Analysis of Macroeconomic Aggregates on Stock Prices in Nigeria: An Application of Co-Integration and Causality Tests 1985 – 2011 (Published)
This study examined the analysis of macroeconomic aggregates on stock prices using evidence from Nigeria Economy. The study investigated the nature of relationship between macroeconomic aggregates proxies by inflation rates, interest rates and money supply while All Share Index (ASI) standing as a proxy for Aggregates Stock Prices.. In course of this study, secondary data were sourced from the Central Bank of Nigeria statistical bulletin and the Nigerian stock exchange fact book. The Granger Causality Test and Johansen Co-integration Test in a Vector Error Correction Model (VECM) setting were employed. The descriptive analysis was also used to mirror their relationship. The empirical results demonstrate that changes in inflation rates, interest rates and money exert a significant impact on aggregate stock within the period understudy. The results also shows that where is a negative long-run relationship between inflation rates, interest rates and All Share Index while a positive significant relationship exist between money supply and aggregates stock prices. However, on the causality test, the study shows a unidirectional causality running from inflation to aggregates stock price and a bi-directional causality between money supply and aggregates stock prices. Therefore, we recommended that macroeconomic policy should be channeled towards improving aggregates stock prices which in turn enhance overall returns on stock market and the Nigerian economy at large.
Keywords: Co-integration, Macroeconomic Aggregates, Stock Prices
Impact of Fiscal Policy on the Manufacturing Sector Output in Nigeria: An Error Correction Analysis (Published)
There has been a growing concern on the role of fiscal policy on the output and input of manufacturing industry in Nigeria, despite the fact that the government had embarked on several policies aimed at improving the growth of Nigerian economy through the contribution of manufacturing industry to the economy and capacity utilization of the sector. The aim of this study is to examine the impact of fiscal policy on the manufacturing sector output in Nigeria. Empirical evidence from the developed and developing economies has shown that fiscal and monetary policies have the capacity to influence the entire economy if it is well managed. An ex-post facto design (quantitative research design) was used to carry out this study. The results of the study indicate that government expenditure significantly affect manufacturing sector output based on the magnitude and the level of significance of the coefficient and p-value and there is a long-run relationship between fiscal policy and manufacturing sector output. The implication of this finding is that if government did not increase public expenditure and its implementation, Nigerian manufacturing sector output will not generate a corresponding increase in the growth of Nigerian economy. It is the recommendation of researcher that the expansionary fiscal policies should be encouraged as they play vital role for the growth of the manufacturing sector output in Nigeria; that fiscal policy should be given more priority attention towards the manufacturing sector by increasing the level of budget implementation, which will enhance aggregate spending in the economy; and consistent government implementation will contribute to the increase performance of manufacturing sector.
Keywords: Capacity Utilization, Co-integration, Error Correction Model, Government Expenditure, Government Tax Revenue, Manufacturing sector, Output
Effect of Bank Lending Rate on the Performance of Nigerian Deposit Money Banks (Published)
This study examined the impact of bank lending rate on the performance of Nigerian Deposit Money Banks between 2000 and 2010. It specifically determined the effects of lending rate and monetary policy rate on the performance of Nigerian Deposit Money Banks and analyzed how bank lending rate policy affects the performance of Nigerian deposit money banks. The study utilized secondary data econometrics in a regression, where time-series and quantitative design were combined and estimated. The result confirmed that the lending rate and monetary policy rate has significant and positive effects on the performance of Nigerian deposit money banks. The implication of these is that lending rate and monetary policy rate are true parameter of measuring bank performance. We therefore recommend that government should adopt policies that will help Nigerian deposit money banks to improve on their performance and there is need to strengthen bank lending rate policy through effective and efficient regulation and supervisory framework.
Keywords: Bank, Bank Performance, Co-integration, Financial System, Lending Rate