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Abstract

The extent of stock market performance cannot be dissociated from the political environment in which it is operating. This reality has motivated a plethora of studies on the relationship between political system and stock market performance in both developed and developing countries, with the political experience and stock market performance in developing countries not akin to that of developed countries. In light of this, this study conducts an in-depth analysis of stock market performance under the military regime and the civilian regime in Nigeria. Monthly data that covers the period from 1985 to 2018 is used for the implementation of our objective. Using a standard robust regression, we generally find that the stock market performs better under the civilian regime than the military regime. However, accounting for inflation and stock market volatility undermines the gains in the stock market under the civilian regime and almost swing the gains in favour of the military regime. The political regime becomes irrelevant when we control for other macroeconomic factors (exchange rate, money supply, output and inflation) determining stock market performance. Given our findings, we advocate for implementation of policy interventions and regular supervision of the market activity to stem the tide of stock market volatility either caused by external or internal shocks.