POLICY INTERACTIONS AND THEIR IMPACT ON NIGERIA’S STOCK MARKET PERFORMANCE

The paper analyzes the interactions of macroeconomic policies and their impact on Nigeria’s stock market performance, using annual data for the period 1985-2012, generated from secondary sources. The empirical investigation was implemented through a vector error correction model. Market returns were found to be positively related to money supply and real gross domestic product and inversely associated with fiscal deficits, inflation, interest and exchange rates. Overall, money supply, fiscal deficits, inflation and exchange rates were found to be significant determinants of stock market performance. A deliberate policy initiative is called for which ensures a vibrant real sector of the economy as a measure to boost local production, promote exports, create employment and curtail inflation, all of which would make for a robust stock market.