Journal of Economics and Business

ISSN 2615-3726 (Online)

ISSN 2621-5667 (Print)

Published: 14 June 2019

Globalization and Capital Market Development in Nigeria

Samson Olusegun Akinwale, Oludayo Elijah Adekunle

Adekunle Ajasin University Akungba-Akoko, Ondo State, Nigeria

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Pages: 396-404

Keywords: Capital Market, Foreign Portfolio Investment, Foreign Direct Investment, Globalization, Trade Openness


The Nigerian capital market has undergone different phases coupled with diverse challenges which impeded the growth of the market and its integration into the world financial market. This study investigated the effect of globalization on the capital market in Nigeria from 1986 to 2017 using secondary data from the Central Bank of Nigeria Statistical Bulletin. Augmented Dickey – Fuller (ADF), Bound Test and Autoregressive Distributed Lag were employed to evaluate the effect of trade openness, foreign direct investment, and foreign portfolio investment on market capitalization in Nigeria. The results of the unit root test revealed that both trade openness and market capitalization were stationary at first difference while foreign direct investment and foreign portfolio investment were stationary at level. Also, the long-run equilibrium relationship was found among the variables based. The ARDL revealed that both trade openness and foreign portfolio investment had a positive and significant effect on market capitalization both in short run and long run while foreign direct investment had a negative and insignificant effect on market capitalization in short run and long run. In line with findings, it was concluded that globalization had a significant effect on the economy through openness and the inflow of foreign capital. The study recommended that there is a need for total liberalization of the economy in order to reap the full benefits of globalization in the economy. The government should formulate a policy that will reduce or discourage the expatriation of profit by foreign investors to foreign countries. Finally, innovative financial instruments should be introduced in the market for the purpose of attracting foreign investors.


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