Foreign Portfolio Investment Flow and Nigerian Stock Exchange Market

Abstract

This study examined the influence of foreign portfolio
investment on the Nigerian stock market from 1986 to 2023.
The analysis employed Augmented Dickey-Fuller (ADF)
and Kwiatkowski-Phillips-Schmidt-Shin unit root tests,
together with the Autoregressive Distributed Lag (ARDL)
method and the ARDL technique. The research findings
revealed that trade openness and gross domestic investment
has a positive and significant impact on the Nigerian stock
market. Foreign Portfolio Investment (FPI) indicators, such
as the currency rate, interest rate, and inflation rate,
negatively affect the stock market. Gross domestic savings
have little to no significant effect on the stock market.
Again, Foreign Portfolio Investment (FPI), gross domestic
savings, currency rate, and interest rate positively influence
Nigeria's economic growth. Gross domestic investment has
a negligible and adverse effect on economic growth.
Finally, the inflation rate significantly harms Nigeria's
economic growth. Consequently, it is recommended that the
government enhance and uphold its current policies on
foreign portfolio investment. Implementing suitable policies
is crucial to attract foreign investors to local financial
products.