Investigating the Impact of Inflation and Other Macroeconomic Variables on Stock Returns in Nigeria

Ayinuola Tunde Folorunso *

Department of Finance, Faculty of Business Administration, LIGS University, Honolulu, Hawaii, USA.

*Author to whom correspondence should be addressed.


This study investigates the impact of inflation and other macroeconomic variables on the stock returns of listed firms across five sectors: In Nigeria. A GARCH model and multivariate panel analysis were used in this study. The results show that inflation negatively and significantly impacts stock returns in the short and long run on an aggregate and sectoral basis. Moreover, money supply has a negative impact on stock returns in the long run and a positive impact in the short run, while the exchange rate has a positive impact. In contrast, interest rate is inversely related to stock returns in the short-run. Therefore, the Nigerian Monetary Authority should introduce a contractionary monetary policy and a stable exchange rate regime in order to achieve moderate inflation commensurate with economic growth and development.

Keywords: Exchange rate, inflation rate, interest rate, stock returns

How to Cite

Folorunso , A. T. (2023). Investigating the Impact of Inflation and Other Macroeconomic Variables on Stock Returns in Nigeria. Asian Journal of Economics, Business and Accounting, 23(14), 8–26.


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