经济学研究杂志

Monetary Policy and Capital Market Performance: An Empirical Evidence from Nigerian Data

Echekoba FN, Okaro CS, Ananwude AC and Akuesodo OE

This study utilized time series data to determine the effect of monetary policy on the performance of Nigerian capital market. The study was motivated by the inconclusive debate on the real effect of monetary policy on capital market performance. Specifically, this study ascertained the effect of monetary policy rate and cash reserve ratio on the performance of Nigerian capital market surrogated by all share index. Secondary data for the period 1986 to 2016 were collected from the Nigerian Stock Exchange and Central Bank of Nigeria annual reports of various editions. The study applied the Ordinary Least Square (OLS) regression technique and causality analysis in which variations in all share index was regressed on monetary policy rate and cash reserve ratio. The analysis revealed that monetary policy tools have no significant effect on capital market performance. The monetary policy rate has negative significant relationship with capital market performance while cash reserve ratio positively relates with performance of the capital market. Considering the findings emanating from this study, the Central Bank of Nigeria should reduce the current double digit monetary policy to a single digit to attract investments in the capital market. Cash reserve ratio which is currently at 22.5% be lowered to the range: 10%-12% to cause an upsurge in money supply which will in turn improve capital market performance through upward movement in all share indexes.