An Econometric Analysis Of Monetary Policy And Stock Prices In Nigeria: 1986-2008
Keywords:
Monetary Policy, Stock Prices, Money Supply, Interest Rate, Market Operators, Investible FundsAbstract
The focus of this paper is to investigate empirically the relationship
between monetary policy and stock prices in the Nigerian stock
exchange market (NSE). We employed time series data on money
supply (MSU), interest (RA) and stock prices (SPR) spanning
(1986-2008). This period was considered due to the liberalization
of the financial sector. Using the method of co-integration and
Error correction modeling (ECM), the study revealed that both
MSU and IRA were rightly signed with SPR. Again, the error
correction coefficient was relatively high, rightly signed and
significant at 5% level. It is suggested that the SEC should be
given enabling environment to monitor the activities of the market
operators to bread efficiency. Above all, the monetary authorizes
should formulate policies that will reduce the rising pace of inflation
to encourage availability of investible funds for investors.
