MONETARY POLICY AND STOCK MARKET IN NIGERIA

The study examined the effect of monetary policy on stock market performance in Nigeria. It employed intermediate monetary policy targets as proxies for monetary policies of the Central Bank of Nigeria and All Share Index as proxy for stock market performance. Monetary policy variables include money supply, interest rate and exchange rate all of which were obtained from the CBN statistical bulletin. The time frame covered 1986 to 2015. Statistical analysis employed was OLS regression technique. The results showed that money supply and exchange rate fluctuation have significant positive effect on stock market price movement, while Interest rate has insignificant negative effect on stock market price movement. On the overall, the results show that monetary policy variables significantly determine 94% of the stock market performance movements in Nigeria. The study posits that monetary policy has a very high determining influence on stock market performance which implies that monetary policy can be used to control stock market activities in Nigeria. It thus recommends, among others that the monetary authorities should make information relevant for securities available to the stock market participants and also make sure the transparency and accountability of audit reports