Macroeconomic Determinants Of Stock Market Development In Nigeria: (1981-2017)

For the stock market to contribute effectively and efficiently in its role of capital formation, the macroeconomic environment in which it operates must be conducive and growth supportive. Hence, this study examined macroeconomic determinants of stock market development in Nigeria for the period of 1981 to 2017. The study employed the ARDL bound testing technique to investigate the long run and short run relationship between the dependent variable (stock market development) and independent variables (GDP, banking sector development, stock market liquidity, foreign direct investment, inflation rate and savings rate). The result of the study found out that in both the short run and long run, key macroeconomic determinants of stock market development in the context of the Nigerian Stock Exchange Market are banking sector development, stock market liquidity, foreign direct investment and to an extent the income level (GDP). While inflation rate which measures macroeconomic stability, and savings rate do not significantly explain stock market development. This study therefore recommended amongst others that policymakers should strive to sustain the stability of the economy in order to promote the growth of stock market development in the short run and long run