EFFECT OF SELECTED MACROECONOMIC VARIABLES ON STOCK MARKET LIQUIDITY IN NIGERIA
Ekani Moses
Volume 4 Issue 1
Abstract
This study examines the effect of selected macroeconomic variables on stock market liquidity in Nigeria for the periods of 1985 to 2021 using Autoregressive Distributed Lag technique to analyse the data. The study employs ex post facto research design with the use of time series secondary data. The selected macroeconomic variables are exchange rate, Gross Domestic Product growth rate and inflation rate. The study found that exchange rate has a negative significant effect on stock market liquidity in Nigeria, while GDP growth rate has no significant effect on stock market liquidity in Nigeria. The result likewise shows that inflation rate has a positive significant effect on stock market liquidity in Nigeria. Based on these findings, the study concludes that macroeconomic variables have significant effect on stock market liquidity in Nigeria. The study recommends that Government should put in place measures that will encourage appreciation of Naira to ensure that the exchange rate is stabilized. Also, Government should aim to take the leap to improve economic growth. Lastly, Investors should invest in stocks when the inflation rate is on the rise because stocks are still a good hedge against inflation over the long term. Keywords: Exchange Rate, Gross Domestic Product Growth Rate, Inflation Rate, Macroeconomic Variables, Stock Market Liquidity
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