Xi'an Shiyou Daxue Xuebao (Ziran Kexue Ban)/ Journal of Xi'an Shiyou University, Natural Sciences Edition ISSN: 1673-064X E-Publication: Online Open Access Vol: 65 Issue 09 | 2022 DOI 10.17605/OSF.IO/N47G3 Sep 2022 | 37 FINANCIAL LIBERALIZATION AND STOCK MARKET PERFORMANCE: EVIDENCE FROM SELECTED AFRICAN COUNTRIES ELEJE EMMANUEL C 1 , ONU CALISTUS C 2 , Dr. EBERE UME KALU 3 and JOSAPHAT U. ONWUMERE 4 1, 2, 3, 4 Department of Banking and Finance, University of Nigeria, Enugu Campus. Abstract This study examined the impact of financial liberalization on stock market performance in selected African countries from the period 1986-2020. The study utilized ARDL bound test approach to analyze the results using both the cross-country comparative and panel data technique. Foreign direct investment, foreign portfolio investment and current account balance were adopted as measures for financial liberalization, while stock market capitalization was used as the stock market performance indicator. The findings showed that foreign direct investment, foreign portfolio investment and current account balance had positive and significant impact on stock market capitalization in Africa. Based on the result, the study recommended that, government and other regulatory agencies, must take proactive steps in ensuring that stringent restrictive policies are relaxed on the ease of doing business, and introduce legislation that promotes the establishment of free trade zone and tax break for investors, and also boost investors’ confidence through the instrumentality of transparency in information disclosure. Keywords: Financial Liberalization, Stock Market Performance, Foreign Direct Investment, foreign portfolio investment, current account balance. 1. INTRODUCTION Financial liberalization policies implemented in the late 1980s appear to have had a significant impact on boosting internationalization of capital flows and global financial market integration. As a result, it provides better access and optimal allocation of capital (safavi & Yousefi, 2017). Financial liberalization, according to Onuora (2019), is the process of removing impediments from the financial system. Ahmed, (2013) and Ousmanou. (2017) viewed financial liberalization as one of the primary growth strategies of developing economies. However, a quick and unconstrained financial liberalization process, might result in a fragile financial system, structural imbalances, and capital flight issues, which can exacerbate domestic financial market instability and entice an increase in the cost of capital (Umutlu, Akdeniz & Altag-Salih, 2010; Fowowe, 2013). McKinnon (1973) and Shaw (1973), gave theoretical support for the relationship between financial liberalization and stock market performance in their seminar papers. They argue that in a repressed financial system, interest rates are kept below competitive levels. Thus, result to disincentives to savings and investments, which may result in the decrease in both financial and economic activities (Kitchen, 1986). The theory was substantiated with the adoption of the structural adjustment programme (SAP) in 1986, due to the promptings of the international monetary fund and World Bank, many African countries economy were deregulated. Expectations were that the identified