign currency (USD), while the exchange rate tends to rise.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
Determinants of stock price movements in nigeria evidence from monetary variables
1. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.14, 2013
www.iiste.org
Determinants of Stock Price Movements in Nigeria: Evidence
from Monetary Variables
1.
2.
Victor A. Malaolu1, Jonathan Emenike Ogbuabor2*, and Anthony Orji2
CBN Entrepreneurship Development Centre (EDC), Ikeja Lagos, Nigeria
Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria
* E-mail of the corresponding author: jonathan.ogbuabor@unn.edu.ng
Abstract
Most studies conducted on the determinants of stock price movements in Nigeria have been done on theoretical
basis with no quantitative empirical evidence to support their postulations. Consequently, this study examined
the macroeconomic determinants of stock price movements in Nigeria using detailed econometric framework in
order to provide the foundation for evidence-based policies. Both the long-run and short run dynamic
relationships between the stock price movement and the macroeconomic variables were analyzed with time
series data that spanned from 1985 to 2010 using the Engle-Granger two-step cointegration test. We established
that there is no cointegration between the variables, indicating the absence of long run relationship. Results of
the regression indicate that the monetary policy variables (real exchange rate, real interest rate and money supply)
as well as political instability are not the determinants of stock price movements in Nigeria; however, inflation
was found to be a major determinant of stock price movements. The study recommends that the monetary
authorities (that is the Central Bank of Nigeria, CBN) and policy makers should pay attention to changes in
money supply and inflation in view of their sensitivity to stock price movements in Nigeria.
Key words: Stock Price Movement; Monetary Policy Variables; Cointegration; Inflation, CBN; Nigeria
1. Introduction
The stock market has become an essential market playing a vital role in economic prosperity by fostering capital
formation and sustaining economic growth in most economies across the world. Stock markets are more than a
place to trade securities; they operate as facilitator between savers and users of capital by means of pooling of
funds, sharing risk, and transferring wealth. Stock markets are essential for economic growth as they ensure the
flow of resources to the most productive investment opportunities (Udegbunam and Eriki, 2001). Guglielmo et al.
(2004) argue that the primary benefit of a stock market is that it constitutes a liquid trading and price determining
mechanism for a diverse range of financial instruments. This allows risk spreading by capital raisers and
investors and matching of the maturity preferences of capital raisers (generally long-term) and investors (shortterm). This in turn stimulates investment and lowers the cost of capital, contributing to the economic growth of a
nation in the long term.
It is worth noting that stock price all over the world including Nigeria is characterized by upward and downward
movements. Meristem Research of August 2008 describes the Nigerian stock market as a secular market driven
by forces that could be in place for many years, causing the price of a particular investment or asset class to rise
or fall over a long period of time. While on the one hand, in a secular bear market, weak sentiment causes selling
pressure over an extended period of time. On the other hand, in a secular bull market, strong investor sentiment
drives prices higher, as there are more net buyers than sellers. Trading volumes (number of shares) in the stock
market constantly fluctuated strongly as stock prices change in stock markets on a daily basis. In Nigeria, just
like in many other countries of the world, the question of what determines stock price movements (upward and
downward) is seen to provoke diverse answers from different circles. The known efficient market theory believe
that stock prices reflect everything that is known about a company and hence can be predicted based on
fundamental analysis, while proponents of technical analysis attempt at forecasting future security prices based
on historical data.
The factors driving stock price movements have become issue of concern to both researchers in academics and
professional portfolio managers. While few researchers have approached the determinants of stock price
movements from the micro perspective, few others approached it from macro perspective. Incidentally, few
studies in Nigeria have attempted to provide empirical evidence of the determinants of stock price movements
(for instance Udegbunam and Eriki, 2001), while few others have done that at theoretical level (for example
Meristem Research, 2008). While the study by Udegbunam and Eriki (2001) is lagging behind in time especially
in the face of the recent global financial crisis, Meristem Research (2008) only provides a theoretical exposition
that lacks quantitative empirical evidence. Again, at the different countries level, studies conducted on the
determinants of stock price movements showed divergent outcomes, even though it seems that some
determinants commonly appeared for all stock markets. However, it is difficult to generalize the results due to
the various conditions that surround each stock market environment. This is because each market has its own
61
2. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.14, 2013
www.iiste.org
rules and regulations, country peculiarities, type of investors, and other factors that provide the basis of its
uniqueness.
Consequently, this study provides quantitative evidence on the factors that determine the stock price movements
in Nigeria. The policy relevance of this study cannot be over stressed since Nigeria has increasingly become an
investment destination for most foreign financial investors as a result of the recent financial sector reforms.
Therefore, studying the determinants of Nigerian stock price movement is very germane for financial investment
decision so that the country-specific factors influencing the upward and downward movements of stock prices
can be identified. Herein lies the purpose and significance of this study.
2. Brief Review of the Related Literature
Following Rational Expectation Theory (RET), the price of a stock or bond depends partly on what prospective
buyers and sellers believe it will be in the future. Rational Expectation theory is a building block for the ‘random
walk’ or efficient markets’ theory of securities prices. A sequence of observations on daily stock price is said to
follow a random walk if the current value gives the best possible prediction of future values. The Efficient
Markets theory of stock prices uses the concept of rational expectations to reach the conclusion that investors
buy stocks they expect to have a higher-than-average return and sell those they expect to have lower returns.
When they do so, they bid up the prices of stocks expected to have higher-than-average returns and drive down
the prices of those expected to have lower-than-average returns. The prices of the stocks adjust until the expected
returns adjusted for risk are equal for all stocks. Equalization of expected returns means that investors’ forecasts
become built into or reflected in the prices of stocks. More precisely, it means that stock prices change so that
after an adjustment to reflect information like dividends, bonuses, the time value of money, and differential risks,
they equal the market’s best forecast of the future price. Therefore, the only factors that can change stock price
are random factors that could not be known in advance (Sergeant and Wallace, 1975).
The Efficient Market Hypothesis posits that the most direct influence on a stock’s price is a change in the
fundamentals of the business. According to them, if revenues and profits are continuously increasing, one can
expect the share price to rise as investors bid to buy into the increasing fortunes of the company. On the other
hand, if the profit is flat or declining with no change in sight, investors begin to abandon the stock and the price
will fall. The theory however argues that changes in the underlying business have a direct impact on the share
price. Smart investors spot a subtle change before they become price-movers and take the appropriate action.
Another factor which the theory identified is what is referred to as sector changes; the theory maintains that
changes in the stock’s sector can have positive or negative effects on its price. Some sectors or industries are
cyclical in nature and that should be expected to affect the stock price (Mukherjee and Naka, 1995; Maysami and
Koh, 2000).
Mukherjee and Naka (1995) argue that market forces such as demand and supply affect stock price movements.
Any change in demand and supply, both of which can change at different rates causes fluctuation in share prices.
If demand for a stock rises, its price tends to rise. An increase in supply depresses the stock price. Demand and
supply are however related to other factors. Investment returns or company profitability is another potential
factor. This factor is however dependent on profitability as there is no company that can pay good investment
returns in terms of dividends and/or bonus issues to its share holders without a solid profitability report.
However no company is by law compelled to declare dividends. It is only when such company makes profit that
it can declare dividend and/or bonus issues. An impressive investment returns will attract more investors to the
company; in other words, if returns on investment are attractive, there will be high demand for its stock and the
price moves up. The reverse is the case when a company’s investment returns is unattractive. Ordinarily, if a
company is performing well in the area of profitability, investors will be interested to invest in such company
and this will influence the share price of the company. On the other hand, a poor profitability will not attract
investors as they will not like to put their monies at risk. In essence, impressive profitability of a company leads
to increase in demand of the company’s shares and subsequently increase in its share price (Meristem Research
Report, 2008).
Apart from specific company characteristics, other external factors such as government rules and regulations,
inflation, exchange rate, money supply, growth in gross domestic product and other economic conditions,
investor behavior, market conditions, competition, uncontrolled natural or environmental circumstances directly
affecting the production of the company, behavior of market participants, strikes, and so on, could be very
important influencing factors in determining stock price movements.
Inflation and interest rate are key external factors identified as determinants of stock price movement. Maysami
and Koh (2000) using cash flow valuation model maintains that an increase in expected inflation rate is likely to
lead to economic tightening policies that would have negative effect upon stock prices. A rise in the rate of
inflation increases the nominal risk free rate and raises the discount rate. DeFina (1991) however argues that the
cash flows does not rise at the same rate as inflation, and the rise in discount rate leads to lower stock prices. A
62
3. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.14, 2013
www.iiste.org
report by dynamic portfolio limited shows that if the inflation rate is high, the tendency is that as the real income
declines, the investors end up selling their assets, including stocks to enhance their purchasing power. The
reverse is the case when the inflation rate is low, investors would like to acquire more assets. In essence, the era
of high inflation rate negatively affects stock prices while low inflation rate boost stock prices.
On the effect of monetary policy variables on stock price moments, Udegbunam and Eriki (2001) examination of
the relation between stock prices and inflation in the Nigerian stock market provides a strong support for the
proposition that inflation exerts a significant negative influence on the behavior of the stock prices. Moreover,
the study shows that stock prices are also strongly driven by the level of economic activity measured by GDP,
interest rate, money stock, and financial deregulation. On the other hand, the findings of the study show that oil
price volatility has no significant effect on stock prices.
A rise in interest rate may encourage investors to switch from the stock market to the money market. Reduced
interest rate encourages demand for cash for speculative purpose and therefore may boost stock market activities.
There is a relationship between bond yield, the level of stock prices and the price earnings ratio. The lower the
yield on debt instruments, the higher the stock prices as well as the price earnings ratio. On the other hand the
higher the yield on bonds, the lower the stock prices. Ologunde et al (2006) examined the relationship between
stock market capitalization and interest rate. Using an ordinary regression analysis they showed that the
prevailing interest rate exerts positive influence on stock market capitalization.
Exchange rate is another factor pointed out in the literature as a key determinant of stock price movements.
Adam and Tweneboah (2008) argue that the instability of exchange rate can cause speculation in foreign
exchange market, disrupt international credit operations and international stock market operations. The
instability can also lead to crisis of confidence that could cause capital flight, or a large-scale withdrawal of
short-term credit facilities. If there is high exchange rate it would encourage round tripping and discourage stock
market investment. It will cause operating cost upward movement and lower corporate profit in the real sector:
The higher the operating cost the lower the profit. When the value of the currency is dropping, the incentive to
invest by foreign investors in the domestic economy is lost. This can affect the stock market and stock prices.
Adam and Tweneboah (2008) employed Johansen multivariate cointegration test and innovation accounting
techniques from Vector Error Correction Model (VECM) to study the effect of macroeconomic variables and
stock price movements in Ghana. They used quarterly data covering the period from the first quarter 1991 to the
last quarter 2006. They established that there is cointegration between macroeconomic variables identified and
Stock prices in Ghana, indicating long run relationship. The result also shows that interest rate is the key
determinant of the share price movements in Ghana.
Money supply and country GDP are also seen as potential determinants of stock price movements. Contraction
in money stock is expected to have a negative impact on stock prices, while an upward movement in GDP could
raise stock prices due to the potential for higher profits arising from a healthy business climate. However, when
the GDP is on the downward trend, there is likelihood of stock prices dropping. Chaudhuri and Smiles (2004)
test the long run relationship between stock prices and changes in real macroeconomic activity in the Australian
stock market in the period 1960 to 1998. The real macroeconomic activities include real GDP, real private
consumption, real money supply, and real oil price. The results of their study indicated that there is a long run
relationship between stock prices and real macroeconomic activity.
3. Methodology
3.1. Model Specification
This study employed an econometric methodology, specifically a single linear regression model. The merit of
using a single linear regression according to Koutsoyianis (1977) is due to its theoretical plausibility, explanatory
ability, accuracy of parameter estimates, simplicity and forecasting ability.
Guided by the research objectives, we formulated the implicit form of our model as follows:
SPR = F ( EXCR , PIS , INTR , MS , INF ) ...................(1)
Where:
SPR = Stock price in Nigeria
EXCR = Exchange Rate
MS = Money Supply
INTR = Interest Rate
INF = Inflation Rate
PIS=Political Instability
We used the turnover ratio as proxy for stock prices, where turnover ratio is computed as total value of total
shares traded divided by market capitalization. This is so because the price of the shares determines how much
an individual investor can spend on shares, and the amount an individual invests also determines the rate of
63
4. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.14, 2013
www.iiste.org
turnover. In addition, political instability was used as proxy for capturing civil unrest. Specifically, dummy
variable that takes the form of 0 and 1 was applied, where 1 stands for military regime and 0 for civilian regime.
The explicit form of the model in equation (1) above is now presented as follows:
SPR = β0 + β1EXCR + β2PIS + β3MS + β4INTR + β5INF + ε ……………….. (2)
Where
β0 = Constant;
β1 to β5 = the parameters to be estimated;
ε = the random error term.
3.2. Data Sources and Software Package
The data for this study were secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin
2010. The study covered the period 1985-2010. The choice of this period is strictly based on availability of data.
The PC-GIVE econometric software was used for the analysis.
4. Presentation and Analysis of Results
4.1 Unit Root Test
Following the submission made by Engle and Granger (1985) and Dickey and Fuller (1981), there is likelihood
of obtaining a spurious regression if the series that generate the results are non stationary. This necessitates our
investigation of the time series properties of the data by conducting unit root test for stationarity using
Augmented Dickey Fuller (ADF) unit root test. The results are presented in table 1 below:
Table 1: Results of ADF Unit Root Test
Variable
t-adf
5% critical value
1% critical value
Integration Order
DDSPR
6.8783*
-1.958
-2.682
2
DDMS
2.9835*
-1.958
-2.682
2
DINF
4.5738*
-1.958
-2.682
1
DINTR
6.0245*
-1.958
-2.682
1
DREXR
2.7287*
-1.958
-2.682
1
Note: * indicates significance at 5% and 1% level; D denotes number of differencing
Source: Author’s computation
The results in Table 1 above indicate that some of the variables were stationary after first differencing (Inflation
rate, Interest rate and Real Exchange Rate) while others became stationary after second differencing (Stock Price
and Money Supply).
4.2. Cointegration Test
Cointegration implies that if two or more series are linked to form an equilibrium relationship spanning the long
run, then even though the series themselves may be non-stationary, they will move closely together over time
and their difference will be stationary. Their long run relationship is the equilibrium to which the system
converges over time, and the disturbance term can be interpreted as the disequilibrium error or the distance that
the system is away from equilibrium at time t. Thus, we used the Engle-Granger two-step procedure for
cointegration test and the result is shown in Table 2 below:
Table 2: Engle-Granger Cointegration Test Result
Variable
t-adf
5% critical value
1% critical value
Lag Length
Residual
-1.2988
-1.957
-2.67
2
Residual
-1.4729
-1.957
-2.67
1
Residual
-1.4113
-1.957
-2.67
0
Source: Author’s computations
The results in Table 2 above indicate the absence of cointegration among the variables since the residual
generated from non stationary series is not stationary using the ADF unit root test.
4.3. Presentation of Regression Results and Discussion of Findings
Table 3: Results of Modeling SPR by OLS
Variable
Coefficient
Std. Error
t-value
t-prob
Constant
0.41163
0.66584
0.618
0.5446
PIS
-0.36693
0.94362
-0.389
0.7022
DINF
-0.064040*
0.030439
-2.104
0.0506
DDMS
7.781207
6.676207
1.166
0.2599
DINTR
-0.12608
0.085762
-1.470
0.1598
DEXRT
-0.038137
0.036486
-1.045
0.3105
Note: * denotes significant at 10%
Source: Author’s computation
64
5. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.14, 2013
www.iiste.org
From the results presented in the Table 3 above, the dummy variable used to capture political instability shows
an expected negative coefficient of -0.36693. This means that a given percent increase in political instability
holding all other variables constant, causes stock price to decrease by approximate 37 percent. The negative
coefficient displayed by political instability conforms to a priori expectation in the sense that political and civil
crisis can discourage potential investors from investing their liquid fund as a result of perceived danger of
insecurity to their investment. This no doubt would lead to a downward pressure in the demand for stock which
will be accompanied by fall in price. Notwithstanding, political instability as captured with a dummy variable is
not statistically significant in determining stock price movement over the period estimated judging from its tvalue of -0.389 which is less than absolute 2 using t-2 rule of thumb.
As expected, inflation displayed a negative coefficient of -0.064040, indicating that, all things being equal, a
percentage increase in inflation rate would reduce stock price by 6.4 percent. The result however conforms to
theory since increase in expected inflation rate under general circumstances is likely to lead to economic
tightening polices that would have a negative effect on stock prices. Additionally, a rise in the rate of inflation
increases the nominal risk-free rate and raises the discount rate in the valuation model. Since money supply do
not rise proportionally with inflation (Defina 1991), the rise in discount rate leads to lower stock prices.
Nevertheless, inflation is statistically significant in determining stock price movement. This is consistence with
the study of Maysami and Koh (2000) which identified inflation as one of the major determinants of stock price
movements. The significance of inflation could be attributed to the fact that economic agents and business units
in Nigeria could not adapt to the persistent inflationary spirals that it continues to have long term effect on their
decision making.
The positive sign of the money supply variable meets our economic a priori expectation. It shows how frequent
changes in the variable unleash deviations on the steady growth rate. Any monetary expansion raises the
disposable incomes of economic agents and this increases aggregate demand. To meet the increased demand,
business units expand production leading to increased output through the multiplier effect. Consequently,
increased demand is expected to exert upward pressure on prices. From the result, a given percent increase in
money supply leads to 778 percent increase in stock price, all things being equal. The positive value of the
coefficient is consistent with the findings of Dimitrios Tsoukalas (2003), Ibrahim (1999, 2003), Mukherjee and
Naka (1995) and Maysami and Koh (2000). However the money supply is statistically insignificant, which
contradicts the results of Chaudhuri and Smiles (2004) that indicates that money supply is a major determinant of
stock price movement in Australia.
The result also shows negative relationship between real interest rate and stock price. The result suggests that
holding every other variable constant, a given percentage increase in real interest rate leads to 13 percent
decrease in stock price. The intuition behind the negative relationship is straightforward. Since the rate of
inflation is positively related to money growth rate (Fama 1981), an increase in money supply is likely to cause
discount rate to increase and lower the stock prices. Real interest rate is not statistically significant, implying that
real interest rate is not a major determinant of stock price movement in Nigeria. The result is in line with the
study of Ologunde et al (2006).
The coefficient of real exchange rate is -0.038137; that is, a given percent increase in real exchange rate leads to
3.8 percent decrease in stock price. Real exchange rate is not statistically significant in the analysis. This implies
that it is not a key determinant of stock price movements in Nigeria. The negative coefficient could be attributed
to the instability in the foreign exchange market which can lead to crisis of confidence that could cause capital
flight, or a large-scale withdrawal of short-term credit facilities. In essence, high exchange rate is expected to
encourage round tripping and discourages stock market investment. This will cause an upward movement in
operating cost and lower corporate profit in the real sector. The higher the operating cost the lower the profit.
When the value of the currency is dropping, the incentive to invest by foreign investors in the domestic economy
is lost. This would no doubt have negative effect on the stock market and share prices.
5. Conclusion
The objective of this study is to provide quantitative evidence on the factors that determine the stock price
movements in Nigeria. Previous studies on the determinants of stock price movements in Nigeria have been done
on theoretical basis with no quantitative empirical evidence to back their postulations. The findings of this study
indicate that monetary variables (which includes real exchange rate, real interest rate and money supply) and
political instability are not the determinants of stock price movements in Nigeria. Furthermore, the results show
that inflation is a major determinant of stock price movements in Nigeria.
The inherent implication of this study is that monetary policy variables are not the determinants of stock price
movements in Nigeria. This finding suggests that micro factors such as individuals’ decision to invest which
follows rational expectation theory that individuals, in deciding how to act, will make use of currently available
information are likely to be the determinants of stock price movements in Nigeria. Finally, it is recommended
65
6. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.14, 2013
www.iiste.org
that the monetary authorities (that is the Central Bank of Nigeria, CBN) should pay attention to changes in
money supply in view of its sensitivity to stock price movements in Nigeria. In addition, the monetary authorities
and policy makers should be more concerned about the changes in inflation rate due to its significant negative
impact on stock price movements in Nigeria.
References
Adam and Tweneboah (2008). Do Macroeconomic Variables Play Any Role in the Stock Market Movement in
Ghana. School of Management, University of Leicester, UK.
Chaudhuri, K. and Smiles, S. (2004). Stock Market and Aggregate Activity: Evidence from Australia. Applied
Journal of Financial Economics.
Defina, R.H. (1991). Does Inflation Depress the Stock Market? Business Review, Federal Reserve Bank of
Philadelphia.
Dickey, D.A. and Fuller, W.A. (1981). Likelihood Ratio Statistics for Autoregressive Time
Series with a Unit Root. Econometrica 49: 1057-1072.
Dimitrios, Tsoukalas (2003). Macroeconomic Factors and Stock Prices in the Emerging
Cypriot Equity Market. Managerial Finance, 29( 4): 87-92.
Engle, Robert F. and C. W. J. Granger. (1987). Co-integration and Error Correction: Representation, Estimation,
and Testing. Econometrica 55: 251 -276.
Fama, E.F. (1981). Stock Returns, Real Activity, Inflation and Money. American Economic Review
Guglielmo Maria C., Peter G. A. Howells, and Alaa M. Soliman. (2004). Stock Market Development and
Economic Growth: The Causal Linkage. Journal of Economic Development 33(29).
Ibrahim, Mansor H. (1999). Macroeconomic Variables and Stock Prices in Malaysia: An Empirical Analysis.
Asian Economic Journal, 13( 2): 219- 231.
Ibrahim, Mansor H. (2003). Macroeconomic Forces and Capital Market Integration: A VAR Analysis for
Malaysia. Journal of the Asia Pacific Economy, 8(1): 19-40.
Investopedia ULC (2008). A Dynamic Investment Report.
Koutsoyiannis, A. (1977). Theory of Econometrics. New York: Palgrave Publishers Ltd.
Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda. Journal of Economic
Literature 35: 688-726.
Long, Chen and Xinlei, Zhao (2007). What Drives Stock Price Movement? The Eli Broad College of Business,
Michigan State University and Department of Finance, Kent State University.
Maysami, R.C. and Koh, T.S. (2000). A Vector Error Correction Model of the Singapore Stock Market.
International Review of Economic Finance.
Meristem Research (2008). Stock Market Sentiments. Meristem Securities Limited, 124 Norman Williams, Ikoyi
South/West Lagos, August 15.
Mukherjee, Tarun and Naka Atsujuki. (1995). Dynamic Relations between Macroeconomic Variables and the
Japaness Stock Market: An Application of Vector Error Correction Model. The Journal of Financial Research 18.
Ologunde, A.O, D. O. Elumilade, and T. O. Asaolu. (2006). Stock Market Capitalization and Interest Rate in
Nigeria: A Time Series Analysis. International Research Journal of Finance and Economics 4.
Sergeant, T. J. and Wallace, N. (1975). Rational Expectations, the Optimal Monetary Instrument, and the
Optimal Money Supply Rule. Journal of Political Economy 83.
Udegbunam, Ralph I. and P. O. Eriki (2001). Inflation and Stock Price Behavior: Evidence from Nigerian Stock
Market. Journal of Financial Management and Analysis, XX (14) (1): 1-10.
66
7. This academic article was published by The International Institute for Science,
Technology and Education (IISTE). The IISTE is a pioneer in the Open Access
Publishing service based in the U.S. and Europe. The aim of the institute is
Accelerating Global Knowledge Sharing.
More information about the publisher can be found in the IISTE’s homepage:
http://www.iiste.org
CALL FOR JOURNAL PAPERS
The IISTE is currently hosting more than 30 peer-reviewed academic journals and
collaborating with academic institutions around the world. There’s no deadline for
submission. Prospective authors of IISTE journals can find the submission
instruction on the following page: http://www.iiste.org/journals/
The IISTE
editorial team promises to the review and publish all the qualified submissions in a
fast manner. All the journals articles are available online to the readers all over the
world without financial, legal, or technical barriers other than those inseparable from
gaining access to the internet itself. Printed version of the journals is also available
upon request of readers and authors.
MORE RESOURCES
Book publication information: http://www.iiste.org/book/
Recent conferences: http://www.iiste.org/conference/
IISTE Knowledge Sharing Partners
EBSCO, Index Copernicus, Ulrich's Periodicals Directory, JournalTOCS, PKP Open
Archives Harvester, Bielefeld Academic Search Engine, Elektronische
Zeitschriftenbibliothek EZB, Open J-Gate, OCLC WorldCat, Universe Digtial
Library , NewJour, Google Scholar