Macro-Economic Variables and Stock Price Volatility in Nigeria Stock Market

Abstract

This study examined the relationship between macroeconomic variables and stock price volatility in Nigeria's stock exchange using quarterly data from the central bank of Nigeria statistical bulletin through the period of January 1990 to December 2009. The selected macro-economic variables used in this study are exchange rate, inflation rate, interest rate and GDP. The study revealed that only inflation has a positive relationship with stock price volatility. Other variables do not have a well-defined effect on volatility. We recommended that to stabilize stock price volatility, inflation should be the main factor to address apart from other internal factors that affect liquidity such as stock market liquidity, and volume of shares.