ECONOMIC POLICY UNCERTAINTY AND CAPITAL MARKET DEVELOPMENT IN NIGERIA: MEDIATING ROLE OF POLITICAL STABILITY

Abstract

Global development, government meddling in daily economic affairs, and capital market factors are all to blame for the steady global expansion of economic policy uncertainty (EPU). Economic agents react differently to uncertainty policies, even though they disrupt some sectors. This is especially true when an unexpected shock is present. The study objective is to determine how EPU and capital market development proxied with market size capitalisation relate with mediation of political stability in Nigeria from 1995 to 2024. Yearly data and an expost facto study design were used. Finding revealed that that the money supply, interest rates, crude oil prices, and the economic uncertainty index all had a considerable impact as well as mediating influence of political stability with EPU strongly determined stock market size capitalization. Thus, the study concluded that domestic and foreign investors should varied across sectors and maximum observation should be on the political stability regarding its policies ad institutions so as to lessen quantum of risk exposure from unpredictable economic policies, sharp practices and this will enhance capital market patronage which will boost market size capitalization in the Nigeria exchange group (NGX).