Effects of Macroeconomic Shocks on the Financial Market Stability in Nigeria
Abstract
Nigeria's economy, which depends heavily on oil earnings, is vulnerable to market volatility brought on by changes in the price of oil globally, fluctuations in exchange rates, inflationary pressures, and imbalances in domestic fiscal policy. These shocks have a direct impact on the stability of the financial markets in addition to the actual economy. This study therefore investigated the effects of various macroeconomic shocks on the stability of Nigeria's financial markets. The study made used of Autoregressive Distributive Lag (ARDL) for analysis. The result shows that MS has a positive inconsequential influence on GDP in the long run, as shown by p-values (0.1272); INTR has a negative impact on GDP in the long run. It has p-values of 0.0153, indicating a substantial effect in the long run; EXCR has a negative, significant impact on GDP in the long term. Its p-values (0.0112) which is less than the 5% level of significance; INF has a detrimental but not impacted on GD in the long term. It has p-values of 0.3953, indicating that there is no statistical significance in the long runs, and that OILP has a positive and not impacted on GDP in the long run. It exhibits p-values of 0.6760, indicating no statistical significance in the long term. The result further showed that macroeconomic variables shock have no significant impact on economic growth in Nigeria. The study recommends among other things that monetary authority and regulators must ensure that the oil price the money supply and exchange rates remain steady overall. They should also endeavour to curb inflationary trends and keep interest rates constant in the economy so that the GDP can perform better and achieve the desired economic growth and national development.
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