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IMPACT OF FOREIGN EXCHANGE RESERVES ON NIGERIAN STOCK MARKET
ABSTRACT
This paper investigates the relationship between foreign exchange reserves and stock market development in Nigeria over the period 1981-2011. We use a multivariate framework incorporating an interest rate variable. The results show that a long run relationship exists among exchange rate reserves, interest rates and stock market development. Foreign reserves have a positive effect on stock market growth. Bidirectional causality exists between interest rates and stock market growth. Finally, a bidirectional relationship exists between interest rates and foreign reserves.
KEYWORDS: Foreign Exchange Reserves, Stock Market