IMPACT OF MONETARY POLICY TARGETS ON CAPITAL MARKET GROWTH IN NIGERIA FROM 1999 – 2024
IMPACT OF MONETARY POLICY TARGETS ON CAPITAL MARKET GROWTH IN NIGERIA FROM 1999 – 2024

Summary/Abstract: The study examined the impact of monetary policy targets on capital market growth in Nigeria from 1999 to 2024. This study sought to achieve the following objectives: to examine the impact of cash reserve ratio on Nigerian capital market turnover ratio, to examine the impact of inflation rate on Nigerian capital market turnover ratio, and to examine the impact of money supply on Nigerian capital market turnover ratio for a period of 25 years spanning from 1999 to 2024. The study adopted the ex post facto research design to consider the trends in the time series data set. Annual data were obtained from CBN statistical bulletin and world bank database for the period of the study. The Autoregressive Distributed Lag Model (ARDL) was used to analyze the data. The findings of the study reveal that, cash reserve ratio and inflation rate have an insignificant impact on Nigerian capital market turnover ratio, also, money supply has a positive and significant impact on Nigerian capital market turnover ratio. From the findings, the study concludes that cash reserve ratio and inflation rate have an insignificant relationship with the Nigerian capital market turnover ratio while money supply exhibits a positive and significant impact on Nigerian capital turnover ratio. It was therefore recommended that, since the relationship between cash reserve ratio and Nigerian capital market turnover ratio appears to be insignificant, Policymakers should consider revisiting the cash reserve ratio to ensure it is conducive to encouraging investment in the capital market. A more stable or lower rate may stimulate activity and investor confidence. Also, Given the negative and insignificant relationship between the inflation rate and capital market turnover ratio, it is crucial for the Central Bank to implement effective measures to control inflation. Maintaining a stable inflation environment could enhance investor confidence and participation in the capital market. Finally, Policymakers should develop strategies to ensure that the growth of money supply is directed towards capital market investments. This could include incentives for investment in the capital market or improving access to capital for businesses, fostering a more vibrant market environment.

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