Financial Crisis, Firm Fundamentals and the Pricing of Bank Stocks in Nigeria – Analysis from a Panel of Banks

Nigerian stock market was rated low before the year 2006. The rating changed afterwards to one of the emerging market economies of the world. Trading activities increased significantly until the recent global financial crisis struck hard on the entire economy. This study looks critically into the issue of stock pricing and the various changes that occurred in the characteristics of banks’ stocks prices during the most recent global financial crisis. With a panel of 10 banks, this study adopts a pooled least square regression analysis method. Among other things, this study finds out that both when the banks are pooled together into one and when studied individually, dividend at previous period is a statistically significant determinant of stock pricing. Also the size of traded stock of seven (7) of the 10 banks studied exerts significant negative effect on the prices of the seven banks’ stocks, leaving only three (3) to be insignificant. Against the apriori expectation, increase in the economic growth rate of the Nigerian economy leads to decrease in the stock prices of 9 out of the 10 studied banks. Of these 9 banks’ stock prices, 7 receive significant impact from economic growth rate. Based on the policy implications of the finding above and so many more, this research study offers some policy recommendations that may be employed to avert such disastrous effects of financial crisis on the investors. Keywords:Financial Crisis, Bank Stock Prices, Bank Fundamentals, Macroeconomic variables

An inquiry into the political economy of the global clean energy transition policies and Nigeria's federal and state governments' fiscal policies

In order to implement clean energy transition programmes, the national and sub-national governments in Nigeria will incur some cost. In the same way, failure to implement the policies will come with some costs. This paper therefore considers the fiscal policy implications of Nigerian governments' implementation of clean energy transition policies in the country. The analysis also reveals that the observed reluctance of Nigerian governments in implementing the policies is obviously unconnected with their dependence on oil revenues. The paper further presents the fiscal policy implications of Nigerian governments' inaction even when other countries implement their clean energy transition policies

To what Extent did Changes in Stock Prices influence Investors’ Confidence on the Nigerian Stock Exchange

When investors commit more than necessary in the market, it only show how much they trust the growth of the market. But when the market does not growth as fast as the level of commitments of the investors, it becomes necessary to question the motivations of their trust. This is the crux of this research study. Employing the panel least squares to study a panel of fifteen (15) firms that operate in six sub-sectors, this study aims at revealing the major basis of the investors’ confidence in Nigerian stock exchange, especially after the crisis. The six sub-sectors considered in this study are Brewery, Petroleum Marketing, Banking, Insurance, Building Materials, and Food and Beverages. Among the major findings of this study is the fact that investors’ confidence in Nigerian Stock Exchange is mainly driven by the opinion of fellow investors. This opinion of fellow investors on its own is not based on calculated study of the market but on fears and optimisms about the market. This conclusion is based on the fact that the study established that the confidence or loss of confidence of investors in the market was neither influenced by movements of the firms’ fundamentals nor the overall macroeconomic environment. Key Words: Efficient Market Hypothesis, Investors’ Confidence, Capital Assets Pricing Model, Arbitrage Pricing Theory, and Nigerian Stock Exchang

The Relative Importance of Macro and Firm-Level Fundamentals to Nigerian Stocks’ Prices: Lessons for other Emerging Markets

The recapitalization policy of the Central Bank of Nigeria in 2005 increased transactions in the Nigerian stock market and also attracted the interest of many investors. As most capital markets are pro-cyclical, the Nigerian stock market was not different. The investors’ interests were not sustained over a long period of time due to a crash. Whenever there is a burst of the market bubble, it is always attributed to a deviation of the stock prices from the fundamentals of the firms that issue the stocks. Therefore, this study investigates the issue of movement in stock prices and the various changes that occurred in the characteristics of banks’ stocks prices between 2006 and 2010. This study adopts pooled least square regression method using a panel of 10 banks to find out the major determinants of stock prices in the Nigerian stock market with the view to establish if the burst was actually a function of deviation of the price from the fundamentals of the firms. One of the striking findings of this study is that prices of banks’ stocks have been mostly driven by the announcement and issuance of returns on investment at previous time periods – declared dividends. Both at individual bank level and the aggregate banks’ level, declared dividend proved to be the major driver of stock prices. This implies that the burst might not have been as a result of deviation of the prices from the fundamentals of the banks, rather by other forces outside the firm fundamentals. Keywords: Nigerian capital market, Bank Stock Prices, Bank Fundamentals, Emerging Market Economies, Macroeconomic fundamentals, Cyclical Market