ABSTRACT

The study examines the effect of economic recession on the performance of financial market in

Nigeria (A case study of NSE 1996-2016). Ex-post facto research design was adopted and data was

extracted from the CBN Statistical Bulletin, 2016. Real GDP, inflation rate, exchange rate were used

as individual independent variables while total market capitalization, all share index and stock

turnover were used as the dependent variable in each model specified. Base on the longitudinal

framework of the data, regression analysis was employed to ascertain whether the variables are

related. The findings established that there is significant positive effect of Real GDP on total market

capitalization (TMC), inflation rate had a significant but negative effect on TMC and exchange rate

had a significant effect on TMC; Real GDP was shown to have a significant positive effect on all

share index (ASI) of the Nigerian stock market, inflation rate had a significant negative effect on ASI

while exchange rate had no significant effect on ASI of the Nigerian stock market; Real GDP had a

positive effect on Stock turnover (ST), inflation rate had a negative effect on ST while exchange rate

had no significant effect on stock turnover on the Nigerian stock exchange during the period under

study. Based on the findings, the researcher gave the following recommendations; the government of

Nigeria need to constantly review the macroeconomic policies to ensure the country is always

cushioned against the external shocks like the credit crunch as well as oil crisis; on findings of all

share index, the investment advisors and brokerage firms need to seek redress from the relevant

policy makers as well as institutions aimed at bringing stability for the good of the stock investors;

the monetary regulations should further be benchmarked against the international best practices to

bring stability on the macro environment to assure shareholders of maximum performance from their

investment in the stock market in the various industries listed in the NSE.