Influence of Economic Factors on Fluctuations of Share Prices in Nigeria (2000 – 2020): VECM Approach
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Date
2022
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IOSR Journal of Economics and Finance (IOSR-JEF)
Abstract
Share prices fluctuate due to many micro and macroeconomic factors. This study investigated the extent to which economic factors influence the fluctuations of share prices in Nigeria from 2000 – 2020, using the VECM approach. Share price was proxy with All Share Index while the identified economic factors are GDP, Price of Crude Oil, Inflation rate and Interest rate. The data used were sourced from the Statistical Bulletins of Central Bank of Nigeria. Percentage increase in the variables over the research period was used and regressed with E-views. Findings, which confirmed some existing works and negated others showed that all the variables were stationary at first difference and that a long run relationship existed between them. All the economic factors influenced share prices though not significantly. Findings further revealed that the speed of adjustment of fluctuations of share prices from short-run to long run in Nigeria is 102%. Since the adjusted R-squared is 35%, the study concluded that other factors not considered in this study influenced the fluctuations more and therefore recommended a total overhaul of all micro and macro- economic factors for stable share prices and its attendant benefits