Global Financial Crisis and Nigerian Stock Market Volatility
GLOBAL FINANCIAL CRISIS AND NIGERIAN STOCK MARKET VOLATILITY
Abdul ADAMU
Department of Business Administration,
Nasarawa State University, Keffi – Nasarawa State. adamuabdulmumeen@yahoo.com uooba1009@gmail.com
Tel. +2348029445391, +2348064851648.
Paper presented at the National Conference on “Managing the challenges of Global Financial Crisis in Developing Economies” organised by the Faculty of Administration, Nasarawa State University, Keffi, Nasarawa State – Nigeria held between March 9 – 11, 2010.
Abstract
The current global financial crisis is no longer news but a reality. Our policy makers in the country have been proven wrong based on their argument that the country was insulated. Some of the sectors that have felt the heat of the crisis are the banking sector and the stock market. In the stock market, investors lost trillions of naira due the downward fall in the prices of stock. Based on this, the study assesses the extent of the stock market volatility in the period preceding the crisis and the period of the crisis. Using the All Share Index, the returns for various months were computed, descriptive statistics of the returns was calculated and the volatility of the market was estimated using the standard deviation. It was found that the stock market is highly volatile in the period of the financial crisis than the period preceding it. The recommendation is that the depth of instruments in the stock market should be varied in terms of fixed securities than equity instruments.
Introduction
The global economic crisis, which first emerged as a financial crisis in one country, has now fully installed itself with no bottom yet in sight. The world economy is in a deep recession, and the danger of falling into a deflationary trap cannot be dismissed for many important countries (UNCTAD, 2009). The recent global economic crisis was a result of economic and political events in the United States. What started with amended federal policy and poor
Abdul ADAMU
Department of Business Administration,
Nasarawa State University, Keffi – Nasarawa State. adamuabdulmumeen@yahoo.com uooba1009@gmail.com
Tel. +2348029445391, +2348064851648.
Paper presented at the National Conference on “Managing the challenges of Global Financial Crisis in Developing Economies” organised by the Faculty of Administration, Nasarawa State University, Keffi, Nasarawa State – Nigeria held between March 9 – 11, 2010.
Abstract
The current global financial crisis is no longer news but a reality. Our policy makers in the country have been proven wrong based on their argument that the country was insulated. Some of the sectors that have felt the heat of the crisis are the banking sector and the stock market. In the stock market, investors lost trillions of naira due the downward fall in the prices of stock. Based on this, the study assesses the extent of the stock market volatility in the period preceding the crisis and the period of the crisis. Using the All Share Index, the returns for various months were computed, descriptive statistics of the returns was calculated and the volatility of the market was estimated using the standard deviation. It was found that the stock market is highly volatile in the period of the financial crisis than the period preceding it. The recommendation is that the depth of instruments in the stock market should be varied in terms of fixed securities than equity instruments.
Introduction
The global economic crisis, which first emerged as a financial crisis in one country, has now fully installed itself with no bottom yet in sight. The world economy is in a deep recession, and the danger of falling into a deflationary trap cannot be dismissed for many important countries (UNCTAD, 2009). The recent global economic crisis was a result of economic and political events in the United States. What started with amended federal policy and poor
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