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Estimation of Sacrifice Ratio for the Nigerian Economy using a Time Varying ADRL Approach
No full textMonetary policy in the last few decades had focused on creating the enabling conditions for sustainable economic growth, using the level of inflation as the pivotal tool, complemented with central banks’ independence and monetary policy transparency. However, attaining the delicate balance of achieving low inflation and optimal output, with minimal tradeoffs has been a cause for concern for policy makers. Thus, the measurement of the output loss, arising from the inflation-output tradeoff, forms the fulcrum of this study. This study estimates the sacrifice ratio using a state space methodology in an aggregate supply framework to adjust for real business cycle rigidities. The results from the ARDL model analysis suggest that when average inflation was lower, the sacrifice ratio was higher. On the balance of risks, an average sacrifice ratio of 0.69 shows that the achievement of price stability will come at a cost of a high output tradeoff. In that case, the monetary authority will be relatively more aggressive with its policy mix, especially adjusting interest rate, to achieve a radical influence on non-structural factors that drive inflation
Institutional Quality, Financial Inclusion and Inclusive Growth: Causality Evidence from Nigeria
No full textThe study examines the causal interactions among the institutional, financial and inclusive growth variables by employing Toda-Yamamoto (TY) Granger non-causality test within the augmented VAR framework. Annual time series, data from 1998 to 2017, were used. The TY analysis showed that all the variables, with the exception of financial inclusion index, Granger-caused inclusive growth, but without any evidence of feedback. However, a bidirectional causal relationship was found between inclusive finance and the interaction of institutional quality and financial inclusion. Thus, the null hypothesis of block exogeneity can be refuted when real GDP per person employed (RGDPE) is taken as the dependent variable. This implies that while the effects of institutional quality could vary widely in an economy, institutional quality appears to be the dominant driving force behind inclusive growth. It is, therefore, recommended that institutional improvement, beyond the present liberal democratic threshold, is much needed to effectively harness the human capital resource-base. The Nigerian government should adopt a labourintensive development strategy, such that poor active households are comprehensively integrated into productive activities for optimal value-chain finance-growth inclusiveness. This should be able to address the protracted tripartite socio-economic problems of poverty, inequality and unemployment in line with Lin’s comparative advantage conforming hypothesis
Legal and Regulatory Framework for the Mortgage Industry in Nigeria
No full textThis article examines the legal and regulatory framework for the mortgage industry in Nigeria. The article examines the concept of housing as a global need and provides an overview of the Nigerian Housing Market with a population of 183 million people and increasing rapidly, a huge housing deficit of around 17 million units. This is further compounded by a rapid rising need for housing by about 20 per cent a year in cities like Lagos, Ibadan, Kano, and Abuja. At least 700,000 housing units across different segments are needed annually to keep up with demand, whereas, production was around 100,000 units, resulting in an accumulated deficit. The article also discusses the regulatory framework for Mortgages in Nigeria. Furthermore, the article examine factors responsible for low mortgage penetration in Nigeria on the on the supply side include: maturity mismatch, limited capacity by primary mortgage banks, high interest rates, tedious enforcement procedures, and the Land Use Act, 1978; and on the demand side they include: exorbitant registration costs, high rate of unregistered titles, the challenge of “double perfection”, low mortgage literacy and shrinking disposable income for housing. The article also identify steps taken by NMRC to mitigate these challenges to include: the model mortgage and foreclosure model law key provisions of the model law are: establishment of a mortgage registry; empowers mortgagee to register mortgages; significantly shortens perfection period; introduces the concept of deemed registration; eliminates requirement for “double consent”; pegs perfection costs; introduces alternative dispute resolution for mortgage matters; introduces the concept of “strata title; and non-judicial foreclosure. The article explores specific areas that require legislative and administrative reforms like: States should push for passing of Model Mortgage and Foreclosure Model Law; Land registries should be digitised; CBN should push more mortgage-friendly regulations and policies; Land registries across states should drastically reduce the timeline for Perfection; and the Land Use Act should be amended
Testing for Single Bubble Episode in the Nigerian Stock Market: an empirical investigation
No full textThis study evaluates a single bubble episode in the Nigerian Stock Exchange (NSE) by utilizing monthly data on nominal and real all-share index (ASI) from January 2010 to December 2017. Analysis of data based on Sup Augmented Dickey-Fuller (SADF) test for bubble detection suggests non-existence of a bubble in the NSE between 2010 and 2017. Though there is an indication of one explosive episode in September 2011 at which the DickeyFuller statistic lied above the critical values sequence line. However, it is not a bubble but a short deviation from trend. The study also estimates a time-varying long memory parameter, using a fractionally-integrated autoregressive model to check the robustness of the SADF test and it provided further evidence on the absence of a bubble. These findings showed that the behaviour of stock prices is not driven by a bubble in the Nigerian Stock Exchange (NSE). The study, therefore recommends a time-to-time bubble diagnostic check on the exchange so that symptoms of a bubble can be early detected and managed to avoid losses that may result from the bust
Is the CFA Franc Prone to Speculative Attacks or a Contagion Effect: a Stochastic-Markov Transition Analysis for Cameroon
No full textThe study employs the Markovian processs on annual nominal effective exchange rate of CFA Franc spanning 1975 to 2017 to examine whether the CFA franc is prone to speculative attacks or a contagion effect. The findings reveal that the expected duration for the CFA Franc to be undervalued is twice higher than for it to be overvalued. This validates the contagion effect of a Euro crisis on the CFA Franc. Though the level of growth increased significantly during the undervaluation era, the level of uncertainty remains equally high. The findings confirm that exchange rate devaluation influences the expectations of private agents, which in turn triggers an attack on the domestic currency
Financial inclusion and people living with disabilities (PLWDs) in Nigeria: a disaggregated analysis
No full textThis study investigated the level of financial inclusion and people living with disabilities (PLWDS) in Nigeria. The disaggregated analysis was employed in investigating the level of financial inclusion of PLWDs across the geopolitical zones in Nigeria. The instrument used to collect data was titled: Financial Inclusion of People living with Disability Survey Inventory (FIPWIDSI). The construct validity of the instrument was ensured using the Principal Component Analysis (PCA).The internal consistency was verified using Cronbach\u27s alpha technique. Descriptive and influential statistics, Mean and standard deviation, Analysis of Variance (ANOVA) and Sidak multiple mean comparison Post Hoc test were employed for data analysis. The result indicated that there was a significant difference on the level of financial inclusion of persons with disability in the geopolitical zones of Nigeria. The result also showed that the level of financial inclusion for persons living with disability on mobile banking, currency distinction, support services and bank media service access is high but low on other financial services in Nigeria. Hence, it was recommended among others that banks should endeavor to install ATMs with braille signage, large fonts and high colour contrast to enable visually impaired persons use the ATM without involving a third part
On the Efficiency of Stock Markets: a case of selected OPEC member countries
No full textThe study investigates the stock market efficiency of selected OPEC member countries within the context of random walk hypothesis and volatility approaches using monthly data on stock market indices from January, 2005 to April, 2016. Parametric (variance ratio: homoskedastic and heteroskedastic martingale), nonparametric (the Wright ranks and scores) tests and ARCHtype estimation are performed. Results of both parametric and nonparametric tests indicate that only Qatar’s stock market is weak-form efficient. The volatility results suggest that monthly stock returns of OPEC countries are volatile, with Qatar being most volatile and shocks to volatility of stock returns are asymmetric. The implications of this are that: first, investors should be conscious of these shocks when making risk-return decision of their portfolios; second, the results provide useful information to regulators to enable them develop safeguard mechanisms to shield the market from possible asymmetric information emanating from the participants
Foreign exchange management : Nigeria\u27s experience with the unholy trinity
No full textForeign exchange management is a major component of monetary policy in many central banks in developing and emerging market economies. This is because maintaining price stability is a key mandate of many central banks in ensuring overall macroeconomic stability. An effective exchange rate policy compliments the objectives of monetary policy. The relationship between monetary policy and the exchange rate can be explained in three different channels namely; income channel, price channel and interest rate channel. This are what the article will deliberate on from Nigeria\u27s perspective
Monetary policy management in Nigeria today: issues in stagflation and recession
No full textThis article explore the rare and challenging economic problem faced by Nigeria refers to as stagflation. i.e. a condition characterized by the co-existence of declining growth rates along with high unemployment and inflation rates. These negative economic development have raised major concern for policy makers and other economic agents because of the adverse effects on investment, financial stability and livelihood
A study on the impact of monetary policies on Nigerian property market
No full textThe authority responsible for formulating monetary policies in Nigeria has focused more on the oil and gas sector while other sectors such as the property sector have not been given their deserved attention with regards to monetary policy formulation. Hence, this study examined the impact of monetary policy rate on the Nigerian property market. It was revealed that the key economic indicators that are relevant to the real estate sector includes interest rate, (monetary policy instrument), GDP, exchange rate , inflation rate as well as international oil price. The findings showed that in the long term monetary policy rate has significant impact on loan advanced to the real estate sector