Effect Of Monetary Policy And Financial Technology On Stock Market Performance In Nigeria

Abstract

The study examined the effect of financial technology and monetary policy on stock market performance in Nigeria. Secondary data covering the period from 2000 to 2023 were used for the study. The study employed Autoregressive Distributed Lag Model (ARDL) Bound test technique to examine long-run relationship and effect of financial technology, monetary policy rate, broad money supply and inflation on stock market performance in Nigeria. The ARDL Bound test confirmed that, there is long-run relationship among the variable of the study. The estimated ARDL model revealed that monetary policy rate (MPR) and inflation (INF) have significant negative effect on stock market performance in Nigeria as a unit increase in MPR and INF reduced stock market performance in Nigeria by about 72% and 15% respectively. The long-run coefficient of the estimated ARDL model revealed that; financial technology (NIP) has positive and significant effect on stock market performance in Nigeria as a unit increase NIP increase stock market performance in Nigeria by about 42%. In line with the findings, the study recommended for the Fintech companies to prioritize data privacy, consent, and fairness in algorithmic decision-making to avoid biases and discrimination. Striking the right balance between innovation and ethical practices is essential for the long-term success and sustainability of the fintech industry. Central Bank of Nigeria should ensure effective monetary policy transmission mechanism that will enhance the performance of the capital market, maintain a stable money supply growth that is consistent with increased activities in the Nigerian stock market and promote policies that will ensure price stability in the economy.