Globalization, Monetary Policy, and Stock Market Performance in Nigeria

Globalization, Monetary Policy, and Stock Market Performance in Nigeria

¹Sarafa Adeyemi Salami., *¹T.T. Ogunro., ²Omolade Adeleke

¹Lead City University, Ibadan

²Federal University Oye Ekiti

DOI: https://dx.doi.org/10.47772/IJRISS.2025.90400419

Received: 14 April 2025; Accepted: 18 April 2025; Published: 19 May 2025

ABSTRACT

This study investigated the dynamic relationship between globalization, monetary policy, and stock market performance in Nigeria from 1985 to 2023 using the Auto Regressive Distributed Lag (ARDL) model. The research employed trade openness as a proxy for globalization, while key monetary policy indicators such as interest rate, exchange rate, and money supply are utilized to assess policy stance. Stock market performance is measured using the All Share Index. The ARDL approach is employed to account for the mixed order of integration among variables and to explore both short-run and long-run dynamics. The long-run findings indicated that trade openness, foreign direct investment (FDI), and exchange rate have a direct and significant impact on the stock market. Furthermore, the results revealed an inverse yet significant relationship between money supply (MS) and the stock market while the relationship between interest rate (INT) and the stock market is positive, it is not statistically significant. In the short-run, the results showed trade openness and exchange rate (OPEN) have a positive and significant impact on the stock market while foreign direct investment (FDI) has a significant but inverse relationship with the stock market, money supply (MS) exhibited a positive but insignificant connection, while interest rate (INT) has a negative but insignificant relationship with the stock market. The study provided empirical evidence supporting the need for coordinated monetary policies that consider global economic trends to enhance market stability and investor confidence. Policy implications suggested a strategic balance between openness and domestic macroeconomic management to foster a resilient financial market.

Key Words: Globalization, Monetary Policy, Stock Market and ARDL

INTRODUCTION

Globalization has significantly transformed financial markets across the world, integrating economies and shaping monetary policy dynamics (Oluwole, 2014). In Nigeria, globalization has influenced the stock market through capital flows, trade liberalization, and technological advancements (Akinlo, 2003). At the same time, monetary policy through instruments such as interest rates, money supply, and exchange rate control plays a critical role in stock market performance (Feriansyah, Noer, Tony, & Lukytawati, 2022; Nkoro, & Uko, 2016). The interaction between globalization, monetary policy, and stock market performance remains a crucial area of economic research, particularly in an emerging economy like Nigeria (Adekunle, Alalede, & Okulenu, 2016; Adeola, 2004)

Nigeria’s stock market has experienced periods of growth, volatility, and downturns, often influenced by both domestic monetary policies and external global financial developments (Erer, & Gacener-Atis, 2018). The Central Bank of Nigeria (CBN) plays a vital role in regulating liquidity, stabilizing the financial system, and ensuring investor confidence (Krzysztof & Piotr, 2019). However, with globalization facilitating capital inflows, exchange rate fluctuations, and financial integration, the effectiveness of domestic monetary policies in stabilizing the stock market has come into question. The 2008 global financial crisis and recent macroeconomic challenges, such as exchange rate volatility and inflationary pressures, have underscored the need to reassess the linkages between globalization, monetary policy, and stock market performance in Nigeria (Nwokoye & Otu, 2018). A major concern regarding stock market development in Nigeria is how globalization affects market performance (Akinmulegun, 2018). It remains unclear whether globalization, particularly through trade openness and foreign direct investment (FDI), has a positive effect on the stock market. Although some studies have debated its impact, globalization has significantly influenced various indicators used to assess stock market performance.

Stock market performance is influenced by several factors, one of which is money supply. Since the stock market primarily deals with long-term capital, its long-run interaction with globalization and monetary policy is crucial for economic growth (John & Ezeabasili, 2020). However, the existence of this relationship remains a subject of debate. In Nigeria, fluctuations in stock prices are often attributed to variations in money supply. Okoya and Dare (2019) indicated that while money supply has a significant positive impact on the stock market in the long run, it also exerts a notable influence in the short run (CBN, 2020; 2021; Asongu, Nnanna, & Tiamiyu, 2020). Despite these findings, previous research presents conflicting views on whether money supply drives stock market performance or if the reverse holds.

Likewise, an effective stock market is supposed to accelerate risks with the increase of capital and widen the access to finance (John & Ezeabasili, 2020). In Nigeria, rate of interest is not steady and this makes the worth of stock market to vary. Changes in interest rate can have a significant impact on stock prices (Simone, 2023). When interest rate is low, investors may be more inclined to invest in stocks seeking higher returns compared to fixed-income securities. This increased in demand for stocks can drive up stock prices. Conversely, rising interest rates may lead investors to reallocate their portfolios away from stocks and into interest-bearing investments, causing stock prices to decline.   Balogun, Dahalan and Hassan (2016) opined that rate of interest affects stock market development in the seven picked SSA. There is a negative connection between globalization and inflation, exchange rate, and interest rate over the long term while there are positive relationship in the short run by Songole (2012). Running against the norm, Sakshi and Sanjay (2020), posited that that money supply and rate of interest rate had an extensive positive impact over the long term on globalization while there is negative relationship in the short run. The aforementioned may be attributable to the instability in interest rate of the country among other factors.

Despite the growing integration of Nigeria’s economy into the global financial system, the impact of globalization on stock market performance remains inconclusive. While some studies suggest that globalization enhances market efficiency and attracts foreign investment, others argue that it increases market volatility and exposes the economy to external shocks. Additionally, monetary policy effectiveness in stabilizing the stock market has been challenged by external factors such as foreign direct investment, exchange rate fluctuations, and speculative investments.

Over the years the Nigerian Stock market have been witnessing inconsistent performance most of which are not encouraging and this has been the main reason adduced for the low impact of the Nigerian stock market on the economic growth of Nigeria ( Oluwole, 2014 ). In recent times there has been aggressive approach to globalization in Nigeria. This has necessitated many trade that encourage globalization. In addition, the incessant policy rate changes (contractionary monetary policy) have been posing some effects on the stock markets and also aid globalization. However, despite all these trials in both globalization and monetary policy approaches in Nigeria, the stock market of Nigeria still continued to fluctuate and fail to have expected impact on the general activities in Nigeria. This study underscores the significance of globalization and monetary policy in enhancing effectiveness of stock market. Consequently, this study aims to address the gap in understanding whether globalization and monetary policy influence stock market performance in Nigeria, or vice versa, providing empirical evidence and policy recommendations.

Chapter one provides the introduction, background to the study, statement of the problem, justification, significance, and organization of the study. Chapter two reviews relevant literature on globalization, monetary policy, and stock market performance, including theoretical and empirical perspectives. Chapter three presents the research methodology, detailing the data sources, model specification, and analytical techniques used. Chapter four analyzes the data, discusses key findings, and interprets the results in the context of existing literature. Chapter five summarizes the findings, concludes the study, and provides policy recommendations based on the results.

LITERATURE

Obstfeld (2007) posited that financial markets around the world are increasingly synchronized, with periods of booms and busts occurring simultaneously across countries. It also suggests that monetary policy actions by major central banks, such as the Federal Reserve, have significant spillover effects on financial markets globally, influencing asset prices, capital flows, and risk-taking behavior. The theory highlights how interconnectedness and financial linkages amplify the transmission of shocks across borders, leading to contagion and systemic risk in global financial markets.

The theory assumes that financial markets are highly interconnected, with capital flowing freely across borders due to globalization and financial innovation. Likewise, it assumes that investors exhibit similar behavior and react uniformly to changes in monetary policy, risk perceptions, and economic conditions, contributing to the synchronization of financial cycles.

Critics argue that the theory may oversimplify the complex dynamics of global financial markets and overlook the role of country-specific factors, institutional differences, and policy responses in shaping financial cycles. Also, some scholars question the theory’s ability to predict and explain financial market dynamics accurately, citing instances where financial cycles diverge across countries or regions.

The theory has important implications for policymakers, highlighting the need for coordination and communication among central banks to manage global financial stability effectively. Also, it informs investors and financial institutions about the interconnectedness of global financial markets, encouraging them to consider the spillover effects of monetary policy and financial shocks when making investment decisions. Having discussed the theory related to the work, below shows the empirical review.

Simon (2022) worked on how, in a typical New Keynesian open economy model, domestic monetary policy transmission is impacted by global financial integration. The primary conclusion is that none of the financial integration models examined compromise the ability of monetary policy to affect inflation and domestic GDP. In contrast, monetary policy is more effective under a wide range of parameterizations and even in situations where the Home country’s traded goods sector is relatively small in relation to global markets and the exchange rate pass-through elasticity is very low.

Tiamiyu (2022) analyzed the connection between stock market and financial deepening in Nigeria over the time (1981-2019). This study used Bound Test cointegration ARDL. The variables used are; stock market development, GDP; financial development, Broad Money Demand, total domestic saving to GDP. The research showed that cointegration existed among the variables used. The findings is in conformity that money stands nonpartisan over the long term as anything occurs in stock market mirrors different markets factors including economic development. In the short run, stock market showed versatile assumption in Nigeria as its past qualities conforms to the current qualities. The paper concluded that regardless of long run or short run, total domestic saving ratio of Gross domestic product has been a factor driving Nigerian stock market.

Imankojemu, Akinlosotu and Aina (2021) researched the effect of globalization on the Nigerian economy from 1988 to 2019. The variables utilized are FDI, external debt, exchange rate, and GDP per capita and OLS technique was utilized. The investigation discovered that balance of trade and exchange rate have positive connection with GDP per capita while external debt had indirect connection with total national output per capita. The adjusted r-square for the models exhibited that balance of trade, exchange rate, external debt, and FDI explained 88.5% variations in the rate of Nigerian GDP per capita. It was prescribed that the national government needs to enhance Foreign Direct Investment strategies that would advance GDP per capita.

Babangida and Khan (2021) used STAR technique on monthly data for the All Share Index (ASI) and monetary policy instrument from 2013 M4 to 2019 M12 to examine the nonlinear impact of monetary policy decisions on the performance of the Nigerian Stock Exchange market. The results demonstrated a nonlinear impact of monetary policy on the stock market. The stock exchange market is found to be significantly positively impacted by the monetary policy rate, money supply, lagged monetary policy rate, and lagged treasury bill rate in the lower regime, however the present treasury bill rate exhibits a negative influence. Money supply and the treasury bill rate’s lag both significantly hurt the stock market in the upper regime. The stock exchange market is found to benefit from the current rate on government bills.

Kingsley and Eberechi (2020) looked at how globalization affected stock market returns in five African nations: Egypt, Morocco, Namibia, Nigeria, and South Africa between 2000 and 2018. Pooled Mean Group/ARDL estimate using panel unit root and cointegration approach were used in the study. Following the establishment of cointegration, it was discovered that, in the long run, trade openness had a major negative impact on stock market returns, while globalization, foreign direct investment, and exchange rates all had positive and significant effects. Through the use of an error correction mechanism, it was determined that trade openness, FDI, globalization, and exchange rates all reacted quickly to any short-term imbalance. The short-run dynamics revealed that while FDI and exchange rates had a negative short-term impact on stock market returns, the globalization index and trade openness had a positive impact. In the short run, only trade openness mattered, though. Ultimately, a one-way causal connection was observed between the returns on the stock markets in the selected African stock markets and the globalization index, exchange rate, and trade openness.

Asongu et. al., (2020) examined the impact of regionalization policies induced by globalization on the effectiveness of financial allocation in four (4) African economies between 1980 and 2008. Seven globalization-related variables were employed as independent variables, and the efficiency of banking and financial system proxies was used as a dependent variable. Fixed effects regression served as the basis for the empirical analysis. The results showed that financial allocation efficiency responded most to globalization and more to financial openness than to trade openness.

Akinwale and Adekunle (2019) analyzed capital market and globalization in Nigeria for the year 1986-2017 utilizing annual series data from the CBN Statistical Bulletin. ARDL were utilized to estimate the effect of trade openness, FDI, and FPI on Nigerian market capitalization. The long-run connection was found among the variables. Long run and short run Foreign Portfolio investment and trade openness had a significant and direct relationship on market capitalization while FDI insignificantly and indirectly affected market capitalization in long run and short run. In accordance with the outcomes, it was resolved that globalization affected the economy through trade openness and foreign capital inflow. The research suggested there is necessity for liberalization of trade in order to achieve full stability of economic globalization.

Onyimba, Nwokediuko and Evelyn (2019) worked on the effect of globalization on development and advancement of capital market in Nigeria during the time of 1990 to 2016 utilizing OLS method. The result showed that capital market is significantly impacted by economic integration. The study concluded that constituted authority in the capital market, need to advocate increased financial market liberalization as this will lead to rise in investors, financial protections, dynamic and nature of business produces and as well as quality and consistency in accounting standard.

Simone (2019), examined financial globalization and monetary transmission in US and Canada. Three key findings come from the analysis. First, the gross and net foreign investment income flows in both nations are statistically significantly impacted by an unexpected contraction of monetary policy. Second, there are significant differences in how monetary policy affects foreign investment income flows over time and across asset classes. Lastly, the findings corroborate the body of research demonstrating how well-suited big vector autoregressions and the Bayesian shrinkage technique are for solving exchange rate and pricing riddles.

Nwokoye and Otu (2018) explored the effect of monetary policy on Nigerian stock market. The research covered the period from 1981-2015. Cointegration and VECM were utilized for the study. The variables used are; market capitalization, money supply, inflation and prime lending rate. The cointegration test shows there is balance relationship among the factors of the model over the long term. VECM result showed that monetary policy, through the expansion in money supply has affected directly and significantly on stock market in Nigeria. Likewise, study revealed that prime lending rate affects the stock market indirectly. The research suggested that the CBN ought to utilize its development pace of supply of money to uplift the stock market and as well as to be wary of the upsurge in money supply to reduce the adverse consequence of inflation.

In 2018, Akinmulegun x-rayed the nexus between the capital market development and FPI in Nigeria between the years 1985-2016. The variables considered are; market capitalization, FDI, foreign portfolio, and trade openness. Augmented Dickey Fuller Test, Granger Causality Test, and VECM were utilized for the study. The research discovered that capital market significantly affects foreign portfolio in Nigeria. The study concluded that there must be a good relationship among nations in order to pave way for international trade. Also, trade restrictions policies should also be abolished between/among the nations of the world.

Nelson, Onduka, Yebimodei and Angonimi (2018) worked on the effect of global financial crisis on stock market development in Nigeria. The research covered the year 2008 to 2016. The variables utilized are stock market capitalization, foreign exchange, and foreign direct investment. The research uncovered that foreign exchange rate has insignificant relationship with stock market in Nigeria; FDI has insignificant but direct effect on Nigerian stock market and foreign reserve has insignificant and indirect effect on stock market. The paper recommended that regulatory authorities and government ought to execute strategies to further develop the deteriorating capitalization of market by encouraging foreign investors to partake and put resources into the market.

Adamu (2017) analyzed global financial crisis and stock market volatility in Nigeria for the year 2006 to 2009 utilizing OLS. The research assessed the pre and pro global financial crisis on the volatility of stock market. Utilizing all share index for monthly data. Using standard deviation, volatility of the market and descriptive statistics were measured. The result posited that the stock market is profoundly volatile in the time of the financial crisis than the period before it.

Echekoba, Okaro, Akuesodo and Ananwude (2017) researched monetary policy and capital market in Nigeria. The work covered the time of 1986-2016 utilizing the OLS procedure and causality examination in which ASI was regressed on cash reserve ratio and monetary policy rate. The outcome showed monetary policy has insignificant effect on performance of capital market. The rate of monetary policy has significant but negative connection with capital market whereas cash reserve ratio has direct relationship with capital market. The work suggested that CBN ought to diminish the present two digit monetary policy to one digit to draw capital market investments.

Having surveyed empirically, the stock market in Nigeria had not performed astonishingly when contrasted with other stock markets in other regions of the world. The variance of stock market, globalization and monetary policy have raised concerned among economists and monetary experts, as for the possible impacts of such on the economy. Some researchers have looked at the trend of globalization, monetary policy and stock market to perceive how they responded to the development of the economy of Nigeria. Be that as it may, not even one of them stressed the significance of globalization and monetary policy to advance intensity of stock market, guarantee increase foreign investment by foreign investors, as well as increase in stock market development. Hence, the review combines the variables of globalization, monetary policy and stock market which has not been used by the previous studies in a single study to the best of the investigator’s knowledge.

METHODOLOGY

The researcher considers the utilization of the Global Financial Cycle Theory as a theoretical framework.  Considering that financial markets around the world are increasingly synchronized, with periods of booms and busts occurring simultaneously across countries. It also suggests that monetary policy actions by major central banks, such as the Federal Reserve, have significant spillover effects on financial markets globally, influencing asset prices, capital flows, and risk-taking behavior. The theory highlights how interconnectedness and financial linkages amplify the transmission of shocks across borders, leading to contagion and systemic risk in global financial markets. This study’s model was built in line with the work of Babangida and Khan (2021). The equation is as follows:

Furthermore, the model was augmented in order to ascertain the objective of this research and to fit to the context of the work. Thus, the equation is as follows:

The Econometric Model:

                                                    Taking the natural logarithms of the variables, ASI OPEN, FDI and EXC, equation 3 is expressed in the form below:

Where intercept,  to  are the coefficients of the independent variables and chastic error term.

Description and Measurement of Variables

There is need to examine the economic meaningfulness of the study’s model with regards to the expected signs of the parametric co-efficient and their conformity or non-conformity with economic theory. In other words, the study examine the likely connection between the variables.

The a-priori expectation is that OPEN > 0, FDI > 0, MS> 0, EXC > 0, and INT < 0

The research utilized Phillip Pheron (PP) and Augmented Dickey Fuller (ADF) to test for unit root. A sequence is described as stationary at level or I(0) if the ADF t-statistic is greater than any of the critical values after performing the unit root otherwise it is I(d) where d depicts the number of time(s) the series is differenced before becoming stationary. The ADF equation is presented thus:

The ARDL model works with both stationary and non-stationary time series. For estimating structural equations with auto-correlated residuals, it is suitable. The ARDL model examines whether or not the study’s variables have a long-term relationship. ARDL estimate are consistent and efficient even when the regressors are integrated of different orders. This is because ARDL treats the integrated and non-integrated variables in the same way and ARDL can be applied on data with short and long time series. The ARDL bound test representation of equation three used to find the impact of variables under consideration in Nigeria is expressed below:

Where Δ is used as change operator,  is the drift factor of the model,  to  are short run elements while  to are long run elements, ecm stand for error correction model and for error term. The variables are co-integrated when the calculated f-stat is higher than the upper bound estimate and not co-integrated when the calculated f-stat is lower than both the lower and upper bounds estimates. It is indecisive when the calculated f-stat is higher than the lower bounds estimates but lower than the upper bound estimates.

The study collected yearly time series data from 1985 to 2023. The secondary data used was collected from WDI and CBN Bulletin. The time frame considered in this study was believed to cover the period Federal Government begins to pay more attention to stock market development in Nigeria.

ANALYSIS AND DISCUSSION

Descriptive Statistics

To assess the impact of globalization and monetary policy on Nigeria’s stock market, it is essential to analyze the descriptive statistics before conducting the time series analysis. This helps to address multicollinearity among independent variables, which could otherwise result in spurious regression. By doing so, the study ensures more accurate regression estimates and reliable inferences. The data series presented in table above demonstrate consistency across variables, as indicated by the mean and median values falling within the range of the maximum and minimum values for each variable.

The standard deviation measures the dispersion of the data series. Among the variables, LNFDI has the lowest volatility, with a standard deviation of 0.991042, while INT exhibits the highest volatility at 3.889110. Additionally, Skewness and Kurtosis are key indicators of distribution characteristics. Skewness evaluates the symmetry of the data, whereas Kurtosis determines whether a variable has heavier or lighter tails compared to a normal distribution. The skewness results reveal that LNASI, LNOPEN, LNFDI, and LNEXC are negatively skewed, while MS and INT are positively skewed. Regarding Kurtosis, the values for LNOPEN, LNFDI, MS, and LNEXC indicate a platykurtic distribution, suggesting that their values tend to cluster below the sample mean since their Kurtosis values are less than 3. Conversely, LNASI and INT exhibit leptokurtic tendencies, characterized by a sharper peak compared to a normal distribution. Furthermore, the probability values support the null hypothesis of normal distribution for most variables, except for LNASI and INT, where the Jarque-Bera statistics exceed the 5% significance threshold.

Unit Root

*** denotes stationary at 1% significance level. ADF represents Augmented Dickey Fuller while PP denotes Philip Pheron tests.

Accordingly, this study employs the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests to establish the order of stationarity for each variable. The null hypothesis for both tests assumes that a variable has a unit root, indicating non-stationarity. This hypothesis is rejected if the t-statistic of the variable exceeds the critical value at the 1% or 5% significance level. Additionally, the null hypothesis can be rejected if the p-value is less than 5%.

Referring to the table, the probability values of the ADF and PP t-statistics at the level form for all variables exceed 5%. According to the results from both tests, LNASI, LNOPEN, LNFDI, MS, LNEXC, and INT become stationary after taking the first difference at the 1% significance level. In summary, these variables are integrated of order one, denoted as I(1).

Multicolinearity Result

The table above presents the results of the multicollinearity test, showing that some variables have coefficients greater than 0.7, suggesting the presence of multicollinearity. Due to the strong correlation among these variables, it is necessary to adopt a dynamic model like the Autoregressive Distributed Lag (ARDL) model.

Lag Selection

Table above shows the LSC, the optimal lag length used in this study is 2 and it is selected based on LR, FPE, AIC, and HQC.

ARDL Bound Test

The bounds test result in the table above shows that the value of F-statistics is higher than the upper bound at 1%. This implies the presence of long run and short run relationship among the variables LNASI, LNOPEN, LNFDI, MS, LNEXC and INT.

Long Run ARDL (1, 0, 2, 2, 0, 1) DV: LNASI

***, ** and * shows 1%, 5% and 10% significant level.

The regression results presented in the table indicate that trade openness, foreign direct investment (FDI), and exchange rate have a direct and significant impact on the stock market. This suggests that in the long run, a 1%, 10%, and 5% increase in trade openness, FDI, and exchange rate would lead to a 0.68, 0.24, and 0.41 rise in stock market performance, respectively. The relationship between trade openness and the stock market aligns with theoretical expectations and supports the findings of Akinwale and Adekunle (2019). Similarly, the impact of FDI on the stock market is consistent with theoretical expectations and corroborates the findings of Onyimba et al. (2019). Additionally, the exchange rate results align with theoretical predictions and are supported by the work of Adebowale and Akosile (2018).

Furthermore, the results reveal an inverse yet significant relationship between money supply (MS) and the stock market at a 1% significance level, which contradicts theoretical expectations. Additionally, while the relationship between interest rate (INT) and the stock market is positive, it is not statistically significant, also deviating from theoretical predictions. Overall, the consistency observed in these results suggests the need for further analysis.

Short Run ARDL (1, 0, 2, 2, 0, 1) DV: LNASI

***, ** and * shows 1%, 5% and 10% significant level.

The ARDL model estimation reveals that the short-run error correction term (ECM) is negative, as expected, with a statistically significant value of -0.558597. This indicates that deviations from the long-run equilibrium are corrected at an annual adjustment rate of 55%.

The results show that trade openness (OPEN) has a positive and significant impact on the stock market. Specifically, a 1% increase in trade openness leads to a 0.38 rise in stock market performance in the short run, aligning with theoretical expectations. Additionally, while foreign direct investment (FDI) has a significant but inverse relationship with the stock market in the short run, money supply (MS) exhibits a positive but insignificant connection, contradicting the expected theoretical outcome.

The exchange rate demonstrates a positive and significant effect on the stock market, consistent with theoretical expectations and the findings of Onyeke (2016). Conversely, interest rate (INT) has a negative but insignificant relationship with the stock market, aligning with theoretical expectations and supporting the work of Adekunle, Alalade, and Okulenu (2016). Overall, the short-run results exhibit consistency, warranting further analysis and discussion.

Post Estimation Technique

Serial Correlation: Breusch-Godfrey LM Test

The serial correlation test result shows that the null hypothesis of serial correlation is rejected and that the f-statistics conforming probability values are statistically not significant at 5 % level. It follows that there is no serial correlation among the variables.

Heteroskedasticity Result: Breusch-Pagan-Godfrey

The result shows that the null hypothesis is accepted because the likelihood of the f-statistics is 0.1984 and is higher than 0.05 at the 5 % level of significance. This is consistent with the absence of heteroscedasticity in the model. In other words, either the error term in the repeated sample are homoscedasticity or they do not have constant value.

CONCLUSION AND POLICY RECOMMENDATION

This study evaluated globalization, monetary policy and stock market in Nigeria using annual time series data over the period (1985-2023). The motivation for this study emanated from the gap in literature on globalization, monetary policy and stock market in Nigeria. Therefore, the review of literature confirmed the controversies as far as the relationship that existed among globalization, monetary policy and stock market is concerned. Evidence from the literature showed the relationship that exists among globalization, monetary policy and stock market have not been settled empirically. Thus, in achieving this objective the research methodology adopted is ARDL. This gives room to measure the long and short run impact of globalization and monetary policy on stock market in Nigeria.

In the long run, the results showed that stock market impacted on globalization, money supply, FDI and interest rate while there is no significant connection between stock market and exchange rate. All have positives relationship with the exception of money supply which is negative. In the short run, there is positive significant connection between globalization and stock market, negative significant relationship between foreign direct investment and stock market, insignificant negative relationship between money supply and stock market, insignificant positive relationship between exchange rate and stock market and insignificant negative relationship between interest rate and stock market.

Ultimately, the Nigerian stock market continues to be a vital component of the country’s financial system. Thus, this study suggests that adopting global stock market standard is necessary. The majority of stock market trading floors must implement contemporary stock braking, a process that is acknowledged as a global standard, in order to guarantee the quick and effective expansion of the Nigerian stock market.  More economic liberalization is required to support the expansion of the stock market, but prudence is required to prevent unfavorable effects from trade liberalization. Regulators overseeing the stock market should make sure that investors are confident in the system. This could be accomplish by upholding the integrity of investments, stock market transactions, and transaction openness and fairness.

The study assists with the existing literature regarding the connection among globalization, monetary policy and stock market in Nigeria by establishing the impact, thereby providing an up to date empirical solutions to the controversies surrounding the link among globalization, monetary policy and Nigerian stock market. The research will also be valuable to policy makers especially in formulating policies that will boost the growth of stock market by coordinating the effective usages of macroeconomic variables. In the same vein, the study will be of immense benefit to the constituted authorities in the industries as well as addressing the various means of tackling the obstacles of stock market in the economy.

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