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AN EVALUATION OF THE EFFECT OF FINANCIAL REFORMS ON LIQUIDITY OF THE NIGERIAN STOCK MARKET
A b s trac t
In Nigeria, many studies have been carried out on the impact of financial/capital market reforms on economic growth, but not much research has been carried out on the impact of financial reform on stock market development indicators like market liquidity. This study evaluated the effect of financial reforms on the liquidity of the Nigerian stock market. Time series data spanning the period 1986 to 2010 which were sourced from the Central Bank of Nigeria (CBN) statistical bulletin was used. The empirical model was analyzed using Ordinary Least Square (OLS) technique and the impact of the financial reforms was determined using the ChowForecast Test of parameter stability and breaking point technique. The analysis revealed that the financial reform s of 1996 im pacted significantly on the stock m arket liquidity. However, credit to the private sector which was used to account for financial interm ediary developm ent im pacted negatively on the liquidity of the stock m arket.
Keywords: Stock M arket, Liquidity, Financial Reform s, Restructuring, Investors