Infernal and External Drivers of Slock Market Returns in Ghana and Nigeria

Abstract

This paper investigates the impact of macroecfonomic (external and internal) and political variableson returns of the Ghanaian and Nigerian stock mnarkets. The study employed the Fully Modified LeastSquare and Dynamic Least Square models to ensure that the results are efficient, robust and reliable.Whilst lag of stock nmarket returns and real gross domestic product exert positive effect of stock marketreturns, the effect of treasury bills, consumer price index and exchange rate are negative. Crude oilprices, LSE all share index and political cycle give diverse results. The study indicates that a key driver ofstock market return is its lag. Policy direction that consistently aims at developing and implementing sound,stable and sustainable macroeconomic environmnent to promote stock mnarket performance was recommended.