Public budget announcement and its implication on stock prices in Nigeria
Abstract
The paper investigates the effect of budget announcements to the stock market of Nigeria using some the key macroeconomic indices such as budget size, fiscal deficit, exchange rate, and monetary policy rate (MPR) and inflation rate. The study is based on annual time series of 2006-2023 with the use of the Ordinary Least Squares regression model to examine the sensitivity of the All-Share Index (ASI) to fiscal and macroeconomic policy exhibits. Findings indicate that the stock market and macroeconomic indicators of Nigeria are highly volatile and are moderately correlated to the size of budget and exchange rate. The article reveals the relevancy of monetary policy as a determinant to the behavior of equity market investors in Nigeria.
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References
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Adewale, A. A., & Adewole, J. A. (2024). Stock market indicators and Nigerian economy. Jurnal Akuntansi Universitas Jember, 22(2), 218–237. https://doi.org/10.19184/jauj.v22i2.46740
Awosiji, P. I. (2022). The impact of state budget on financial markets (using nigeria as a case study) (Doctoral dissertation, Vilniaus universitetas.).
Edirisinghe, U. C. (2017). Impact of government budget announcement on stock market sector indices: Evidence from Colombo stock exchange. Journal of Finance and Accounting, 5(6), 214-218.
Gbadebo, A. D., Adekunle, A. O., Akande, O. J., & Olanipekun, D. W. (2021). The MPC meetings, macroeconomic announcements and exchange rate behaviour in Nigeria. Cogent Economics & Finance, 9(1), 1952720.
Jain, N., & Mahapatra, S. K. (2024). Testing Market Efficiency: An Empirical Study on Sectoral Reaction to Union Budget Announcement. South India Journal of Social Sciences, 22(3), 104-114.
Lyócsa Š., Molnár P. & Plíhal T. (2019) Central bank announcements and realized volatility of stock markets in G7 countries, Journal of International Financial Markets, Institutions and Money, Vol. 58, 117-135, ISSN 1042-4431, https://doi.org/10.1016/j.intfin.2018.09.010.(https://www.sciencedirect.com/science/article/pii/S1042443117305887)
Narthana, H. D., Samarakoon, S. M. R. K., Pradhan, R. P., & Rajapakse, R. P. C. R. (2025). Fiscal signals in frontier markets: unveiling the impact of government budget announcements on stock returns. Macroeconomics and Finance in Emerging Market Economies, 1-30.
Nwachukwu, D., & Nwogu, C. U. K. (2022). Monetary policy and marketing performance of businesses in Port Harcourt: A case of Naira redesign in 2022. International Academy Journal of Management, Marketing and Entrepreneurial Studies, 9(1), 191-213.
Nwogo J. E. (2024) Effect of Fiscal Policy on Stock Market Performance in Nigeria. South East Political Science Review, 9(1)11-27
Ogbulu, O. M., Torbira, L. L., & Umezinwa, C. L. (2015). Assessment of the impact of fiscal policy operations on stock price performance: Empirical evidence from Nigeria. International Journal of Financial Research, 6(2), 190-202.
Ohazurike, P., & Igwe, M. (2024). Impact of fiscal policy and monetary policy on the economic growth of Nigeria (1980–2016). American Journal of Humanities and Social Sciences Research (AJHSSR), 8(3), 01-22.
Onoh, J. O. (2016). Semi-strong market efficiency studies of the Nigerian capital market using dividend announcements. Journal of Business and African Economy, 2(1).
Orji, O. (2019). The effect of budget implementation on the economic growth of Nigeria (1999–2018). Journal of Accounting and Financial Management, 5(3), 1-10.
Shafiq, S., & Qureshi, S. S. (2022). Impact of budget announcement on stock returns: An Event Study in Pharmaceutical and Automobile sector. Global Management Journal for Academic & Corporate Studies, 12(1), 67-80.
Srinivasu K. & Prathyusha M. (2025). Stock Market Reactions to Union Budget Announcements: An Econometric Assessment. International Journal of Economics and Business Administration. Volume XXIII, Issue 1. pp. 122-140
Ugochukwu, S. D., & Oruta, L. I. (2021). Government expenditure and economic growth in Nigeria: A disaggregated analysis. Traektoria Nauki= Path of Science, 7(11), 4022-4035.
Adewale, A. A., & Adewole, J. A. (2024). Stock market indicators and Nigerian economy. Jurnal Akuntansi Universitas Jember, 22(2), 218–237. https://doi.org/10.19184/jauj.v22i2.46740
Awosiji, P. I. (2022). The impact of state budget on financial markets (using nigeria as a case study) (Doctoral dissertation, Vilniaus universitetas.).
Edirisinghe, U. C. (2017). Impact of government budget announcement on stock market sector indices: Evidence from Colombo stock exchange. Journal of Finance and Accounting, 5(6), 214-218.
Gbadebo, A. D., Adekunle, A. O., Akande, O. J., & Olanipekun, D. W. (2021). The MPC meetings, macroeconomic announcements and exchange rate behaviour in Nigeria. Cogent Economics & Finance, 9(1), 1952720.
Jain, N., & Mahapatra, S. K. (2024). Testing Market Efficiency: An Empirical Study on Sectoral Reaction to Union Budget Announcement. South India Journal of Social Sciences, 22(3), 104-114.
Lyócsa Š., Molnár P. & Plíhal T. (2019) Central bank announcements and realized volatility of stock markets in G7 countries, Journal of International Financial Markets, Institutions and Money, Vol. 58, 117-135, ISSN 1042-4431, https://doi.org/10.1016/j.intfin.2018.09.010.(https://www.sciencedirect.com/science/article/pii/S1042443117305887)
Narthana, H. D., Samarakoon, S. M. R. K., Pradhan, R. P., & Rajapakse, R. P. C. R. (2025). Fiscal signals in frontier markets: unveiling the impact of government budget announcements on stock returns. Macroeconomics and Finance in Emerging Market Economies, 1-30.
Nwachukwu, D., & Nwogu, C. U. K. (2022). Monetary policy and marketing performance of businesses in Port Harcourt: A case of Naira redesign in 2022. International Academy Journal of Management, Marketing and Entrepreneurial Studies, 9(1), 191-213.
Nwogo J. E. (2024) Effect of Fiscal Policy on Stock Market Performance in Nigeria. South East Political Science Review, 9(1)11-27
Ogbulu, O. M., Torbira, L. L., & Umezinwa, C. L. (2015). Assessment of the impact of fiscal policy operations on stock price performance: Empirical evidence from Nigeria. International Journal of Financial Research, 6(2), 190-202.
Ohazurike, P., & Igwe, M. (2024). Impact of fiscal policy and monetary policy on the economic growth of Nigeria (1980–2016). American Journal of Humanities and Social Sciences Research (AJHSSR), 8(3), 01-22.
Onoh, J. O. (2016). Semi-strong market efficiency studies of the Nigerian capital market using dividend announcements. Journal of Business and African Economy, 2(1).
Orji, O. (2019). The effect of budget implementation on the economic growth of Nigeria (1999–2018). Journal of Accounting and Financial Management, 5(3), 1-10.
Shafiq, S., & Qureshi, S. S. (2022). Impact of budget announcement on stock returns: An Event Study in Pharmaceutical and Automobile sector. Global Management Journal for Academic & Corporate Studies, 12(1), 67-80.
Srinivasu K. & Prathyusha M. (2025). Stock Market Reactions to Union Budget Announcements: An Econometric Assessment. International Journal of Economics and Business Administration. Volume XXIII, Issue 1. pp. 122-140
Ugochukwu, S. D., & Oruta, L. I. (2021). Government expenditure and economic growth in Nigeria: A disaggregated analysis. Traektoria Nauki= Path of Science, 7(11), 4022-4035.
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