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

Abstract

The study looked into the effects of monetary policy and financial technology on Nigerian stock market performance. Secondary data released between 2000 and 2023 was used in the research. This study examined the long-term relationships and effects of financial technology, inflation, the broad money supply, and the monetary policy rate on the performance of the Nigerian stock market using the Autoregressive Distributed Lag Model (ARDL) Bound test approach. There is a long-term association between the study's variables, according to the ARDL Bound test. Because the unit rise in the monetary policy rate (MPR) and inflation (INF) reduced the stock market performance in Nigeria by about 72% and 15%, respectively, the estimated ARDL model demonstrated that these two factors have a significant negative influence on stock market performance in Nigeria. According to the calculated ARDL model's long-run coefficient, financial technology (NIP) significantly and favorably affects Nigeria's stock market performance; a unit increase in NIP raises stock market performance by around 42. Granger causality was used to show that the money supply and monetary policy rate in Nigeria were causally related in a one-way fashion. According to the study's conclusions, in order to avoid prejudice and discrimination, Fintech businesses should prioritize data protection, consent, and fairness when using algorithms for decision making. Finding the ideal balance between innovation and moral behavior is essential to the long-term viability and success of the fintech industry. A strong monetary policy transmission mechanism that enhances capital market performance, steady money supply growth that corresponds with increased activity in the Nigerian stock market, and the implementation of policies that promote price stability in the economy are all necessary for the Central Bank of Nigeria