Globalization and Stock Market Development in Nigeria
Abstract
Globalisation affects new stock markets in many ways, and earlier research has not always reached consistent conclusions. Nigeria's stock market has grown fast, but it has also become more unpredictable. This study examines how various aspects of globalisation have influenced Nigeria's stock market from 1990 to 2023. We used yearly data on market size, ease of trading, price changes, and market efficiency, along with scores for economic, social, and political globalisation. Our method enabled us to observe both short- and long-term effects. We found that economic globalisation was linked to a 0.85% drop in market size for every 1% increase, while more trade with other countries made trading easier by 0.62%. More foreign investment in stocks led to a 0.31% increase in price changes. The market bounced back quickly after disruptions. Our results showed that globalisation and market growth are mutually reinforcing. Social globalisation helped the market, while political globalisation had mixed effects. These findings suggest that countries like Nigeria should move carefully to gain from trade while keeping financial risks in check.
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