Effect of Monetary Policy on Stock Market Liquidity in Nigeria

ABSTRACT

This study explores the effect of monetary policy on stock market liquidity in Nigeria.The objective of the study is to find out how monetary policy affects stock market liquidity in the Nigerian economy either positively and negatively. Data for this study were collected through primary and secondary data gathering sources. Data was analysedusing responses received using questionnaire which was designed in a yes or no format.iChi-square iwas iused ito imeasure ithe idiscrepancies iexisting between the observed and expected frequency values and to also prove the level of significance in testing the stated hypotheses of the study. The Statistical Package for Social Sciences (SPSS) was employed for the analysis. The data collected from the respondents regarding the study collected data from CBN statistical bulletin from 013 to 2016. The result found that there was a significant relationship between monetary policy and GDP. Findings of the study reveal significant impact of monetary policy on the Nigerian economy. However, monetary policy show no significant effect on stock market liquidity. Moreover, no significant positive but high negative effect was observed between monetary policy and population growth in Nigeria. It is therefore recommended that policy formulators such as the CBN should strive to improve on the monetary policy guidelines aimed at enhancing market liquidity for the overall benefit of the entire Nigeria populace.

Keywords:

Monetary Policy, Stock Market Liquidity, Gross Domestic Product (GDP), Nigeria

TABLE OF CONTENTS

TITLE iPAGE.................................................................................................i - iii

DECLARATION.................................................................................................iv

CERTIFICATION................................................................................................v

DEDICATION.....................................................................................................vi

ACKNOWLEDGMENT....................................................................................vii

TABLE iOFiCONTENTS.................................................................................viii

LIST iOF iTABLES...........................................................................................ix

LIST iOF iFIGURES............................................................................................x

ABSTRACT.......................................................................................................xi

CHAPTERiI:iINTRODUCTION

1.1 BackgrounditoitheiStudy.................................................................. 1

1.2 StatementiofitheiProblem................................................................. 3

1.3 ObjectivesiofiStudy.......................................................................... 5

1.4 ResearchiQuestions.......................................................................... 5

1.5 ResearchiHypotheses........................................................................ 6

1.6 ScopeiofiStudy.................................................................................. 6

1.7 Significanceiofitheistudy……………………….…………………. 6

1.8i DefinitioniofiOperationaliTermsi(Optional)i…………………….. 7

ix

CHAPTERiII:iLITERATUREiREVIEW

2.1 Introduction………………………………………………………… 8

2.2 ConceptualiFrameworki………………………..………………… 10

2.3i EmpiricaliAnalysis........i…………………………………………… 12

2.4i TheoreticaliFramework...................................................................... 17

2.5i ResearchGapi(Optional) …………………………………………… 18

CHAPTERiIII:iRESEARCHiMETHODOLOGY

3.1 Introduction...................................................................................... 24

3.2 ResearchiDesign............................................................................... 24

3.3 PopulationiofiStudy.......................................................................... 24

3.4 SampleiofiStudy................................................................................ 25

3.5 TypesiandiSourcesiofiData…............................................................ 25

3.6 InstrumentiofiDataicollection............................................................ 26

3.7 DefinitioniofiVariables…………………………………………..… 27

3.8 ModeliSpecification........................................................................... 27

3.9 MethodiofiDataiAnalysis................................................................... 28

CHAPTERiIV:iDATAiPRESENTATIONiANDiANALYSIS

4.1iIntroductioni........................................................................................... 30

4.2iPresentationiofiDescriptiveiStatistics..................................................... 31

4.3iAnalysisiofiDatai………………………………………...................... 32

x

4.4iDiscussioniofiFindingsi………………………………………………. 34

CHAPTER V: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.

5.1iIntroduction............................................................................................... 35

5.2iSummaryi………................................................................................ 35

5.3iConclusion................................................................................................ 36

5.4iRecommendations..................................................................................... 37

5.5iLimitationsiofitheiStudy…………………………………………………38

5.6SuggestionsforiFurtheriStudies..................................................................38

REFERENCES……………………………………………………………… 38

APPENDICES