An Empirical Analysis of National Debt, Debt Servicing and the Growth of the Nigerian Economy (Published)
Nigeria’s national debt and debt servicing expenditure has been on the increase since from 1981 till date, this has prompted the researchers to study the impact and economic implications of this rise in debt and debt servicing profile on the growth of the Nigerian economy. The study adopted annual debt stock, debt service expenditure and the control variables of exchange rate and inflation rate as the independent parameters which were regression against gross domestic product as proxy for the growth of the Nigerian economy and response variable. Secondary data were collected from Central Bank of Nigeria Statistical Bulletin and the Debt Management Office for the ranging from 1981 to 2019. The study employed multiple regression techniques assisted by the E-views computer software for the analysis of data. The results revealed that annual national debt and exchange rate had significant impact on the growth of the Nigerian economy with a P-value of 0.0180 and 0.0070 respectively which were less than the 0.05 level of significance. Debt servicing and inflation rate had no significant impact on economic growth in Nigeria with a P-value of 0.1054 and 0.5011 respectively. In the overall, the results of the model indicated that debt and debt servicing had statistically significant effect on economic growth with overall probability of F-statistics value of 0.050683 which less than the 0.05 significance level. Based on the findings the study recommended that the monetary authorities should put in place appropriate steps to properly manage the Nation’s debt stock and the cost of servicing debt; and that the country’s borrowings should be invested on viable capital projects as well as human capital that will yield economic returns.
Keywords: Debt, Debt Servicing, Exchange Rate, Gross Domestic Product, Inflation Rate
Currency devaluation and Non-Oil export of Nigeria: 1986-2018 (Published)
The paper examined the effect of currency devaluation on the Non-oil export of Nigeria. The study covered the period of 1986 to 2018. Secondary data were sourced from Central Bank of Nigeria Statistical Bulletin of various issues. Independent variables include: Inflation Rate (INFR), Exchange Rate (EXR), and Money Supply (MS) while Non-Oil Export (NOE) represented the dependent indicator. Ordinary Least Square Regression Model was used to analyze the short run relationship between variables used for the study. The variables were also subjected to Augmented Dickey Fuller and Philip Perron Unit Root test, Johansen Co-integration and Granger Causality Tests was adopted to analyze the effect of currency devaluation on non-oil export in Nigeria. The result showed that EXR had a negative significant effect while MS had positive significant influence on non-oil export but INFR had negative but insignificant relationship on the dependent variable in Nigeria hence devaluation of currency influenced non-oil export in Nigeria negatively. The Nigerian Government needs to increase its competitive chances by either revaluating its currency or banning importation of some items produced locally to boost the domestic economy. The study provides the extent at which the devaluation of currency influences the non-oil export in Nigeria.
Keywords: Exchange Rate, Inflation Rate, Money Supply, Non-Oil Export
Vector Autoregression (VAR) Analysis of the Nexus between Exchange Rate Volatility and Private Domestic Consumption in Nigeria (Published)
This paper models the empirical relationship between exchange rate variations and private domestic consumption in Nigeria using vector auto regression (VAR) method. In addition to exchange rate, household disposable income and recurrent expenditure were introduced in the model as part of the explanatory variables. The study sample spanned from 1990 to 2016 and the data on each of the variables were sourced from the Central Bank of Nigeria Statistical Bulletin. The unit root test results indicate that all the variables are difference stationary with all I(1) order. Additionally, the test for cointegration reveals that variables have long run relationship as evidenced in the outcomes of the trace and maximum eigenvalue tests. This provides basis for rejecting the null hypothesis of no cointegration. The estimated VAR model reveals that exchange rate lagged for one period has significant negative effect on private domestic consumption. 1 percent increase in exchange rate, on the average, increases private domestic consumption by 1.733 percent. The dynamic effects of disposable on private consumption are mixed. From the VAR estimates, lag 2 of disposable income negatively influenced private consumption whereas lag 3 is positively linked to private domestic consumption. Additionally, public recurrent expenditure lagged for 3 periods has significant positive effect on private domestic consumption. This paper, therefore, concludes that increase in the exchange rate is associated with increasing level of private domestic consumption. Owing to the findings, it is recommended that the CBN should ensure that effective exchange rate management system is put in place to maintain a stable rate of exchange and provide pathway for rapid and sustained increase in private domestic consumption.
Keywords: Exchange Rate, Private domestic consumption, VAR and Nigeria., disposable income
Banking Sector Reforms and the Performance of Banking Business in Nigeria – An Econometric Analysis (Published)
The study examines the effect of financial reforms on banking sector efficiency in Nigeria from 1986- 2016. The objective of the study is to evaluate the extent to which exchange rate, (EXCH), interest rate (INT) and liquidity (LQT) have affected the efficiency of banking operations in Nigeria. The dependent variable in measuring banking sector efficiency is proxy by Nonperforming Loan (NPL). The OLS regression was adopted for test of the three hypotheses formulated. The findings indicate that financial reform targets have significantly affected banking sector efficiency in Nigeria in the long run. The study recommends that the regulatory and supervisory framework should be strengthened while interest rate policy should be made to stimulate savings through high real deposit rate and lending rate so as to promote financial deepening and thus banking efficiency.
Keywords: Banking Efficiency., Exchange Rate, Interest Rate, Liquidity, financial reforms
IMPACT OF INFLATION ON ECONOMIC GROWTH IN NIGERIA (2000-2009) (Published)
The main purpose of this study is to ascertain the existence of a relationship between inflation and economic growth in Nigeria. The methodology employed in this study is the quantitative research design. Consumer price index (CPI) was used as a proxy for inflation and the GDP as proxy for economic growth, to examine the relationship. The scope of the study spanned from 2000 to 2009. Ordinary least square method and t-test was used to test the variables most likely to impact on economic growth in Nigeria due to inflation. The findings also shows that there is strong relationship between inflation and economic growth in Nigeria, that exchange rate has positive impact on economic growth and that high interest rate discourages investment and hence forestalls economic growth. It is therefore, recommended that the monetary policies aimed at exchange rate be strengthened through effective supervision and regulatory framework of financial system by the monetary framework of financial system by the monetary authorities. Continuous monetary policies that will achieve the desired macroeconomic stability, increase in private sector credits and there is also need fro more effective management of interest rate in Nigeria
Keywords: Economic Stability., Exchange Rate, Inflation Rate, Monetary Authorities, economic growth
ANALYSIS OF BANKS FINANCIAL PERFORMANCE IN A LIBERALIZED BANKING ENVIRONMENT: A STUDY OF FIVE SELECTED BANKS IN NIGERIA. (Published)
The very essence of this research was to assess the financial performances of banks in a liberalized banking environment using an ordinary Least Square (OLS) method of regression analysis to analyze five selected banks in Nigeria. The time series properties of the variables were investigated by conducting a unit root test to determine the stationarity status of the data using annual series data spanning from 2001 – 2010. The analysis was further extended to cointegration and error correction modeling (ECM) technique in order to test for the stationarity status of the data by conducting a unit root test using the Dickey–Fuller (DF) and Augmented Dickey–Fuller (ADF) test. The objective of this research among others is to find out the effect of the nominal lending rate, the exchange rate and the credit volume on banks financial performances in terms of their profitability. The data sources were mainly from a ten year financial summary of the banks selected and CBN Statistical Bulletin, various years. From the empirical evidence made from the study so far, it was discovered that the nominal lending rate and the total credit had a positive impact on the profit of the five selected banks under review. Only exchange rate has a negative significance which is contrary to the other variables studied. The overall submission was that the variables employed are statistically significant as over 98 percent of them were explained at the long run. The researcher, therefore, recommends that to improve banks financial performance, the banks need a good regulatory environment that will enable them to expand their scope of business but strictly within the financial service industry and also good corporate governance that will allow for transparency and minimize fraud in the bank.
Keywords: Exchange Rate, Financial Performance, Interest Rate, Liberalization, Total credit
ANALYSIS OF BANKS FINANCIAL PERFORMANCE IN A LIBERALIZED BANKING ENVIRONMENT: A STUDY OF FIVE SELECTED BANKS IN NIGERIA. (Review Completed - Accepted)
The very essence of this research was to assess the financial performances of banks in a liberalized banking environment using an ordinary Least Square (OLS) method of regression analysis to analyze five selected banks in Nigeria. The time series properties of the variables were investigated by conducting a unit root test to determine the stationarity status of the data using annual series data spanning from 2001 – 2010. The analysis was further extended to cointegration and error correction modeling (ECM) technique in order to test for the stationarity status of the data by conducting a unit root test using the Dickey–Fuller (DF) and Augmented Dickey–Fuller (ADF) test. The objective of this research among others is to find out the effect of the nominal lending rate, the exchange rate and the credit volume on banks financial performances in terms of their profitability. The data sources were mainly from a ten year financial summary of the banks selected and CBN Statistical Bulletin, various years. From the empirical evidence made from the study so far, it was discovered that the nominal lending rate and the total credit had a positive impact on the profit of the five selected banks under review. Only exchange rate has a negative significance which is contrary to the other variables studied. The overall submission was that the variables employed are statistically significant as over 98 percent of them were explained at the long run. The researcher, therefore, recommends that to improve banks financial performance, the banks need a good regulatory environment that will enable them to expand their scope of business but strictly within the financial service industry and also good corporate governance that will allow for transparency and minimize fraud in the bank.
Keywords: Exchange Rate, Financial Performance, Interest Rate, Liberalization, Total credit