THE EFFECTS OF MACROECONOMIC INDICATORS ON THE PRICES OF STOCK IN THE NIGERIAN BANKING INDUSTRY /
OLALEKAN MICHAEL OLATUNDE; SUPERVISOR: ASSOC. PROF. DR. DEMET BETON
- 58 sheets; 31 cm. Includes CD
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