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THE CASE OF REMITTANCES INFLOW AND CAPITAL MARKET SUSTAINABILITY IN NIGERIA

ABSTRACT: Owing to the continuous increase in the volume of remittances inflow to Nigeria and the seeming synergy between capital market and economic growth, this study examines the role of remittances in fostering sustainability of the Nigeria capital market for the period 1981 to 2020. The study used Auto-Regressive Distributed Lag (ARDL) modeling approach to co-integration analysis and based on relevant theory, the model was estimated. Estimates showed that remittances significantly and positively impact capital market in the long run.  The result also shows that the capital market adjusts speedily to the tune of 64 percent towards convergence in any displacement. Other diagnostics analyses conducted, such as the causality test, affirmed the existence of unidirectional causality running from remittances to the capital market. CUSUM and CUSUMQ tests attest to the stability of the model, which makes it amenable for policy prediction. The findings bring the policy implications and recommendations to the fore.

KEY WORDS: Remittances, Capital Market, Time series, Nigeria 

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