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JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 4
NO 1, JUNE, 2006

IMPACT OF MONETARY POLICY ON FINANCIAL ASSET RETURNS: AN ANALYSIS OF SELECTED STOCKS FROM THE NIGERIAN CAPITAL MARKET.
Dr. O. T. Ebiringa
Department of Financial Management Technology
Federal University of Technology Owerri

ABSTRACT
This paper presents an analysis of the impact of monetary policy on financial asset returns, with particular reference to stocks. The minimum discount rate and an index based on the direction of change in discount rate were used as monetary policy proxies. The analysis was done using a multi-association model of which business environment proxies (Dividend per share, term spread, and default spread) were introduced as additional independent variables to the monetary policy proxies. Our finding among others was that restrictive monetary policy decreases portfolio returns while expansive ones increases stock return. Above all monetary policy posture has significant explanatory power in predicting financial asset returns beyond the business environmental conditions.

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