Unlocking Nigeria’s Economic Potential: The Impact of Financial Openness on Stock Market Growth
DOI:
https://doi.org/10.22452/IJIE.vol18no1.8Keywords:
Exchange rate, Financial liberalisation, Financial openness, Foreign direct investment, Stock market developmentAbstract
In Nigeria, despite the long existence of the stock market, its poor level
of development remains a concern. Financial openness may aid the development of
Nigeria’s stock market, especially with regard to increasing foreign participation in the
market. The growth of financial activity, especially the banking sector, is dependent on
external financial openness. This study examines how financial openness influences
Nigeria’s stock market. A descriptive statistics test, correlation analysis, stationarity
test and co-integration test were carried out and to analyse the model, the autoregressive
distributed lag (ARDL) regression method was employed. The study covered a time
period of 37 years from 1984 to 2020. The Findings reveal that financial openness has a
significant impact on Nigerian stock market development. To preserve foreign portfolio
investment, the study proposes increased openness incentives to increase international
stock market involvement. The study recommends that favourable investment policies by
the government should be created to stimulate foreign participation.
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