Effect of Stock Market Deregulation on Stock Market Performance in Nigeria (1986 - 2018)

The aim of this study is to empirically investigate the effect of Stock Market Deregulation on Stock Market Performance in Nigeria. The study used secondary data from the Statistical Bulletin of Central Bank of Nigeria. Ex-post factor research designs was adopted for this study. The study is designed to cover thirty two years, from 1986 to 2018. The study relied on data from Central Bank of Nigeria statistical bulletin, covering thirty one years from 1986 to 2018. Fully Modified Ordinary Least Square regression model has been constructed, the goodness of fit of the model is confirmed using R-squared. The statistical significance of the estimated parameters is checked by an F-test of the overall fit, followed by the probability value of the individual parameters. Interpretations of these diagnostic tests rest heavily on the model assumptions. The results of the multicollinearity, heteroscedasticity provides the robustness check for the mode of the study. The hypotheses formulated was tested by means of the probability values of estimates of regression analysis. Thus, from the random sample from the population, we estimate the population parameters and obtain the sample linear regression model. The result of the regression analysis revealed that stock market deregulation proxied by equities (EQUI) has negative and statistically insignificant effect on stock market performance in Nigeria. A 1 percent increase in equity will reduce stock market performance by 29.0%. Also the result indicates that interest rate has a negative and statistically insignificant effect on stock market performance in Nigeria. On the other hand, exchange rate was found to have positive but statistically significant (p<0.05) effect on stock market performance in Nigeria. The value of the R-squared (0.714) indicates that about 51.4% of the total variation in the dependent variable is explained by the independent variables. It was concluded that further deregulation of the market will weaken the market and therefore should be avoided. It was recommended among that evolvement of policies that will bring down the rate of exchange and interest rate in the view of making the naira valuable relative to the dollar and making the cost of capital affordable