Impact of Capital Market Development on Foreign Portfolio Investment in Nigeria
DOI:
https://doi.org/10.61143/umyu-jafr.1(2)2021.005Keywords:
Capital Market, Development, Foreign Portfolio, Investment, NigeriaAbstract
The study examines the effect of capital market development on the foreign portfolio investment in Nigeria. The time series secondary data covering the period 1990 to 2019 used for the study were obtained from the Central Bank of Nigeria Statistical Bulletin, Nigeria Stock Exchange fact sheet, National Bureau of Statistics, Articles, Journals libraries and Internet. The study analyzed the data using unit root test to determine the stationarity or otherwise of the time series data with Augmented Dickey Fuller (ADF) unit root test. Vector Error Correction Model was employed in estimating the effect of the independent variables on the dependent variable. Granger causality test was also adopted to establish the direction of causality among the relevant variables. The findings revealed that market capitalization has positive but significant impact on foreign portfolio investment in Nigeria. The granger causality result indicates unidirectional causality movement from market capitalization (MCAP) and real gross domestic product (RGDP) to foreign portfolio investment. The study recommended that capital market regulators should apply all necessary tools to encourage listing of private companies on the floor of stock exchange market.
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