<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Fiscal policy methods are critical to a country’s economic stability. However, when fiscal policy changes occur, all economic sectors react either favorably or adversely. The stock market is not spared from this reaction because it is likewise an important aspect of the economy. From 1998 through 2020, the inquiry looks at the link between fiscal policy mechanisms and stock market performance. The Levin, Lin, and Chu test is used to determine data stationarity. At zero latency, all factors remain constant. Other screening tools employed indicate that all datasets and models utilized in this work are of satisfactory quality. Pearson Product Moment Correlation (PPMC) is a statistical method used to investigate the link between fiscal policy plans and stock market results. Correlation coefficients quantify the strength of a link between two variables. The study’s findings indicate that fiscal measures such as tax income, domestic borrowing, government capital, and regular expenditure have a substantial and extremely strong positive relationship with Nigerian stock market returns. The study also indicates that foreign borrowing is harmful to Nigeria’s stock market advancement. Other data indicate that foreign borrowing has a modest to very weak link with other fiscal policy methods when compared to the outcomes of the other instruments. As a result, the report recommends increased tax income collection and a significant reduction in the country’s foreign debt.</p>
</abstract>

Fiscal policy methods are critical to a country’s economic stability. However, when fiscal policy changes occur, all economic sectors react either favorably or adversely. The stock market is not spared from this reaction because it is likewise an important aspect of the economy. From 1998 through 2020, the inquiry looks at the link between fiscal policy mechanisms and stock market performance. The Levin, Lin, and Chu test is used to determine data stationarity. At zero latency, all factors remain constant. Other screening tools employed indicate that all datasets and models utilized in this work are of satisfactory quality. Pearson Product Moment Correlation (PPMC) is a statistical method used to investigate the link between fiscal policy plans and stock market results. Correlation coefficients quantify the strength of a link between two variables. The study’s findings indicate that fiscal measures such as tax income, domestic borrowing, government capital, and regular expenditure have a substantial and extremely strong positive relationship with Nigerian stock market returns. The study also indicates that foreign borrowing is harmful to Nigeria’s stock market advancement. Other data indicate that foreign borrowing has a modest to very weak link with other fiscal policy methods when compared to the outcomes of the other instruments. As a result, the report recommends increased tax income collection and a significant reduction in the country’s foreign debt.

Nexus Between Fiscal Policy Mechanism and Stock Market Output in a Growing Economy

onyinyechi.omodero@covenantuniversity.edu.ng

Department of Accounting, College of Management and Social Sciences

Journal of Legal Studies

This work is licensed under the Creative Commons Attribution 4.0 International License.

Fiscal policy methods are critical to a country’s economic stability. However, when fiscal policy changes occur, all economic sectors react either favorably or...

Nexus Between Fiscal Policy Mechanism and Stock Market Output in a Growing Economy

Published Online: Nov 02, 2023

Page range: 27 - 44

Received: May 01, 2023

Accepted: Jul 01, 2023

DOI: https://doi.org/10.2478/jles-2023-0009

Keywords
Fiscal policy, tax revenue, government expenditure, debt, stock market returns

© 2023 Cordelia Onyinyechi Omodero, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Nexus Between Fiscal Policy Mechanism and Stock Market Output in a Growing Economy

Published Online: Nov 02, 2023

Page range: 27 - 44

Received: May 01, 2023

Accepted: Jul 01, 2023

DOI: https://doi.org/10.2478/jles-2023-0009

KeywordsFiscal policy, tax revenue, government expenditure, debt, stock market returns

© 2023 Cordelia Onyinyechi Omodero, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
Fiscal policy, tax revenue, government expenditure, debt, stock market returns