IMPACT OF INFLATIONARY TRENDS ON STOCK MARKET PERFORMANCE IN NIGERIA

Abstract

Since stock market performance indicators in Nigeria have shown remarkable volatility over the years, this study aims to investigate the relationship between inflation and stock market performance in the country over from 1981 t0 2021 In order to determine the nature of the relationship between inflation and indicators of stock market performance in Nigeria, we obtained variables on stock market capitalization, stock market all share index, turnover ratio, and total values of shares traded from the financial report of the central bank of Nigeria and regressed them using the augmented dickey and fuller test for stationarity, the johansen test, and the ordinary least squares estimation method. In addition, the empirical results showed that stock market capitalisation was positively significant and related with inflation negatively across the study period. Since inflation has a direct negative impact on the standing of stock market all share index in the country during the period of this investigation, the study concluded that the government should formulate and implement economically friendly policies that would facilitate and improve the performance of the stock market during that time.