Acta Universitatis Danubius. Œconomica, Vol. 15, No. 1 - 5
Abstract
For the stock market to contribute effectively and efficiently in its role of capital formation, the macroeconomic
environment in which it operates must be conducive and growth supportive. Hence, this study examine macroeconomic determinant
of stock market development in Nigeria for the period of 1981 to 2017. The study employed the ARDL bound testing technique to
investigate the long run and short run relationship between the dependent variable (stock market development) and independent
variables (GDP, banking sector development, stock market liquidity, foreign direct investment, inflation rate and savings rate). The
result of the study showed that in both the short run and long run, key macroeconomic determinants of stock market development
in the context of the Nigerian Stock Exchange Market are banking sector development, stock market liquidity, foreign direct
investment and to an extent the income level (GDP) while inflation rate which measures macroeconomic stability, and savings rate
do not significantly explain stock market development. This study therefore recommended amongst others that policymakers should
ensure economic stability in order ensure the development of stock market.
References
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Al-Mamun, M. (2013). The Effect of Macroeconomic & Market Specific Dynamics on Stock Market Development in Global
Growth Generator Countries. Asian Economic and Financial Review, 3(9), pp. 1152-1169.
Arodoye, N.L. (2012). An Econometric Analysis of the Impact of Macroeconomic Variables on Stock Prices in Nigeria: A Vector
Autoregressive (VAR) Model Approach. International Review of Business and Social Sciences, 1(8), pp. 63-77.
Ayunku, P.E. &Etale, L.M. (2015). Determinants of Stock Market Development in Nigeria: A Cointegration Approach. Advances
in Research, 3(4), pp. 366-373.
Bayar, Y. (2016). Macroeconomic Determinants of Stock Market Development: Evidence from Borsa Istanbul. Financial Studies,
1(1), pp. 70-89.
Dev, K. &Shakeel, S.F. (2013). Determinants for the Growth of Stock Market. JISR-MSSE, 11(2), pp. 71-82.
English, W.B. (1999). Inflation and financial sector size. Journal of Monetary Economics, 44, pp. 379-400.
Garcia, V.F. & Liu, L. (1999). Macroeconomic Determinants of Stock Market Development. Journal of Applied Economics, 2(1),
pp. 29-59.
Ho, S.Y. (2017). The Macroeconomic Determinants of Stock Market Development: Evidence from South Africa. MPRA Paper
No. 76493.
Ho, S.Y. &Odhiambo, N.M. (2018). Analysing the Macroeconomic Drivers of Stock Market Development in the Philippines.
Cogent Economics & Finance, 6(1), pp. 1-18.
Hsing, Y. (2014). Impacts of Macroeconomic Factors on the Stock Market in Estonia. Journal of Economics and Development
Studies, 2(2), pp. 23-31.
Ita, J.J. & Joe, D. (2013). Macroeconomic Factors that Influence Stock Market Development in Nigeria. International Journal of
Business and Management Review, 1(2), pp. 43-56.
Kemboi, J.K. &Tarus, D.K. (2012). Macroeconomic Determinants of Stock Market Development in Emerging Markets: Evidence
from Kenya. Research Journal of Finance and Accounting, 3(5), pp. 57-68.
Levine, R. & Zervos, S. (1996). Stock Market Development and Long-Run Growth. World Bank Economic Review, 10(2), pp. 323-
340.
Levine, R. &Zervos, S. (1998). Stock Markets Banks and Economic Growth. American Economic Review, 88 (1), pp. 537-558.
Malaolu, V.A.; Ogbuabor, J.E. & Orji, A. (2013). Determinants of Stock Price Movements in Nigeria: Evidence from Monetary
Variables. Journal of Economics and Sustainable Development, 4 (14), pp. 61-66.
Matadeen, S.J. (2017). The Macroeconomic Determinants of Stock Market Development from an African Perspective. Theoretical
Economics Letters, 7(1), pp. 1950-1964.
Muhammad, A.; Sonia, S. &Tayyaba, Z. (2017). The Impact of Macro-economic Determinants on Market Capitalization: An
Empirical Analysis in Context of Pakistan. The International Journal of Business & Management, 5(4), pp. 185-191.
Nikmanesh, L. & Nor, A.H.S.M. (2016). Macroeconomic Determinants of Stock Market Volatility: An Empirical Study of
Malaysia and Indonesia. Asian Academy of Management Journal, 21(1), pp. 161-180.
Okoro, C.O. (2017). Macroeconomic Factors and Stock Market Performance: Evidence from Nigeria. International Journal of
Social Sciences and Humanities Reviews, 7(1), pp. 1-9.
Owiredu, A.; Oppong, M. &Asomaning, S.A. (2016). Macroeconomic Determinants of Stock Market Development in Ghana.
International Finance and Banking, 3(2), pp. 33-48.
Rahman, A.A.; Sidek, N.Z.M. &Tafri, F.H. (2009). Macroeconomic Determinants of Malaysian Stock Market. African Journal of
Business Management, 3(3), pp. 095-106.
Shadnan, Khan (2017). Macroeconomic Determinants of Stock market Development of South Asian Countries. A Research Thesis
Submitted to the Department of Management & Social Sciences, Capital University of Science and Technology, Islamabad In
Partial Fulfillment of the Requirements for the Degree of Master of Science in Management Science, Department Of Management
Sciences, Faculty of Management & Social Sciences, Capital University of Science and Technology, Islamabad.
Shrestha, P.K. & Subedi, B.R. (NRB). Determinants of Stock Market Performance in Nepal. NRB Economic Review, pp. 26-40.
Su, D.T.; Bui, T.M.H. & Nguyen, V.B. (2016). Determinants of Stock Market Development: The Case of Developing Countries
and Vietnam. Journal of Economic Development, 24(1), pp. 32-53.
Sukruoglu, D. & Nalin, H.T. (2014). The Macroeconomic Determinants of Stock Market Development in Selected European
Countries: Dynamic Panel Data Analysis. International Journal of Economics and Finance, 6(3), pp. 64-71.
Yartey, C.A. (2008). The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different? IMF
Working Paper, WP/08/32, pp. 1-31.
Zhou, J.; Zhao, H.; Belinga, T. & Gahe, Z.S.Y. (2015). Macroeconomic Determinants of Stock Market Development in
Cameroon. International Journal of Scientific and Research Publications, 5 (1), pp. 1-11.
Al-Mamun, M. (2013). The Effect of Macroeconomic & Market Specific Dynamics on Stock Market Development in Global
Growth Generator Countries. Asian Economic and Financial Review, 3(9), pp. 1152-1169.
Arodoye, N.L. (2012). An Econometric Analysis of the Impact of Macroeconomic Variables on Stock Prices in Nigeria: A Vector
Autoregressive (VAR) Model Approach. International Review of Business and Social Sciences, 1(8), pp. 63-77.
Ayunku, P.E. &Etale, L.M. (2015). Determinants of Stock Market Development in Nigeria: A Cointegration Approach. Advances
in Research, 3(4), pp. 366-373.
Bayar, Y. (2016). Macroeconomic Determinants of Stock Market Development: Evidence from Borsa Istanbul. Financial Studies,
1(1), pp. 70-89.
Dev, K. &Shakeel, S.F. (2013). Determinants for the Growth of Stock Market. JISR-MSSE, 11(2), pp. 71-82.
English, W.B. (1999). Inflation and financial sector size. Journal of Monetary Economics, 44, pp. 379-400.
Garcia, V.F. & Liu, L. (1999). Macroeconomic Determinants of Stock Market Development. Journal of Applied Economics, 2(1),
pp. 29-59.
Ho, S.Y. (2017). The Macroeconomic Determinants of Stock Market Development: Evidence from South Africa. MPRA Paper
No. 76493.
Ho, S.Y. &Odhiambo, N.M. (2018). Analysing the Macroeconomic Drivers of Stock Market Development in the Philippines.
Cogent Economics & Finance, 6(1), pp. 1-18.
Hsing, Y. (2014). Impacts of Macroeconomic Factors on the Stock Market in Estonia. Journal of Economics and Development
Studies, 2(2), pp. 23-31.
Ita, J.J. & Joe, D. (2013). Macroeconomic Factors that Influence Stock Market Development in Nigeria. International Journal of
Business and Management Review, 1(2), pp. 43-56.
Kemboi, J.K. &Tarus, D.K. (2012). Macroeconomic Determinants of Stock Market Development in Emerging Markets: Evidence
from Kenya. Research Journal of Finance and Accounting, 3(5), pp. 57-68.
Levine, R. & Zervos, S. (1996). Stock Market Development and Long-Run Growth. World Bank Economic Review, 10(2), pp. 323-
340.
Levine, R. &Zervos, S. (1998). Stock Markets Banks and Economic Growth. American Economic Review, 88 (1), pp. 537-558.
Malaolu, V.A.; Ogbuabor, J.E. & Orji, A. (2013). Determinants of Stock Price Movements in Nigeria: Evidence from Monetary
Variables. Journal of Economics and Sustainable Development, 4 (14), pp. 61-66.
Matadeen, S.J. (2017). The Macroeconomic Determinants of Stock Market Development from an African Perspective. Theoretical
Economics Letters, 7(1), pp. 1950-1964.
Muhammad, A.; Sonia, S. &Tayyaba, Z. (2017). The Impact of Macro-economic Determinants on Market Capitalization: An
Empirical Analysis in Context of Pakistan. The International Journal of Business & Management, 5(4), pp. 185-191.
Nikmanesh, L. & Nor, A.H.S.M. (2016). Macroeconomic Determinants of Stock Market Volatility: An Empirical Study of
Malaysia and Indonesia. Asian Academy of Management Journal, 21(1), pp. 161-180.
Okoro, C.O. (2017). Macroeconomic Factors and Stock Market Performance: Evidence from Nigeria. International Journal of
Social Sciences and Humanities Reviews, 7(1), pp. 1-9.
Owiredu, A.; Oppong, M. &Asomaning, S.A. (2016). Macroeconomic Determinants of Stock Market Development in Ghana.
International Finance and Banking, 3(2), pp. 33-48.
Rahman, A.A.; Sidek, N.Z.M. &Tafri, F.H. (2009). Macroeconomic Determinants of Malaysian Stock Market. African Journal of
Business Management, 3(3), pp. 095-106.
Shadnan, Khan (2017). Macroeconomic Determinants of Stock market Development of South Asian Countries. A Research Thesis
Submitted to the Department of Management & Social Sciences, Capital University of Science and Technology, Islamabad In
Partial Fulfillment of the Requirements for the Degree of Master of Science in Management Science, Department Of Management
Sciences, Faculty of Management & Social Sciences, Capital University of Science and Technology, Islamabad.
Shrestha, P.K. & Subedi, B.R. (NRB). Determinants of Stock Market Performance in Nepal. NRB Economic Review, pp. 26-40.
Su, D.T.; Bui, T.M.H. & Nguyen, V.B. (2016). Determinants of Stock Market Development: The Case of Developing Countries
and Vietnam. Journal of Economic Development, 24(1), pp. 32-53.
Sukruoglu, D. & Nalin, H.T. (2014). The Macroeconomic Determinants of Stock Market Development in Selected European
Countries: Dynamic Panel Data Analysis. International Journal of Economics and Finance, 6(3), pp. 64-71.
Yartey, C.A. (2008). The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different? IMF
Working Paper, WP/08/32, pp. 1-31.
Zhou, J.; Zhao, H.; Belinga, T. & Gahe, Z.S.Y. (2015). Macroeconomic Determinants of Stock Market Development in
Cameroon. International Journal of Scientific and Research Publications, 5 (1), pp. 1-11.
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Published
2021-06-28
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Collective Authors. (2021). Acta Universitatis Danubius. Œconomica, Vol. 15, No. 1 - 5: Array. Acta Universitatis Danubius. Œconomica, 15(1). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1200
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