FOREIGN PORTFOLIO INVESTMENT AND CAPITAL MARKET DEVELOPMENT IN NIGERIA

The poor performance of Nigeria’s stock market is a source of concern and has generated contentious debates among the stakeholders in the Nigerian Stock Exchange Market (NSE). This study investigates the impact of foreign portfolio investment on the performance of the stock market in Nigeria for the period of 30years (1989-2018). Secondary and time-series data were used and the variables such as; stock market capitalization proxy for capital market performance, portfolio investment, exchange rate and inflation rate were sourced from the Central Bank of Nigeria (CBN) statistical bulletin, 2019 To avoid spurious results, unit-root test and regression analysis were used as the tools of data analysis. Findings show that all the predictors have no significant impact on stock market capitalization except the exchange rate that is statistically significant at 5% critical value. However, the f-statistic results (18.83660) indicate that the combine variables have a significant impact on stock market performance in Nigeria. It was therefore concluded that foreign portfolio investment if properly encouraged serve as a Potent variaable for enhancing the performance of the stock market in Nigeria. The study recommends that, there is a need for the government through the central bank of Nigeria to implement a policies that will increase the level and size of market capitalization in the capital market. Such an increase in the capital market will provide the necessary funds for investors for further investments thereby increasing productivity in Nigeria.

Investigating the Effect of Broad Money Supply on Stock Market Index and Market Capitalization: Evidence from Liberalized India

The present study investigates the effect of changes in money supply on both Indian stock market sensitive index and stock market overall capitalization by employing unit root test with break point, Johansen’s cointegration test, vector error correction (VEC) model, VEC Granger causality test, variance decomposition, and impulse response function. The result of the unit root test reveals that all the variables are nonstationary in levels but become stationary at the first-order difference. The unit root test further reveals that there are structural breaks in the mid-1990s or 2000s. The Johansen’s cointegration test reveals that the Indian stock market index and stock market capitalization are individually cointegrated with money supply. Further, the long-run co-movement between the Indian stock market and money supply and stock market capitalization and money supply is found to be positive. The results of the VEC model shows that the error correction term in the lnSENSEX–lnMS model is negative and statistically significant, while the error correction term in the lnMARCAP–lnMS model is found to be insignificant. The VEC Granger causality test shows that there is no short-run causal relationship between the variables. The variance decomposition indicates that both Indian stock market index and stock market capitalization are strongly exogenous. The impulse response function suggests that money supply has an immediate positive effect on both Indian stock market index and stock market capitalization. The investors and fund managers should take investment decisions keeping in view the positive co-movement of Indian stock market performance and broad money supply. The study recommends that the government should avoid aggressive tightening of money supply.

Determinants of Stock Market Development in Eurasian Countries

Stock market capitalization has been regarded as an important component of financial development of countries, as an instrument of economic growth. This study examines the effect of private credit, real income, inflation, foreign direct investment, financial openness, stock market liquidity, liquid liabilities, and domestic savings on stock market capitalization for 55 Eurasian countries between 1975 and 2017. I find that real income, stock market liquidity, foreign direct investment and financial openness have a positive effect, while inflation has a negative effect on stock market capitalization to GDP ratio. Other variables are found to be insignificant. I also examine pre-1990 and post-1990 periods due to political and structural changes in the region, however the results are robust to both periods.

RELATIONSHIP BETWEEN THE STOCK MARKET DEVELOPMENT, BANKING SECTOR DEVELOPMENT AND ECONOMIC GROWTH IN THE CEE COUNTRIES

The stock markets of most CEE countries have been actively developing and improving over the past decades but they still do not belong to the developed markets according to MSCI classification, the financial systems of these countries tends towards the bank-oriented type. Does the level of stock market development affect economic growth in CEE countries and do these countries need to develop their stock markets accordingly? The purpose of this article is to identify the direction of the causal link between stock market development, banking sector development and economic growth in Central and Eastern European (CEE) countries. The subject of the research is the relationship between the stock market development, banking sector development and economic growth in the CEE countries. Methodology. The research is based on the annual data for two time periods 1999-2012 and 1999-2015 for the 8 and 5 CEE countries, respectively. The study is based on the Granger causality test and linear regression models. According to results of the research the stock market development plays an important role in attracting foreign direct investment and economic growth in CEE countries in the long-run period. There are revealed the channels of indirect influence of the stock market capitalization on the economic growth. Stock market capitalization has impact on the banking sector and gross capital formation, which in turn have impact on the economic growth of CEE countries. There is the impact of both the stock market and the banking sector development on the economic growth in CEE countries during 1999-2015. However, the impact of the stock market size on the economic growth is positive and the impact of domestic credit to private sector is negative. Practical implications. The study proves the reasonable need for the CEE countries to move towards further development of the stock market, improving the market infrastructure and institutional environment in order to expand the size of the stock market and thereby contribute to the economic growth of this countries. Value/originality. The obtained conclusion about the role of the stock market in economic growth and attraction of FDI is of great importance both for Ukraine and other countries with similar trajectory of economic development in general and similar historical aspects of the origin of stock markets in particular and should be taken into account by state leaders when making decisions on the need to create conditions for development of such element of the country’s financial system as the stock market.

The impact of stock market on enterprise capital structure in ASEAN developing countries

Capital structure is one of the topics in which business managers as well as academics are always interested, because it has many important implications. This problem in developing countries is even more relevant due to the low level of financial development in these countries, leading to uncertain access to external capital by firms. This paper focuses on the impact of stock market development on capital structure in five developing countries in ASEAN, namely Indonesia, Malaysia, Philippines, Thailand and Vietnam, for the period 2010 - 2018. Stock market development is measured in four different ways: Stock market capitalization to GDP (MACAP), total value of shares traded to GDP (LIQ1), total value of shares traded to stock market capitalization (LIQ2) and average of the three indexes (STOCK). The results show that development of stock market has different impacts on capital structure, depending on the measures used to reflect the stock market development. Specifically, MACAP, LIQ2 and STOCK do not reach statistical significance, while LIQ1 has a negative effect. In addition, firm size (SIZE), tangible assets (TANG), growth opportunities (TOBINQ), inflation (INF) and GDP growth (GDPGR) positively affect capital structure; while firms' profit (ROA) has negative effect. Based on the research findings, the research offers several implications for relevant stakeholders.

FINANCIAL DEVELOPMENT DAN PERTUMBUHAN EKONOMI INDONESIA

<p><em>This study aims to analyze the effect of financial development on Indonesia's economic growth using annual data for the 1985-2018 period. The ARDL-ECM model is used to determine the effect in the long term and short term. The results showed in the long run the variable stock market capitalization ratio, the ratio of bank credit to GDP, real interest rates, trade openness and labor productivity affect the economic growth of Indonesia. Variable stock market capitalization ratio significantly influences economic growth, while real interest rates, bank credit ratios to GDP and trade openness have no significant effect. In the short term, the stock market capitalization ratio, bank credit to GDP ratios, real interest rates, trade openness and labor productivity influences Indonesia's economic growth. Variable stock market capitalization ratio, Bank credit ratio to GDP, trade openness and labor productivity have a significant effect on economic growth, while real interest rates have no significant effect on Indonesia's economic growth, The implication of this research is that in order to overcome the impact of interest rates on other economic growth, the government, in this case Bank Indonesia as a regulator, needs to reduce the interest rate to a minimum to encourage the growth of the real sector and other economic variables. In addition, the government must encourage the development of a comprehensive economic system especially financial institutions and monetary policies that are not interest-based as a solution to overcome general economic problems</em></p><p> </p><p>Penelitian ini bertujuan untuk menganalis pengaruh financial development terhadap pertumbuhan ekonomi Indonesia dengan menggunakan data tahunan periode 1985-2018. Model ARDL-ECM digunakan untuk mengetahui pengaruh dalam jangka panjang dan jangka pendek. Hasil penelitian menunjukan dalam jangka panjang variabel rasio kapitalisasi pasar saham, rasio kredit Bank terhadap PDB, suku bunga riil, keterbukaan perdagangan dan produktivitas tenaga kerja berpengaruh terhadap pertumbuhan ekonomi Indonesia. Variabel rasio kapitalisasi pasar saham secara signifikan berpengaruh terhadap pertumbuhan ekonomi, sedangkan suku bunga riil, rasio kredit Bank terhadap PDB dan keterbukaan perdagangan tidak berpengaruh signifikan.Dalam jangka pendek variabel rasio kapitalisasi pasar saham, rasio kredit Bank terhadap PDB, suku bunga riil, keterbukaan perdagangan dan produktivitas tenaga kerja berpengaruh terhadap pertumbuhan ekonomi Indonesia. Variabel rasio kapitalisasi pasar saham, rasio kredit Bank terhadap PDB, keterbukaan perdagangan dan produktivitas tenaga kerja berpengaruh signifikan terhadap pertumbuhan ekonomi. Sedangkan suku bunga riil tidak berpengaruh signifikan terhadap pertumbuhan ekonomi Indonesia, Untuk itu, dalam mengatasi dampak suku bunga terhadap pertumbuhan ekonomi lainnya maka pemerintah dalam hal ini Bank Indonesia sebagai regulator perlu menurunkan tingkat suku bunga sampai batas minimal untuk mendorong pertumbuhan sektor riil serta variabel ekonomi lainnya. Selain itu, pemerintah harus mendorong pengembangan sistem ekonomi secara komprehensif khususnya lembaga keuangan dan kebijakan moneter yang tidak berbasis bunga sebagai solusi untuk mengatasi permasalahan ekonomi secara umum</p>

The impact of global financial transformations on the economic security of Central and Eastern European countries

Global financial transformations provoke shifts in financial systems that can threaten countries’ economic security. Further integration of the CEE states to the global economy will be accompanied by the increasing dependence of their financial markets and economic security on global financial challenges. The study aims to identify the relationship between global and regional financial trends that shape CEE countries’ economic security and reveal the shifts in the CEE region’s economic security under the influence of global financial transformation. The global financial transformations are the object of the study. Comparative analysis of the dynamics of financial transformations in the world and the CEE countries is made using structural analysis and methods of economic and mathematical modeling of trends. Given the heterogeneity of the CEE states’ financial development, global financial transformations have different manifestations in these countries. The relationship between global and regional indicators of financial transformation proved to be ambiguous. The regional dynamics of stock market capitalization, debt securities, and external debt fit corresponding world indicators’ dynamics. The indicators of global and regional official reserves and bank assets are moving in different directions. The region’s economic security challenges are great volatility of stock market capitalization, growth of external debt burden, and uneven distribution of official reserves. The obtained results should be considered when identifying financial threats affecting the CEE countries’ security and developing relevant policies for shaping the region’s efficient financial system.