IMPACT OF CAPITAL MARKET ON INFLATION IN NIGERIA

Ighotegonour Godfrey Ederewhevbe (PhD), Andrew Ngozi Iweka (PhD)

Abstract


This research appraises the impact of capital market on inflation in Nigeria. The capital market in the process of carrying out its function is faced with many challenges which have some effects on economic trend through financial restructuring and reforms by government. The capital market is therefore required to adapt to the constantly trends in the economy. The study is aimed at addressing the vital role of the capital market on the control of inflation on the Nigerian economy. The ordinary least square multiple Regression analysis was used to analyze the data. The variables used are inflation, market capitalization, value of shares traded, capital formation, interest rate and exchange rate and Inflation being the dependent variable. After carrying out this research it was found out that market capitalization has a negative relationship with inflation in Nigeria. In order for the Nigerian capital market to be a controlling agent to inflation , there should be improvement in declining capitalization by encouraging more foreign investors to participate in market , maintain state of the art technology like automated trading and settlement practices, electronic fund clearance and eliminated physical transfer of shares.


Keywords


Capital market, Inflation, Economic Trends and Nigerian Capital Market

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