Original Research Article | OPEN ACCESS
Macroeconomic Variables and Nigeria Stock Market Returns

M. Josiah1, E. B. Akpoveta2

1Department of Accounting, Igbinedion University, Okada, Edo State, Nigeria..

For correspondence:-  M. Josiah   Email:

Received: 15 December, 2018        Accepted: 10 Feb, 2019        Published: 31 Marcch 2019

Citation: Josiah M, Akpoveta EB. Macroeconomic Variables and Nigeria Stock Market Returns. Account Tax Rev 2019; 3(1):55-68 doi:

© 2019 The authors.
This is an Open Access article that uses a funding model which does not charge readers or their institutions for access and distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0) and the Budapest Open Access Initiative (http://www.budapestopenaccessinitiative.org/read), which permit unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited..


This study empirically examines the influence of key macroeconomic variables on stock market returns in Nigeria. In-depth knowledge of the relationship between macroeconomic variables and stock market returns is essential in designing an effective policy framework for managing volatile macroeconomic variable indices like capital flows, inflation, money supply, interest rate, exchange rate fluctuations and their disruptive potential. We utilized cointegration Tests, the error correction model mechanism and Granger causality tests to show the nature of relationship amongst the variables of interest, with stock market returns serving as our dependent variable. Our empirical findings show that sound macroeconomic environment reflective of coherent exchange rate, sufficient money supply (liquidity), exchange rate, increased output and financial openness stimulates stock market returns in Nigeria. On the basis of our findings, the government and indeed statutory capital market regulators are advised to further open up the Nigerian financial market and economy to more capital inflows needed for further economic and industrial development. Investors are also advised to hedge against stock price volatility by constructing very highly diversified portfolio’s which reflects the overall market portfolio.

Keywords: Financial Openness, Inflation, Exchange Rate, Interest Rate, GDP, Money Supply, Stock Market Returns, Nigeria.

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