ABSTRACT

This study examines the effect of foreign capital inflows, macroeconomic variables and stock market development in Nigeria spanning periods from 2000 to 2022 based on the accessibility of data. Three hypotheses were raised and evaluated using the fully modified ordinary least squares (FMOLS). Based on the analysis conducted, the following findings were made: there is a significant negative relationship between the inflation rate and stock market development; exchange rate negatively and insignificantly impact on the development of the stock market; and export and re-export positively and significantly influence the development of the stock market. Based on these findings, the following recommendations were made: implement strategies aimed at curbing inflation to foster a more conducive environment for stock market growth; policies aimed at minimizing excessive volatility in the exchange rate, such as foreign exchange interventions by the central bank or policies encouraging a diverse export base, can help stabilize the currency; and encouraging and facilitating exports can lead to an influx of foreign currency, improve the balance of trade, and by extension, enhance the performance of the stock market.