FINANCIAL MARKET PERFORMANCE AND FOREIGN PORTFOLIO INFLOWS TO NIGERIA: AUTOREGRESSIVE DISTRIBUTIVE LAG APPROACH

Adesola W. Adebisi; Oka Felix Arikpo

doi:10.29121/granthaalayah.v5.i6.2017.2100

Authors

Dr. Adesola W. Adebisi Department of Accountancy, Cross River University of Technology, Nigeria
Oka Felix Arikpo Department of Banking & Finance, University of Calabar, Nigeria

DOI:

https://doi.org/10.29121/granthaalayah.v5.i6.2017.2100

Keywords:

Stock Market Liquidity, Foreign Portfolio Investment, Capital Market, Financial Market, Total New Issues, Foreign Capital Inflows

Abstract [English]

This study examined the relationship between financial market performance and foreign portfolio investment in Nigeria. The study specifically assessed whether there is a long run and short run causal relationship running from financial market performance to foreign portfolio investment in Nigeria. Financial market performance was measured using stock market performance, stock market liquidity and total new issues. The data for the study were source from the CBN statistical bulletin for the period 1984 to 2015. The exploratory design was combined with the ex-post facto research design; the data collection method was desk survey. The study used the Autoregressive Distributive Lag (ARDL) technique for data analysis. Findings from the analyses showed that financial market performance has no long run causal relationship with foreign portfolio investment in Nigeria. Also, stock market performance and stock market liquidity have no short run causal relationship with foreign portfolio investment in Nigeria. Lastly, total new issue has a short run causal relationship with foreign portfolio investment in Nigeria. The study on the basis of these findings recommends that stock market regulators should through conscious enlightenment campaigns encourage more domestic participation in the market to enhance the market performance, deepening and growth as this will strengthen its long run causality with FPI. Lastly, stock market regulators should through conscious risk reduction policies formulation and implementation reduce the riskiness of investing in the stock market to increase transactions and liquidity in the stock market, boost the rate of turnover to investors as this will attract foreign portfolio investors to the Nigerian financial market.

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