The Role of Foreign Direct Investment in Stock Market Development in Nigeria: A Test of Complementarity

Gbenga Festus Babarinde



This paper examines the role of foreign direct investment (FDI) in stock market development in Nigeria for the period 1981-2018 via Dynamic Ordinary Least Squares(DOLS) and pairwise Granger causality techniques. Empirical findings indicate that FDI plays a positive significant role in the development stock market in Nigeria. Also, a unidirectional causality flows from FDI to stock market development. This study concludes that FDI constitutes a catalyst to stock market development in Nigeria, which implies the complementary role of FDI in stock market. Therefore, Nigerian government should ensure investors-friendly macroeconomic framework and implement policies to encourage inflows of FDI in Nigeria.


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