Economic Integration and Stock Market Development: Evidence from Nigeria

ABSTRACT This study assesses the relationship between economic integration and stock market performance in Nigeria alongside her top trading partners. The autoregressive distributed lag in the context of the new trade theory was utilized. The study finds a negative relationship between the US stock price and trade integration with Nigeria. India’s stock price affects and is affected by the degree of integration with Nigeria. It is therefore recommended that where trade integration significantly and positively drives the stock market of Nigeria, authorities should encourage trade policy while being conscious of trade policy arrangements with countries where such a policy is stock market inhibiting.