Capital Market and Fiscal Policy Shocks in Nigeria

Ejem Chukwu Agwu; Ogbonna Udochukwu Godfrey

doi:doi:10.11648/j.jfa.20200803.13

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Capital Market and Fiscal Policy Shocks in Nigeria

Ejem Chukwu Agwu, Ogbonna Udochukwu Godfrey

Published in Journal of Finance and Accounting (Volume 8, Issue 3)

Received: 7 May 2020 Accepted: 25 May 2020 Published: 3 June 2020

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Abstract

This study dissected fiscal policy from monetary policy to unravel its impact on Capital market performance in Nigeria and how capital market responds to fiscal policy measures. The empirical analysis came up with the following major findings; the Error Correction Model revealed that market Capitalization as a performance index in this study is autoregressive, implying that previous market capitalization can predict investors’ perception of the market in the futures, also the model’s results show that recurrent expenditure and Non-Oil Revenue have negative and significant relationship with capital market performance in Nigeria. And Domestic debt was found to have a positive and significant relationship with capital market performance, validating the Keynes’s postulations reviewed in this study that government should adopt fiscal policy through deficit financing to put an end to further economic depression and related issues. Pairwise Granger Causality Test Results found bi-directional effect between domestic debt and market capitalization, implying that the duo drive each other or have feedback effect. Also VEC Granger Causality/Block Exogeneity Wald Test revealed that fiscal policy variables jointly cause capital market performance in the long run. The impulse responses revealed that shock market capitalization (own shock) exerted huge influence in the cause of variations on capital market performance followed by shocks from government expenditures. It is in light of the findings the researchers among others; advise the regulatory authorities in Nigeria that government revenues and expenditure be adequately orchestrated as main drivers to correct disequilibria in the Nigeria.

Published in	Journal of Finance and Accounting (Volume 8, Issue 3)
DOI	10.11648/j.jfa.20200803.13
Page(s)	125-135
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Fiscal Policy, Market Capitalization, Impulse Responses, Nigeria

References

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APA Style

Ejem Chukwu Agwu, Ogbonna Udochukwu Godfrey. (2020). Capital Market and Fiscal Policy Shocks in Nigeria. Journal of Finance and Accounting, 8(3), 125-135. https://doi.org/10.11648/j.jfa.20200803.13

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ACS Style

Ejem Chukwu Agwu; Ogbonna Udochukwu Godfrey. Capital Market and Fiscal Policy Shocks in Nigeria. J. Finance Account. 2020, 8(3), 125-135. doi: 10.11648/j.jfa.20200803.13

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AMA Style

Ejem Chukwu Agwu, Ogbonna Udochukwu Godfrey. Capital Market and Fiscal Policy Shocks in Nigeria. J Finance Account. 2020;8(3):125-135. doi: 10.11648/j.jfa.20200803.13

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@article{10.11648/j.jfa.20200803.13,
  author = {Ejem Chukwu Agwu and Ogbonna Udochukwu Godfrey},
  title = {Capital Market and Fiscal Policy Shocks in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {3},
  pages = {125-135},
  doi = {10.11648/j.jfa.20200803.13},
  url = {https://doi.org/10.11648/j.jfa.20200803.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200803.13},
  abstract = {This study dissected fiscal policy from monetary policy to unravel its impact on Capital market performance in Nigeria and how capital market responds to fiscal policy measures. The empirical analysis came up with the following major findings; the Error Correction Model revealed that market Capitalization as a performance index in this study is autoregressive, implying that previous market capitalization can predict investors’ perception of the market in the futures, also the model’s results show that recurrent expenditure and Non-Oil Revenue have negative and significant relationship with capital market performance in Nigeria. And Domestic debt was found to have a positive and significant relationship with capital market performance, validating the Keynes’s postulations reviewed in this study that government should adopt fiscal policy through deficit financing to put an end to further economic depression and related issues. Pairwise Granger Causality Test Results found bi-directional effect between domestic debt and market capitalization, implying that the duo drive each other or have feedback effect. Also VEC Granger Causality/Block Exogeneity Wald Test revealed that fiscal policy variables jointly cause capital market performance in the long run. The impulse responses revealed that shock market capitalization (own shock) exerted huge influence in the cause of variations on capital market performance followed by shocks from government expenditures. It is in light of the findings the researchers among others; advise the regulatory authorities in Nigeria that government revenues and expenditure be adequately orchestrated as main drivers to correct disequilibria in the Nigeria.},
 year = {2020}
}

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TY  - JOUR
T1  - Capital Market and Fiscal Policy Shocks in Nigeria
AU  - Ejem Chukwu Agwu
AU  - Ogbonna Udochukwu Godfrey
Y1  - 2020/06/03
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200803.13
DO  - 10.11648/j.jfa.20200803.13
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 125
EP  - 135
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200803.13
AB  - This study dissected fiscal policy from monetary policy to unravel its impact on Capital market performance in Nigeria and how capital market responds to fiscal policy measures. The empirical analysis came up with the following major findings; the Error Correction Model revealed that market Capitalization as a performance index in this study is autoregressive, implying that previous market capitalization can predict investors’ perception of the market in the futures, also the model’s results show that recurrent expenditure and Non-Oil Revenue have negative and significant relationship with capital market performance in Nigeria. And Domestic debt was found to have a positive and significant relationship with capital market performance, validating the Keynes’s postulations reviewed in this study that government should adopt fiscal policy through deficit financing to put an end to further economic depression and related issues. Pairwise Granger Causality Test Results found bi-directional effect between domestic debt and market capitalization, implying that the duo drive each other or have feedback effect. Also VEC Granger Causality/Block Exogeneity Wald Test revealed that fiscal policy variables jointly cause capital market performance in the long run. The impulse responses revealed that shock market capitalization (own shock) exerted huge influence in the cause of variations on capital market performance followed by shocks from government expenditures. It is in light of the findings the researchers among others; advise the regulatory authorities in Nigeria that government revenues and expenditure be adequately orchestrated as main drivers to correct disequilibria in the Nigeria.
VL  - 8
IS  - 3
ER  -

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Author Information

Ejem Chukwu Agwu

Department of Banking and Finance, Abia State University, Uturu, Nigeria
Ogbonna Udochukwu Godfrey

Department of Management Science, Rhema University, Aba, Nigeria

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APA Style

Ejem Chukwu Agwu, Ogbonna Udochukwu Godfrey. (2020). Capital Market and Fiscal Policy Shocks in Nigeria. Journal of Finance and Accounting, 8(3), 125-135. https://doi.org/10.11648/j.jfa.20200803.13

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ACS Style

Ejem Chukwu Agwu; Ogbonna Udochukwu Godfrey. Capital Market and Fiscal Policy Shocks in Nigeria. J. Finance Account. 2020, 8(3), 125-135. doi: 10.11648/j.jfa.20200803.13

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AMA Style

Ejem Chukwu Agwu, Ogbonna Udochukwu Godfrey. Capital Market and Fiscal Policy Shocks in Nigeria. J Finance Account. 2020;8(3):125-135. doi: 10.11648/j.jfa.20200803.13

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@article{10.11648/j.jfa.20200803.13,
  author = {Ejem Chukwu Agwu and Ogbonna Udochukwu Godfrey},
  title = {Capital Market and Fiscal Policy Shocks in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {3},
  pages = {125-135},
  doi = {10.11648/j.jfa.20200803.13},
  url = {https://doi.org/10.11648/j.jfa.20200803.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200803.13},
  abstract = {This study dissected fiscal policy from monetary policy to unravel its impact on Capital market performance in Nigeria and how capital market responds to fiscal policy measures. The empirical analysis came up with the following major findings; the Error Correction Model revealed that market Capitalization as a performance index in this study is autoregressive, implying that previous market capitalization can predict investors’ perception of the market in the futures, also the model’s results show that recurrent expenditure and Non-Oil Revenue have negative and significant relationship with capital market performance in Nigeria. And Domestic debt was found to have a positive and significant relationship with capital market performance, validating the Keynes’s postulations reviewed in this study that government should adopt fiscal policy through deficit financing to put an end to further economic depression and related issues. Pairwise Granger Causality Test Results found bi-directional effect between domestic debt and market capitalization, implying that the duo drive each other or have feedback effect. Also VEC Granger Causality/Block Exogeneity Wald Test revealed that fiscal policy variables jointly cause capital market performance in the long run. The impulse responses revealed that shock market capitalization (own shock) exerted huge influence in the cause of variations on capital market performance followed by shocks from government expenditures. It is in light of the findings the researchers among others; advise the regulatory authorities in Nigeria that government revenues and expenditure be adequately orchestrated as main drivers to correct disequilibria in the Nigeria.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Capital Market and Fiscal Policy Shocks in Nigeria
AU  - Ejem Chukwu Agwu
AU  - Ogbonna Udochukwu Godfrey
Y1  - 2020/06/03
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200803.13
DO  - 10.11648/j.jfa.20200803.13
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 125
EP  - 135
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200803.13
AB  - This study dissected fiscal policy from monetary policy to unravel its impact on Capital market performance in Nigeria and how capital market responds to fiscal policy measures. The empirical analysis came up with the following major findings; the Error Correction Model revealed that market Capitalization as a performance index in this study is autoregressive, implying that previous market capitalization can predict investors’ perception of the market in the futures, also the model’s results show that recurrent expenditure and Non-Oil Revenue have negative and significant relationship with capital market performance in Nigeria. And Domestic debt was found to have a positive and significant relationship with capital market performance, validating the Keynes’s postulations reviewed in this study that government should adopt fiscal policy through deficit financing to put an end to further economic depression and related issues. Pairwise Granger Causality Test Results found bi-directional effect between domestic debt and market capitalization, implying that the duo drive each other or have feedback effect. Also VEC Granger Causality/Block Exogeneity Wald Test revealed that fiscal policy variables jointly cause capital market performance in the long run. The impulse responses revealed that shock market capitalization (own shock) exerted huge influence in the cause of variations on capital market performance followed by shocks from government expenditures. It is in light of the findings the researchers among others; advise the regulatory authorities in Nigeria that government revenues and expenditure be adequately orchestrated as main drivers to correct disequilibria in the Nigeria.
VL  - 8
IS  - 3
ER  -

Copy | Download