KOGI STATE
Faculty of Management Sciences
Journal of MANAGEMENT
ISSN: 3212 - 3122
IMPACT OF MACROECONOMIC FORCES ON STOCK MARKET LIQUIDITY: EVIDENCE FROM NIGERIA
Uhunmwangho Monday
Abstract
Changes in macroeconomic activities affect stock market behaviour and ultimately stock market liquidity. This study aimed to investigate the impact of macroeconomic forces on stock market liquidity in Nigeria. Data was collected from the Nigerian Stock Exchange and Central Bank of Nigeria statistical bulletins from first quarter 2010 to second quarter of 2017. A dynamic model and co-integration were used to establish the long and short run connection between the regress and regressors. The results showed that macroeconomic variables significantly affect stock market liquidity. Specifically, economic growth, lending rate, market size and inflation have negative and significant influence on stock market liquidity, while exchange rate positively and significantly impact stock market liquidity. This study therefore recommends that investors should pay careful attention to macroeconomic forces and that government prevail on commercial banks to reduce interest rate on credit as this will boost activities at the exchange and enhance stock market liquidity.
Keywords
Co-integration, Dynamic model, Economic growth, ECM, Market liquidity, Time series data.
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UNIVERSITY, ANYIGBA
