Impact of Budget Deficit Financing On Economic Stability in Nigeria (Published)
Nigeria has been financing budget deficit overtime but their implications on economic stability have not been fully ascertained. This study sought to investigate the implications of budget deficit financing on economic stability in Nigeria between 1970-2013. The study adopted regression analysis. The study revealed that External Source of Deficit Financing (EXF), Non-banking Public Source of Deficit Financing (NBPF) and Exchange Rate has significant and positive implications on Economic Stability proxy for Gross Domestic Product (GDP), while Ways and Means Source of Deficit Financing (WM), Banking System Source of Deficit Financing (BSF) and Interest Rate (INTR) has negative implications on economic stability in Nigeria. The implication is that government deficit financing through External Source of Deficit Financing (EXF) and Non-banking Public Source of Deficit Financing (NBPF) will maintain economic stability while government deficit financing through Banking System Source of Deficit Financing (BSF) and Ways and Means Source of Deficit Financing (WM) will reduce economic growth thereby causing instability in the economy. We, therefore, recommend that deficit financing in Nigeria should be focused on the productive sectors of the economy. This is because deficit financing has merely resulted in economic instability indicating that sound policies are needed to achieve economic stability in Nigeria.
Keywords: Banking System., Budget, Deficit Financing, Economic Stability., Ways and Means, economic growth
Impact of National Fadama 111 Development Project Financing On the Socio-Economic Growth of Ebonyi State in Nigeria. (Published)
One of the major problems confronting Nigeria today is how to improve the quality of life in the rural areas, reduce the level of poverty and contribute to economic growth through Fadama 111 Development Project. The aim of this study is to investigate the impact of National Fadama Development Project Financing on the socio-economic growth of Ebonyi State using contents analysis and descriptive survey. It was discovered that counterpart contribution by Ebonyi State government has significant effect on socio-economic development of Ebonyi State and that there is long run correlation between counterpart contribution by Local Government Areas of Ebonyi State and socio-economic development of the state. We concluded that introducing the principles of comparative advantage, by the provision of credit facilities to the comparative group in Ebonyi State, only for those businesses that earned them the highest income should be encouraged.
Keywords: Counterpart, Fadama, Financing, Income, economic growth
Implications of Savings and Investment on Economic Growth in Nigeria (Published)
The implication of savings and investment on economic growth is mixed and controversial both theoretically and empirically. There is large empirical literature which examines the relationship between savings and economic growth in Nigeria. There is also a considerable literature which looks at the relationship between economic growth and investment. However, little attention has been given to examining the implications of savings and investment on economic growth in Nigeria. The aim of this paper is to evaluate the implications of savings and investment on economic growth in Nigeria using ordinary least square regression. Results for ADF and PP unit root tests show that all variables under consideration are I(1). The study also revealed that there is long run relationship between savings, investment and economic growth in Nigeria. The result of the regression indicates that change in gross domestic savings movements has negative and significant effect on the change in economic growth in Nigeria and that the change in gross domestic investment has positive and significant effect on the change in the Nigerian economic growth. We therefore recommend that government should set a sound and fertile environment in order to foster domestic saving that will help to increase the level of economic growth in Nigeria
Keywords: ADF, Investment, PP., Savings, economic growth
Assessing the Relationship between Diversification of Non-Oil Export Product and Economic Growth in Nigeria. (Published)
The study investigates the relationship between diversification of non-oil export products and economic growth in Nigeria from 1981 and 2014. The study examines the significant role of non-oil export product on real economic growth which the previous studies might have ignored and the aggregate non-oil exports product data used by them might bias their conclusions. In achieving the objectives of the study, Ordinary Least Square Methods involving Error correction mechanism, co-integration, over-parametization and parsimonious were adopted. Johansen Co integration test reveals that the variables are cointegrated which confirms the existence of long-run equilibrium relationship between the variables. Thus, this suggests that all the variables tend to move together in the long run. The study reveals that the there is significant relationship between diversification of non-oil export and economic growth in Nigeria during the period. This was evident in the study that the policies on non-oil products during the period in Nigerian do not sufficiently encourage non-oil export, thus reduce their contributions to growth. This is because the study reveals that agricultural and manufacturing components of non-oil export has positive and significant relationship with economic growth while solid minerals components has negative and insignificant relationship with economic growth in Nigeria. This study therefore recommend that government should enforce non-oil export policies towards resuscitating the failing non-oil export industry. The study among other things encourages the government to strengthen the legislative and supervisory framework of the non-oil products in Nigeria and diversify the economy to ensure maximum contributions from all faces of the subsectors to economic growth of Nigeria.
Keywords: Agricultural, Manufacturing, Non-Oil Export, Solid Mineral., economic growth
Implication of Deficit Financing On Economic Growth in Nigeria (Published)
Nigeria has been financing budget deficit overtime but their implications on economic stability have not been fully ascertained. This study sought to investigate the implications of deficit financing on economic stability in Nigeria between 1970-2013. The study adopted regression analysis. The study revealed that External Source of Deficit Financing (EXF), Non-banking Public Source of Deficit Financing (NBPF) and Exchange Rate has significant and positive implications on Economic Stability proxy for Gross Domestic Product (GDP), while Ways and Means Source of Deficit Financing (WM), Banking System Source of Deficit Financing (BSF) and Interest Rate (INTR) has negative implications on economic stability in Nigeria. The implication is that government deficit financing through External Source of Deficit Financing (EXF) and Non-banking Public Source of Deficit Financing (NBPF) will maintain economic stability while government deficit financing through Banking System Source of Deficit Financing (BSF) and Ways and Means Source of Deficit Financing (WM) will reduce economic growth thereby causing instability in the economy. We, therefore, recommend that deficit financing in Nigeria should be focused on the productive sectors of the economy. This is because deficit financing has merely resulted in economic instability indicating that sound policies are needed to achieve economic stability in Nigeria.
Keywords: Banking System., Deficit Financing, Economic Stability., Ways and Means, economic growth
IMPACT OF BANK CREDIT ON ECONOMIC GROWTH IN NIGERIA: APPLICATION OF REDUCED VECTOR AUTOREGRESSIVE (VAR) TECHNIQUE (Published)
This study investigates the impact of bank credit on economic growth in Nigeria applying the reduced form of vector autoregressive (VAR) technique using time series data from 1960 to 2011. Current gross domestic product (GDP) is the dependent variable and proxy for economic growth while bank credit to the private sector (CPS) to GDP ratio and broad money (M2) to GDP ratio were proxies for financial indicator and financial depth respectively. We tested the stationarity of the variables using the Augmented Dickey-Fuller (ADF) and Phillips Perron (PP) unit root tests. All the variables were integrated of order one i.e., I (1). A major finding is that there is a significant positive relationship between bank credit to the private sector, broad moneyand economic growth. The past values of all the variables were significant in predicting their current values. This result implies that the bank consolidation and recapitalization exercise was a welcome development and further steps should be taken to ensure the stability of the banking sector.
Keywords: Bank credit, Broad money, Vector Autoregression, economic growth
VALUE ADDED TAX AND ECONOMIC GROWTH IN NIGERIA (Published)
Value added tax (VAT) is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. The administration of VAT is relatively easy, unselective and difficult to evade. The study investigated the impact of value added tax on the economic growth of Nigeria. Ordinary Least Square technique was employed to test the hypotheses formulated. The result shows that VAT contributes significantly to the total tax revenue of government and by extension the economic growth of Nigeria. VAT revenue growth had consistent increase though it was not that explosive. To boost tax revenue we need to boost revenue collected from VAT. This can be achieved not necessarily by increasing the VAT rate of 5% percent but by closing every VAT revenue leakage, sensitizing the managers of companies operating in Nigeria on the need to remit the VAT revenue collection and proper training of the Federal Inland Revenue staff in charge of VAT revenue collection.
Keywords: VAT Revenue, VAT System, VAT Target, economic growth
Foreign Exchange Management and the Nigerian Economic Growth (1960 – 2012). (Review Completed - Accepted)
The study examined foreign exchange management and the Nigeria economic growth from 1970 to 2012. The scope of the study is limited to Nigeria. The empirical model for the study was based on the conclusion of our theoretical framework. The data used for this study were majorly sourced from the Central Bank of Nigeria Bulletin (2011). The ordinary least square estimation techniques within the error correction model (ECM) framework are employed in the study. The choice of the ECM is to enable it account for the explanatory potent of the regressions in both the short run and long run as well as ascertaining the dynamics of attaining long run equilibrium, an issue which is the key to studies related to macroeconomics variables one of which is the exchange rate. The Johansen-Joselius Co- Integration test is employed in this study, to test for the presence of a long run relationship between the dependent variable (exchange rate) and the independent variables. The result of the co-integration as revealed show that trace statistics and maximum Eigen values are greater than the critical values at 5% level of significance. It shows that there is a unique long run relationship among Y, EXCR, EXPT,IMP, INF and FDI. The result further shows that the explanatory variables explain and account for about 99% of variation in economics growth peroxide by GDP, which is an evidence of a good fit of the model. The f-statistics shows that the explanatory variables are jointly significant in explaining economic growth (dependent variable). The result above shows export and foreign direct investment are statistically significant in determining economic growth which considered at 5% and 10% respectively. However, exchange rate import and inflation are found to be statistically non-significant. It is against this back drop of the above findings, that it is recommended that effort be made to increase the consumption of made in Nigeria goods, which includes the usage of raw material that can be sourced locally by Nigerian industries in order to increase foreign exchange earnings. The implication of this is that local industries should be encouraged to look inward for their raw material. Having uncovered from the study that the nexus between economic growth and foreign exchange management being a short run relationship, it is necessary that the foreign exchange management policy initiatives be made to satisfy the shorts–run behavioral expectations of the variables used in uncovering this fact
Keywords: Error Correction Model, Exchange Rate, Foreign Exchange Market, economic growth
IMPACT OF BANK CREDIT ON ECONOMIC GROWTH IN NIGERIA: APPLICATION OF REDUCED VECTOR AUTOREGRESSIVE (VAR) TECHNIQUE (Review Completed - Accepted)
This study investigates the impact of bank credit on economic growth in Nigeria applying the reduced form of vector autoregressive (VAR) technique using time series data from 1960 to 2011. Current gross domestic product (GDP) is the dependent variable and proxy for economic growth while bank credit to the private sector (CPS) to GDP ratio and broad money (M2) to GDP ratio were proxies for financial indicator and financial depth respectively. We tested the stationarity of the variables using the Augmented Dickey-Fuller (ADF) and Phillips Perron (PP) unit root tests. All the variables were integrated of order one i.e., I (1). A major finding is that there is a significant positive relationship between bank credit to the private sector, broad money and economic growth. The past values of all the variables were significant in predicting their current values. This result implies that the bank consolidation and recapitalization exercise was a welcome development and further steps should be taken to ensure the stability of the banking sector.
Keywords: Bank credit, Broad money, Vector Autoregression, economic growth
Exchange Rate Fluctuation and Inflation Targeting In an Open Economy: Econometric Approach (Published)
The study empirically evaluates the impact of exchange rate fluctuation on inflation targeting on the Nigerian economy. The study adopted annual times series data spanning a period of 43 years (1970 to 2012). The finding of our results suggests that the theoretical modelling requirements for all the variables used in the regression satisfy the statistical requirements that determine the choice of the statistical model. The result from the estimated long–run model shows that all the variables [interest rate (INTR) and exchange rate (EXCHR)] were statistically significant. The INTR positively influence the growth of INFR in the Nigerian economy while EXCHR negatively impact on the economy. Therefore, more concerted effort should employed by the federal government to stabilize the exchange rate as this will in turn lead to a positive impact of EXCHR on the economy. This will boost the country’s export as well as reduce import their by reduction inflation in the economy. In the light of the foregoing, we state that the financial sector does not operate in ambiance but in a macroeconomic environment. It is therefore necessary that the environment should be one that is amenable to contemporary market situations. We therefore recommend that in order to curb inflation through inflation targeting, efforts must be made towards gathering financial data at a more precise level such that majority of financial transactions is captured in the database. Also, lending rates in Nigeria should be made flexible while other means should be employed towards raising the value of the naira as this will reduce greatly the inflation rate in the country.
Keywords: Exchange Rate Volatility, Inflation Targeting, Open Economy, economic growth