BROAD MONEY SUPPLY, CREDIT TO PRIVATE SECTOR AND GOVERNMENT EXPENDITURE ON MARKET CAPITALIZATION IN NIGERIA.

Abstract

This study examined the impact of broad money supply, credit to private sector and government expenditure on capital market performance in Nigeria from 1970-2020. The variables of this study are credit to the private sector, gross domestic product, inflation, and investment (domestic), and broad money supply among other variables. This study employed vector autoregressive model, the impulse response function and variance decomposition. Results suggested that credit to the private sector, had a negative and insignificant impact on capital market capitalization and broad money supply was found to be negative and insignificant. The result further showed that government expenditure had negative and insignificant impact on capital market performance. This study therefore recommended, among others, the need to combine the use of money supply, credit to private sector and government expenditure to promote investment in the stock market.