Impact of Foreign Direct Investment on Nigerian Capital Market Development

The fundamental objective of this research work is to assess the impact of foreign direct investment on Nigerian capital market development given the role of the later in stimulating the development of the nation’s economy. The study employed ADF unit root test and Johansen co-integration test to analyze the secondary data obtained from Central Bank of Nigeria statistical bulletin from 1970-2010. The absence of co-integration between foreign direct investment and market capitalization informed the resort to OLS regression result which shows that foreign direct investment impact positively and significantly on market capitalization. Since foreign direct investment is a significant determinant. Efforts should be made by government and monetary authority to encourage foreign direct investment into Nigeria. However given the lack of co-integration and low beta weight suggest that emphasis on foreign direct investment as a way of stimulating long run growth in the developing country like Nigeria does not worth the while.