GLOBALIZATION AND STOCK MARKET GROWTH IN NIGERIA

ABSTRACT

This study investigates the effect of globalization on stock market growth in Nigeria over the period of 1981-2021. The study used annually time series data for market capitalization, trade openness, exchange rate, export and foreign direct investment. Unit Root test, Johansen cointegration test, and Granger causality test were employed in this study. The ADF unit root test shows that all variables were non stationary at level but all became stationary at first difference. The granger causality test also shows that globalization granger causes stock market growth in Nigeria. The Johansen co-integration test shows that there is no evidence of a long run relationship between globalization and stock market growth in Nigeria which result to the use of VAR technique of estimation. The results of the VAR analysis show that Globalization proxies have both positive and negative relationship with stock market growth in Nigeria. The study recommends that there is need to further liberalize the economy but this must be done with caution so as to avoid the negative impact of trade liberalization. Also, the growth of stock market is tied to the adoption of new information and technology. Thus, new payment and settlement system should be adopted so as to attract new investors both domestically and internationally.