DETERMINANTS OF FOREIGN PORTFOLIO INVESTMENTS IN AN EMERGING ECONOMY: EVIDENCE FROM NIGERIA
Duruechi, Anthony H
Department of Banking & Finance
Faculty of Management Sciences
Imo State University, Owerri Imo State
Email: tonimoore03@gmail.com
ABSTRACT
The study concerned itself with determinants of foreign portfolio investments in Nigeria. The main objective was to ascertain those factors that influence foreign portfolio investments in an emerging economy like Nigeria. Secondary data used for the study were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin, spanning the period 1990 to 2018. The Vector Error Correction Mechanism (VECM) was used to analyze the data aided by e-views version 10. The research findings revealed that market capitalization, all-share index, economic growth, foreign exchange rates, interest rates and inflation rates are determinants of Foreign Portfolio Investments in Nigeria. Thus, it was concluded that the identified variables are major factors considered by foreign investor’s viz-a-viz foreign portfolio investments in Nigeria. Thus, it was recommended that having established the fact that market capitalization, all-share index, economic growth, foreign exchange rates, interest rates and inflation rates are major determinants of foreign portfolio investment in Nigeria, there is need to ensure that these variables are properly monitored in order to attract more foreign portfolio investors into the country.
Keywords: Foreign portfolio investments, market capitalization, all share index, economic growth, foreign exchange rates, interest rates and inflation rates.
