Effects of Monetary Policies on Stock Market Performance in Nigeria: Further Investigation

• Author(s): Balogun Fatimah Omotoyosi; Adizuo onyekachi Isreal; Bello Tajudeen Atanda; Shodiya Bilqees Temitope; Unagha Oluchi Chibuzor; Bello, Hassan T. (Ph.D.); Gbemisola, O. S
• Paper ID: 1714053
• Page: 183-194
• Published Date: 06-02-2026
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 9 Issue 8 February-2026

Abstract

This study examines the effects of monetary policy instruments on stock market performance in Nigeria over the period 1990–2024. Using the All Share Index (ASI) as a measure of stock market performance, the study employs the Autoregressive Distributed Lag (ARDL) modeling framework to analyze both short-run dynamics and long-run relationships between monetary policy variables and stock market outcomes. The monetary policy variables considered include the monetary policy rate, broad money supply, inflation rate, exchange rate, treasury bill rate, and cash reserve ratio. Unit root test results indicate that the variables are integrated of mixed orders, thereby justifying the application of the ARDL approach. The ARDL bounds test reveals the absence of a stable long-run equilibrium relationship among the variables, suggesting that Nigeria’s stock market is more responsive to short-term monetary policy shocks than to long-term policy trends. Short-run results show that changes in money supply, inflation, and interest-related variables significantly influence stock market performance. Diagnostic and stability tests confirm the adequacy and robustness of the estimated model. The study concludes that monetary policy actions in Nigeria primarily affect the stock market through short-run transmission channels, reflecting the market’s sensitivity to macroeconomic instability.

Keywords

Monetary Policy, Stock Market Performance, ARDL, All Share Index, Nigeria.

Citations

IRE Journals:
Balogun Fatimah Omotoyosi, Adizuo onyekachi Isreal, Bello Tajudeen Atanda, Shodiya Bilqees Temitope; Unagha Oluchi Chibuzor, Bello, Hassan T. (Ph.D.); Gbemisola, O. S "Effects of Monetary Policies on Stock Market Performance in Nigeria: Further Investigation" Iconic Research And Engineering Journals Volume 9 Issue 8 2026 Page 183-194 https://doi.org/10.64388/IREV9I8-1714053

IEEE:
Balogun Fatimah Omotoyosi, Adizuo onyekachi Isreal, Bello Tajudeen Atanda, Shodiya Bilqees Temitope; Unagha Oluchi Chibuzor, Bello, Hassan T. (Ph.D.); Gbemisola, O. S "Effects of Monetary Policies on Stock Market Performance in Nigeria: Further Investigation" Iconic Research And Engineering Journals, 9(8) https://doi.org/10.64388/IREV9I8-1714053