Thesis (MBA) - Cyprus International University. Institute of Graduate Studies and Research Business Administration Department

Includes bibliography (sheets 45-53)

ABSTRACT
An effective stock market and economic growth requires a stable macroeconomic
environment. The banking sector is critical to the Nigerian stock market's continued
growth. The effects of volatile macroeconomic conditions on the stock performance
of the industry over time cannot be overlooked. The stock market is regarded as part
of a country's major economic indicators, it affords the Country to secure long-term
real capital commitments.The primary purpose, However, is to determine the impact
of macroeconomic indicators on prices of stocks with emphasis on the Nigerian
banking sector. The type of research design chosen for this study is the ex-post facto’s,
as I used data or information that had already occurred in-order to make critical
evaluation of the indicators studied. Time series data on rate of interest, inflation, rate
of exchange, crude oil, banking stock index, supply of money and stock returns
between 2014 – 2021, culled from the statistical bulletin of the CBN and the fact
books of the Nigerian stock exchange (per-month basis) will be utilized for this study.
ARDL integration model will be used to examine both short run and long run effects
on the indicators between 2014 and 2021.From the findings of this study, it is inferred
that there is an unimportant effect of rate of interest on banking stocks. In the same
way, it observes a non-significant effect of other monetary indicators- rate of exchange
and supply of money on banking prices of stocks - highlighting the ineptitude of
monetary policy tools in influencing the stock market. But on the contrary, it reveals a
significant effect of price of oils and inflation on banking stocks. It observes that the
indicators maintain their effects on banking stocks in the near and long run. The
statistically unimportant influence of the monetary policy benchmark rate – the rate of
monetary policy on banking stocks underscores the weak relationship between the
Nigerian stock market, of which banking stock is a dominant force, and the monetary
policy operations signaled by the rate of monetary policy. This submission validates
the position of Akpan and Chukwudum (2014), who observed that interest rate does
not affect stock prices. The finance principle suggests that an upshoot in the rate of
monetary policy would increase the money market rates, raising the rate of interests
on banking loans and thereby generating higher interest income for the banks. Whereas
it validates the positive effects, it, however observes that the connecting link is
unimportant in the case of Nigeria, contrary to the conclusions of Uddin and Alam
(2007); Mugambi and Okech (2016); Moya-martinez et al., (2015); and Omankhanlen
et al. (2016). It establishes that changes in price of oils and inflation directly affect
banking stocks. The impact that price of oils has on banking stocks possibly
underscores the exposure of many banks to the oil and gas sector. The positive effect
of inflation on banking stocks suggests that banking stocks are havens for investors to
preserve funds from being eroded by soaring inflation. This is in line with
Omankhanlen et al. (2016) conclusion that inflation drives the movement of banking
stock returns