ABSTRACT

The sJudy investigated the effect of capital market development on foreign portfolio investment in Nigeria for the period /990-2018 with specific objectives namely; lo determine if market capitalization impacts on foreign portfolio investment positively in Nigeria and to determine the impact of All Share Index on Foreign Portfolio Investment in Nigeria. The specified model was estimated using the Ordinary Least Square with the help of the Error Correction Model to determine the level of impact that one variable has on the other. While E-views 10 statistical software was employed in computing the result, time series data were obtained from World Bank national accounts data and OECD National Accounts data files and the study established that All Share Index (LASI) has a positive relationship with FPINV and statistically significant at 5% level of significance while lending Interest Rate (LINTR) has a posilive relationship with FPINV in the short run but statistically insignificant at 5% level of significance, Market Value (LMCAPLC) had a negative relationship with Foreign Portfolio Investment while Trade Openness (LTRAOP) had a negative relationship with FPINV and statistically insignificant at 5% level of significance and finally Official Exchange Rate (OEXCR) had a negative relationship with FPINV and statistically insignificant at 5% level of significance. Based on the findings, the study recommended that the government should formulale a policy that will reduce or discourage the expatriation of profit by foreign investors lo foreign countries. The global stock market standard should be adopted in order to integrate the Nigerian capital market into world financial market and finally, more innovative financial instruments should be introduced in the market for the purpose of attracting foreign investors.