Sources of stock price fluctuations in contemporary Nigeria and their implications for microeconomic decisions

Economic theory stipulates that for growth to occur, long term funding is necessary. In developing economies where locally mobilized savings usually fall short of the capital required to bring about economic growth, it becomes necessary to fill the savings-investment gap. This is where the stock market becomes indispensable. Often times, the market fails because stock price and trading volumes are characterized by fluctuations on daily basis. Admittedly, researches on forces driving fluctuations in stock prices have provoked diverse results. This study is therefore conducted to identify country-specific factors driving movements in stock prices in Nigeria. From the result, interest rate, inflation rate and political instability are statistically negligible while exchange rate and money supply are significant drivers of stock price movements in Nigeria. The study recommends liberalization of the financial sector for efficiency of the financial system with only financially viable firms allowed to operate b the Security and Exchange Commission.