Monetary Policy Instruments and Performance of Nigeria Capital Market

Capital Market is the engine of every economy since financial intermediation are carried out through it. The study aims to carefully ascertain the effects of monetary policy rate, liquidity ratio and interest rate on the performance of Nigeria capital market. Secondary data were obtained from CBN statistical bulletin and the NSE Annual reports. The study applied the ordinary least square regression technique with E- view statistical software version 10 in which variations in market capitalization was regressed on monetary policy rate, interest rate and liquidity ratio: The analysis revealed monetary policy rate influences capital market performance significantly and thus, a strong determinant factor. Interest rate and liquidity ratio is not very significant in terms of influence on capital market performance in Nigeria. Based on the findings from this study the CBN should moderate the monetary policy rate by reducing it to single digit percentage, which will enable customers seek for more loans for investment; government should pursue a lower interest rate regimes as it negatively influenced capital market performance which would encourage investment and boost productivity of capital. The Deposit money banks should maintain an optimal level of liquidity in order to have enough funds that they will extend to the economy for investment in the capital market