The Nexus between Stock Market Prices and External Shocks: Evidence from Nonlinear ARDL on Selected Firms in the Nigerian Stock Market
Economic policies in favour of openness and liberalisation have open up new markets, promoted financial market globalization and bridge the gap between domestic and foreign markets (Kim, 2003) but with attendant consequences for shocks contagion among countries. Some of these external shocks come in the form of exchange rate fluctuations (see Suriani, et al. 2015) occasioned by erratic portfolio investment flows, put differently, inconsistent international capital flow (Basak, et al. 2017), and instability in the price of essential commodity traded internationally such as crude oil in the case of Nigeria. These external risks and shocks have implications on domestic macroeconomic fundamentals and as such impact on financing and investment decisions. These fluxes can feed into the domestic financial market to amplify volatility in the stock market and create uncertainties for investors and speculators in the financial markets (see Khan and Abbas, 2015).
