Journal of Finance and Bank Management

Macroeconomic Variables, Stock Market Bubble, Meltdown and Recovery: Evidence from Nigeria
Mike Ozemhoka Asekome1, (Ph.D); Abraham Oni Agbonkhese, (Ph.D)

Abstract
The study attempts to empirically examine the macroeconomic variables that contributed to the Nigeria stock market bubble, its consequent melt down and its gradual recovery during the period under review and particularly between 2007 to 2013. Relying on the Ordinary Least Square (OLS) regression technique, the study examined the joint impact of gross domestic product (GDP), money supply (M2), exchange rate (EXR), capacity utilization (CAU), and inflation (INF) on All Share Index (ASI). The result shows that the coefficients of gross domestic product and money supply were statistically significant while the remaining three: exchange rate, capacity utilization and inflation were not significant. The paper observes that the post melt down macroeconomic policies including banking sector reforms contributed to the gradual recovery of the stock market. The paper therefore recommends the need for policies that could further strengthen and stabilize the banking sector, ensure low but steady interest rates, favourable exchange rate, low inflation and consistent policy environment that could boost a steady growth in the real sector.

Full Text: PDF     DOI: 10.15640/jfbm.v3n2a3