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Monetary Policy Instruments and Stock Market Returns Volatility in Nigeria

Author

Listed:
  • Emmanuel Othuke Akpokerere

    (Department of Banking and Finance, Faculty of Administration and Management, Delta State University of Science and Technology, Ozoro Delta State, Nigeria)

  • Azuoma Caroline Onojaife

    (Department of Office and Information Technology, Faculty of Administration and Management, Delta State University of Science and Technology, Ozoro Delta State, Nigeria)

  • Elizabeth Eloho Osevwe-Okoroyibo

    (Department Accountancy, Faculty of Administration and Management, Delta State University of Science and Technology, Ozoro Delta State, Nigeria)

Abstract

The study examines monetary policies instruments impact on stock market volatility in Nigeria for the period of 1993-2022. The study identified the independent variables, namely; reserve requirement (RR), cash reserve ratio (CRR), discount rate (DR) and money supply (MS) which were analyzed in relation to stock market volatility proxied with all share index volatility (ASIV). The data was analyzed with descriptive statistics, correlation matrix several diagnostics tests (VIF, validity test, ADF and Johansen tests) and the multiple regression analysis. The findings revealed that RR, CRR and MS have significant effect on ASIV while DR has insignificant effect on ASIV in Nigeria. It was concluded that reserve requirement, discount rate and money supply exert significant effect on Nigerian economy. Thus, it thereby recommended that management of CBN should put modalities in place to aggressively control ASIV in Nigeria. CBN should put measures in place to increase CRR. This will provide banks opportunity to fund economic transaction in the Nigerian economy, thereby reducing ASIV.

Suggested Citation

  • Emmanuel Othuke Akpokerere & Azuoma Caroline Onojaife & Elizabeth Eloho Osevwe-Okoroyibo, 2024. "Monetary Policy Instruments and Stock Market Returns Volatility in Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 273-282, October.
    • Handle: RePEc:eco:journ1:2024-06-30
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    More about this item

    Keywords

    Reserve Requirement; Cash Reserve Ratio; Discount Rate; Money Supply and Stock Market Volatility;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G1 - Financial Economics - - General Financial Markets

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