Analysis of foreign capital inflows and stock market performance in Nigeria

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Most studies concentrate on the impact of only one constituent of the foreign capital influx on the stock market and economic performance, but only few studies simultaneously considered the unique impact of the duo of foreign portfolio investment (FPI) and foreign direct investment (FDI), and many of these studies were not undertaken in Nigeria.This study, therefore, assesses how foreign capital inflows (FPI and FDI) affect the stock market development in Nigeria. The foundations for the empirical study were built upon the dividend discount model, which formed the basis for the analytical framework. Going forward, the ARDL co-integration procedure was adopted to examine the long-run relationship between foreign capital and stock market performance. The results from the ARDL Bounds test suggest no evidence of a long-run equilibrium relationship between foreign capital inflows (FDI & FPI) and the stock market performance. Also, the short-run analysis indicates an insignificant relationship between FDI and stock market performance, whereas, a reversed relationship was obtained for FPI, as it exerts a positive and significant impact on stock market performance. The study recommends strengthening the institutional framework for the enlistment of multinational companies in the Nigerian stock market.

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    • Table 1. Description of variables
    • Table 2. Summary statistics
    • Table 3. Test for stationarity at the level and after the 1st difference
    • Table 4. Bounds test
    • Table 5. Test for heteroskedasticity
    • Table 6. Test for autocorrelation
    • Table 7. ARDL test estimation
    • Conceptualization
      Onome Tite, Oluwatomisin M. Ogundipe
    • Data curation
      Onome Tite, Oluwatomisin M. Ogundipe
    • Investigation
      Onome Tite, Oluwatomisin M. Ogundipe
    • Methodology
      Onome Tite, Adeyemi A. Ogundipe
    • Resources
      Onome Tite, Oluwatomisin M. Ogundipe, Adeyemi A. Ogundipe, Mukail Aremu Akinde
    • Software
      Onome Tite, Oluwatomisin M. Ogundipe
    • Writing – original draft
      Onome Tite, Oluwatomisin M. Ogundipe
    • Formal Analysis
      Oluwatomisin M. Ogundipe, Adeyemi A. Ogundipe
    • Project administration
      Oluwatomisin M. Ogundipe, Adeyemi A. Ogundipe
    • Supervision
      Oluwatomisin M. Ogundipe, Adeyemi A. Ogundipe
    • Visualization
      Oluwatomisin M. Ogundipe, Mukail Aremu Akinde
    • Writing – review & editing
      Oluwatomisin M. Ogundipe, Adeyemi A. Ogundipe, Mukail Aremu Akinde
    • Validation
      Adeyemi A. Ogundipe, Mukail Aremu Akinde
    • Funding acquisition
      Mukail Aremu Akinde