Influence of Macroeconomic Variables on the Performance of the Nigerian Capital Market

The performance of the Nigerian capital market is closely linked to macroeconomic conditions, and understanding these relationships is essential for investors, policymakers, and market regulators. This study investigates the influence of selected macroeconomic variables on the performance of the Nigerian capital market for the period 2008 to 2022, using secondary data from the Nigerian Exchange Group and the Central Bank of Nigeria Statistical Bulletin. Capital market performance was measured by the All-Share Index returns. Macroeconomic variables examined included gross domestic product growth rate, inflation rate, interest rate, exchange rate, and oil price. Johansen cointegration analysis and vector error correction modelling were employed to assess long-run and short-run relationships. Results confirmed cointegrating relationships between capital market performance and all five macroeconomic variables. In the long run, gross domestic product growth rate (coefficient = 0.43, p < 0.01) and oil price (coefficient = 0.29, p < 0.05) had significant positive effects on market performance. Inflation and interest rate exerted significant negative long-run effects on capital market returns. The error correction coefficient was negative and statistically significant (-0.38, p < 0.01), confirming convergence to long-run equilibrium after short-run deviations. The study concludes that macroeconomic stability is a prerequisite for capital market development in Nigeria, and recommends coordinated fiscal and monetary policy frameworks to reduce macroeconomic volatility and attract long-term capital market investment. Keywords: macroeconomic variables, capital market performance, All-Share Index, cointegration, Nigeria