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Abstract
This research work empirically investigates the influence of macroeconomic factors on stock market returns in Nigeria utilizing ordinary least square (OLS) technique. We utilize four macroeconomic variables which are money supply, interest rate, exchange rate, inflation rate and GDP from 2002 – 2021. With yearly change in all share index (proxy for stock market retuns) as the dependent variable, we estimate regression estimate of the model. The OLS result shows that supply of money negatively and significantly influence market returns in Nigeria whereas GDP has a significant and positive impact on stock market returns. The result also reveals that interest rate and inflation rate has a positive and insignificant effect on stock market returns. Exchange rate was directly and insignificantly related to stock market returns. The paper recommends adoption of contractionary monetary policy in order to reduce the money in circulation so as to reduce the adverse effect of money supply on stock market returns in Nigeria. We also recommend the adoption of a realistic exchange rate that will enhance the performance of stocks in Nigeria.
