Impact of General Elections on Financial Market in Nigeria
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Date
2022
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Humanities, Arts and Social Sciences Studies
Abstract
This study investigated the pre-and-post-event impact (PEI) of general
elections on the financial market in Nigeria. Specifically, the study investigated the
impact of the general elections on stock returns; money market and the currency
market in Nigeria. Political instability increases financial vulnerability in countries
having weak economic fundamentals and these are peculiar with emerging
economies where political-institutional instability is on the rise. Twenty-four
months data was analyzed comprising twelve months pre and twelve months post election with the election month as the base month. The monthly all shares index,
certificate of deposit issued, notes and deposit certificates, and official exchange
rates for 1999, 2003, 2007, 2011 and 2015 election years were used to examine
the impact of the general elections on financial markets in Nigeria using event
study. The findings showed that the political environment has strong synergies
with the economic and real sectors of the economy. Therefore, the general election
had a significant impact on the three markets. Findings also showed that the stock,
money and currency markets’ returns were influenced by money supply and
change in election periods. Therefore, the study recommends that government
should engage in effective regulation of the financial market and electoral
institution as well as stimulate the economy after the election through appropriate
expansionary policies.
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Keywords
Currency market, Elections, Financial market, Money market, Stock market
Citation
Akinyede, O., Worimegbe, T. and Ayodele, T. (2022). Impact of general elections on financial market in Nigeria. Humanities, Arts and Social Sciences Studies