Financial Market Development and Capital Inflows in Nigeria: The Role of Stock Market Development
Journal of Investment and Management
Volume 4, Issue 6, December 2015, Pages: 369-376
Received: Jul. 29, 2015; Accepted: Aug. 13, 2015; Published: Oct. 16, 2015
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Author
Nwosa Philip Ifeakachukwu, Department of Economics, Accounting and Finance College of Management Sciences, Bells University of Technology, Ota, Ogun State, Nigeria
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Abstract
This study investigated the relationship between capital inflows and stock market development in Nigeria for the period spanning 1986 to 2013. Capital inflow was proxied by foreign direct investment and foreign portfolio investment while stock market development was proxied by market capitalization, turnover ratio and value traded ratio. The study employed error correction modelling techniques. From the regression estimate, it was shown that only market capitalization and value traded ratio had significant influence on foreign portfolio investment while none of the measures of stock market development significantly influenced foreign direct investment in the long run in Nigeria. The short run estimate showed that among the three measures of stock market development only market capitalization influenced both foreign direct investment and foreign portfolio investment while value traded ratio only had significant influenced on foreign direct investment in the short run. The study concluded that stock market development had not significantly promoted the inflows of foreign capital inflow in Nigeria.
Keywords
Market Capitalization, Turnover Ratio, Value Traded Ratio, Foreign Direct Investment, Foreign Portfolio Investment, ECM, Nigeria
To cite this article
Nwosa Philip Ifeakachukwu, Financial Market Development and Capital Inflows in Nigeria: The Role of Stock Market Development, Journal of Investment and Management. Vol. 4, No. 6, 2015, pp. 369-376. doi: 10.11648/j.jim.20150406.21
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