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

Abstract

The capital market as a veritable engine of development has attracted discussions among scholars. This paper reviewed the findings of several studies on the effect of the macroeconomic variables on the performance of the capital market in Nigeria. Content study was used where the findings of several other studies were reviewed to identify any consensus or divergence on the findings. The findings indicate a positive and significant relationship between the variables of aggregate money supply and Gross Domestic Product on one hand and the development of the capital market in Nigeria. Interest rates and inflation were shown to have negative and significant effect. Findings on the effect of the exchange rate were divergent and, therefore inconclusive. It was recommended that governments at all levels should make concerted efforts to tame corruption and provide infrastructures to improve business activities as well as effectively manage inflation and interest rates through appropriate policies.