EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023)

Adedayo Adebisi; Olusegun Odesola; Kehinde Aromona; Bisola Oyenekan

doi:10.17261/Pressacademia.2025.1981

EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023)

Abstract

Purpose - The study tests the interactive and causal relationship among exchange rate volatility (ERV), foreign direct investment (FDI), and stock market performance (SMP) in Nigeria from 2003–2022. Specifically, it investigates the long-run effect of ERV on SMP as well as the interactive effect of ERV and SMP on FDI. Methodology - The research follows an explanatory time series design and relies on secondary data gathered from the World Bank database. Econometric techniques, including the Autoregressive Distributed Lag (ARDL) model, Granger causality tests, and multiple regression analysis, are employed to examine both short- and long-run relationships among the variables. Results - The long-run ARDL specification and bounds test reveal the presence of a large inverse relationship between lagged and current FDI, which indicates an adjustment process towards equilibrium. Exchange rates have a positive and significant effect on long-run FDI, but the dynamics of short-run exchange rate movements and stock market performance are not significant. More volatility of exchange rates is also associated with low FDI, which reflects the adverse effect of exchange rate uncertainty on foreign investment. Conclusion - The evidence supports the supreme role played by exchange rate dynamics in determining FDI inflows. The long-run negative impact of exchange rate volatility on FDI supports the need for policy measures to ensure exchange rate stability for a more conducive investment climate in Nigeria.

Keywords

References

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Details

Primary Language

English

Subjects

Finance, Finance and Investment (Other), Business Administration, Business Systems in Context (Other)

Journal Section

Research Article

Authors

Adedayo Adebisi ^*
0009-0004-6496-3276
Nigeria

Olusegun Odesola
0000-0003-4017-1042
Nigeria

Kehinde Aromona
0009-0003-3301-7968
Nigeria

Bisola Oyenekan This is me
0009-0005-7082-8756
Nigeria

Publication Date

July 30, 2025

Submission Date

November 10, 2024

Acceptance Date

June 12, 2025

Published in Issue

Year 2025 Volume: 12 Number: 1

DOI

https://doi.org/10.17261/Pressacademia.2025.1981

IZ

https://izlik.org/JA62BS52YA

Cite

RIS / Bibtex

APA

Adebisi, A., Odesola, O., Aromona, K., & Oyenekan, B. (2025). EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023). Journal of Economics Finance and Accounting, 12(1), 54-70. https://doi.org/10.17261/Pressacademia.2025.1981

AMA

1.Adebisi A, Odesola O, Aromona K, Oyenekan B. EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023). JEFA. 2025;12(1):54-70. doi:10.17261/Pressacademia.2025.1981

Chicago

Adebisi, Adedayo, Olusegun Odesola, Kehinde Aromona, and Bisola Oyenekan. 2025. “EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023)”. Journal of Economics Finance and Accounting 12 (1): 54-70. https://doi.org/10.17261/Pressacademia.2025.1981.

EndNote

Adebisi A, Odesola O, Aromona K, Oyenekan B (July 1, 2025) EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023). Journal of Economics Finance and Accounting 12 1 54–70.

IEEE

[1]A. Adebisi, O. Odesola, K. Aromona, and B. Oyenekan, “EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023)”, JEFA, vol. 12, no. 1, pp. 54–70, July 2025, doi: 10.17261/Pressacademia.2025.1981.

ISNAD

Adebisi, Adedayo - Odesola, Olusegun - Aromona, Kehinde - Oyenekan, Bisola. “EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023)”. Journal of Economics Finance and Accounting 12/1 (July 1, 2025): 54-70. https://doi.org/10.17261/Pressacademia.2025.1981.

JAMA

1.Adebisi A, Odesola O, Aromona K, Oyenekan B. EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023). JEFA. 2025;12:54–70.

MLA

Adebisi, Adedayo, et al. “EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023)”. Journal of Economics Finance and Accounting, vol. 12, no. 1, July 2025, pp. 54-70, doi:10.17261/Pressacademia.2025.1981.

Vancouver

1.Adedayo Adebisi, Olusegun Odesola, Kehinde Aromona, Bisola Oyenekan. EXCHANGE RATE VOLATILITY, STOCK MARKET DYNAMICS AND FOREIGN DIRECT INVESTMENT IN NIGERIA (2002–2023). JEFA. 2025 Jul. 1;12(1):54-70. doi:10.17261/Pressacademia.2025.1981