Financial market frictions in the Nigerian capital market

Abstract

This study investigates the financial market friction in the Nigerian capital market by examining several variables, such as transaction cost, taxes and regulations, asset indivisibility, non-traded asset, and agency with information problems. Statistical methods such as correlation, regression, and tests for unit root and co-integration were used to analyze time series data. The study revealed that the different factors have varying impacts on stock market performance and contribute to the various reactions to challenges in the stock market. Based on the econometric findings, the study recommends that transaction costs be managed efficiently, investors be taxed in a way that encourages investment, the capital market provide reliable information to investors, and the number of instruments traded on the stock exchange be increased.