THE IMPACT OF INVESTORS’ SENTIMENT AND MONEY SUPPLY ON STOCK RETURNNS IN NIGERIA

Abstract

The objective of this study is to empirically establish the relationship between investors’ sentiment and money supply on stock return in Nigeria. The study is correlational in nature and used panel regression model to test the hypotheses. Using 10 listed firms as the sample size from 1st January 2008 to 31st December 2021 out of the 156 firms listed on the Nigerian stock exchange. The study found the presence of a positive and insignificant link between investor sentiment and stock return, also showed the presence of a positive and significant relationship between money supply and stock return. Consequently, the study recommended that, there is need for the policy makers and regulators of the Nigerian capital market to consider sentiment amongst investor as an indicator for price movement in the stock market; and adequate quantitative data on sentiments should be made available to guiding both existing and potential investors on their behavioral approaches towards the market. The central bank of Nigeria should maintain a steady and realistic liquidity injected into the economy at a level that will boost investment in stocks.