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The Relevance of External Reserve in an Emerging Capital Market: Evidence from Nigeria

Okoye, A. E. and Babajide, A. A (2008) The Relevance of External Reserve in an Emerging Capital Market: Evidence from Nigeria. Management Sciences Review (MSR), 1 (1).

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This paper investigates the relevance of external reserve in an emerging capital market. The objective are in two folds, the first is to ascertain the il~fluence of external reserve in attracting foreign porf:lolio investment and the second is to examine the impact of foreign portfolio investment on capital nzarket development. To achieve these objectives, secondary data vvere obtained ji'om Central Bank of Nigeria (CBN) and Nigeria Stock Exchange (NSE) fa ct book. The data were analysed using regression technique of the ordinwy least square. We ji11d out that there is strong positive link belween external reserve and port;folio investment, and there is a positive correlation between stock market development and extemal reserve but a negative relationship between por(folio investment and stock market capitalization in Nigeria. We recommend that more effort· should be concentrated towards development of the local market and investor' friendly enl'ironment should be created to encourage foreigners to retain their capital invested in the stock market.

Item Type: Article
Uncontrolled Keywords: External reserves, Emerging capital market. JEL Classification: F21, G1
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 01 May 2014 09:57
Last Modified: 01 May 2014 09:57

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