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Forecasting the Volatilities of the Nigeria Stock Market Prices
No full textThe objective of this work is to assess and forecast the volatilities of prices on the Nigeria Stock Exchange. The ARCH family (ARCH, GARCH, TGARCH, EGARCH and PGARCH) and ARIMA models are used to assess and forecast volatilities in prices on the Nigeria stock market. The EGARCH model is found to be the most efficient for forecasting volatilities and has the capability to show the asymmetric effect. The assessment of volatilities in prices for 1985 to 2014 shows clustering, over the years. The forecasting performance shows the volatility in the Nigeria stock market to be on the increase for the next four years
Determinants of Financial Inclusion in Sub-Saharan Africa Countries: does institutional infrastructure matter?
No full textThe paper examines the determinants of financial inclusion by specially accounting for the role of institutions in a panel of eighteen (18) subSaharan Africa (SSA) countries using a dynamic system of Generalized Method of Moments (SYS-GMM). The emanated findings consistently stress the importance of institutions together with other control variables like GDP per capita, inflation, bank concentration and z-score as key drivers of FI. In the final analysis, the paper emphasizes the importance of using dimension by dimension indicators of governance as well as a composite governance index instead of relying solely on the latter as a basis of informing policy decisions as both yield different policy outcomes
Empirical estimation of optimal International reserves for Nigeria: the sudden stop model
No full textThe study examined the issue of optimum external reserves for Nigeria during 2010 - 2014, using Jeanne and Ranciere (2006) and Goncalves (2007) sudden stop model approach. The study showed that resident foreign currency deposit accounted for over 90 per cent of the total foreign currency deposit, while non-resident foreign currency deposit accounted for the remaining. The result of the model suggested that external reserves were adequate in 2010 but beyond that period, it was far below optimal level. On average, the optimum external reserves were around 15.7 per cent of GDP in the past four years, translating to US$54.52 billion
Economic Growth, Poverty and Income Inequality Matrix in Nigeria: A Further Investigation
No full textThis paper examined the existing relationship among economic growth, poverty and income inequality in Nigeria. Using the Vector Auto-regressive (VAR) model and the Engle-Granger technique to test for the causality existing among the variables, the results revealed that economic growth had no impact on poverty reduction and income distribution in Nigeria due its non-inclusive nature. There was, however, evidence of a unidirectional causality, running from income inequality to increased poverty. This implied that inequality would lead to increase in poverty in Nigeria. Therefore, the paper recommended that government should develop stronger economic institutions that are capable of reorganising the productive base and reward system in the economy so as to promote and guarantee economic efficiency, equity and macroeconomic stability and inclusive growth
Financing agriculture for sustainable economic development
No full textNigeria\u27s agriculture is diverse. presenting various opportunities. lt includes four sub-sectors, namely; crop, livestock, fishery and forestry. The crop sub-sector accounts for about 90.0 per cent of agricultural production in Nigeria, followed by the livestock sub-sector which contributes about 7.0 per cent. Fishing activities contribute about 2.0 per cent and forestry activities account for about 1.0 per cent. However, Nigeria remains a food-deficit country blessed as it is with abundant agro-ecological resources and diversity. As reported by the Food and Agricultural Organization of the United Nations (FAO), the number of people undernourished has been on the increase, from 8.7 per cent of total population in 2007-09 to 11 .2 percent in 2012- 2014. This is because adequate attention has not been given to the agricultural sector, particularly after the discovery of oil in commercial quantities in the country. For instance, the proportion of government total recurrent and capital expenditure allocated to the agricultural sector between 1981 and 2014 has been less than 3.0 per cent compared with the 25 per cent recommended by the FAO, and the minimum of 10 per cent recommended by the African Union. Similarly, the agricultural sector\u27s share of total commercial banks sectoral allocation of loans and advances to the economy declined from the height of 19.6 percent attained in 1996 to 3.7 per cent in 2014. Meanwhile the Bank of Agriculture set up to focus on financing the sector has been plagued by inadequate capital and poor management. Other funding initiatives put in place to assist the agricultural sector have not been very successful as well due to the peculiar nature of agricultural production in Nigeria and hence, the preference for financing of commerce by financial institutions, lt is therefore recommended that more financial resources be strategically directed at the agricultural sector for sustainable development of the Nigerian economy in view of the traditional role of agriculture in a developing economy
Modelling Banks’ Interest Margins in Nigeria
No full textThis study applied panel analysis to determine the factors influencing interest margins in Nigeria using bank-specific, sector-specific and macroeconomic data ranging from 2010:Q1 to 2014:Q2. Based on the Hausman test, a fixed effect model in a generalized form (GLS) was estimated. The result shows that credit risk, growth in loans and advances, staff operating cost, GDP growth, inflation rate and money supply growth are significant determinants of interest margins in Nigeria. Consistent with previous studies, staff cost exerts highest impact on interest margins followed by fixed effects term. Further analysis of the banks’ fixed effects reveals that seven banks control about 64%, which raises a policy concern for banks’ supervisors. The result also reveals that banks usually transfer their staff operating costs to customers by either imposing exorbitant lending rates or low deposit rates or both. This study recommends the formulation of strategies for reducing growing banks staff cost in the area of levels of compensation, employee turnover, redundancy, automation processes and outsourcing of non-critical tasks should be given due attention to ensure efficiency and competitive margin that could spur growth in Nigeria
Monetary Policy and Unemployment in Nigeria: Is there a Dynamic Relationship?
No full textThis paper examines the link between unemployment and monetary policy in Nigeria using a vector autoregressive (VAR) framework for the period 1983q1 – 2014q1. The paper investigates the effect of structural change by identifying three structural breakpoints and incorporating them into the VAR model as dummy variables. The results show that a positive shock to policy rate raises unemployment over a 10 quarter period. In addition, all the variables used as proxy in the model jointly Granger cause unemployment, implying the existence of a dynamic relationship between monetary policy and unemployment in Nigeria
Day-of-the-week Anomaly: An illusion or a Reality? Evidence from Naira/Dollar Exchange Rates
No full textThis study examines the day-of-the-week effect in the Nigerian foreign exchange market (Naira against the US dollars), its volatility as well as the asymmetric effects, for the period of 12th May 2009 to 12th June, 2015. The empirical results of GARCH-t(1,1), EGARCH-t(1,1), GJR-GARCH-t(1,1), IGARCH and the OLS methodology shows that the detection of the day-of-the-week effect is influenced by the choice of the volatility model applied. Similarly, the highest or lowest volatility market day goes with the influence of these models. Thus this study clearly support the argument of Charles (2010), that, the days of the week anomalies lies on the choice of model specified
The Impact of Lending Rate on the Manufacturing Sector in Nigeria
No full textThe study investigates the impact of lending rate on output of the manufacturing subsector using the Vector Error Correction Model (VECM) and annual data from 1981- 2014. The empirical results indicated that high lending rate had negative impact on manufacturing output in the long-run. This suggests that increase in lending rate undermines manufacturing output, thus retarding growth in the real sector. Specifically, the estimates revealed that a 1.0 per cent increase in lending rate reduces manufacturing output by 0.03 per cent. The study, therefore, recommends the implementation of investment friendly policies that narrows the lending rate by the deposit money banks (DMBs) in order to stimulate output growth in the manufacturing sub-sector and allow global competitiveness of products. Similarly, development finance institutions should be encouraged to lend at concessionary rates to the manufacturing sector
Monetary policy and financing real sector growth in Nigeria.
No full textThe study examines CBN\u27s real sector financing initiatives and implication for real sector growth and economic development. Section 2 discusses selected CBN real sector financing initiatives. Section 3 is the implications of the initiatives for growth and economic management. Section 4 discusses challenges of implementing the policies while section 5 concludes the paper and presents suggestions on the way forward