Interest Rate Corridor and Stock Market Performance in Nigeria

Abstract

The study focused on the interest rate corridor and stock market performance in Nigeria. The interest rate corridor was measured using the monetary policy rate, the treasury bill rate, and the savings rate. However, stock market performance was measured using market capitalization. To achieve the objectives of this study, an ex-post facto research design was adopted. Data was collected from the CBN statistical bulletin for the period 2000 to 2024. The collected data were analyzed using the autoregressive distributed lag (ARDL) model. The ARDL results revealed that the monetary policy rate and the treasury bill rate have a positive and significant effect on market capitalization. However, the savings rate has a positive but insignificant effect on market capitalization. Based on the findings, the study concludes that the interest rate corridor has a positive effect on stock market performance in Nigeria. Therefore, the study recommends that CBN should ensure consistency in its interest rate decisions to boost investor confidence and encourage greater participation in the stock market. Policymakers should adopt treasury bill rate policies that support liquidity and promote investment activities in the Nigerian capital market. Improving savings mobilization through competitive returns, financial literacy, and investment education may encourage savers to channel more funds into capital market investments, thereby strengthening stock market performance over time.