This study investigates the moderating role of institutional quality in the relationship between fiscal policy and financial market stability in Nigeria from 1996 to 2023. Using ARDL and Toda-Yamamoto causality, the study finds that fiscal policy effectiveness is largely dependent on institutional settings. Government expenditure negatively affects stability in the long run, while tax revenue has positive effects. Institutional quality positively influences stability and counteracts the negative influence of spending through interaction effects. The study recommends public expenditure transparency websites, strategic tax reform framing, and institutionalized investor-regulator dialogue to support sustainable financial market development in Nigeria.
