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An empirical analysis of the effect of monetary policy on the manufacturing sector in Nigeria
No full textThis study examined the effect of monetary policy on the manufacturing sector in Nigeria from 1970 to 2012 using Autoregressive Distributed Lag (ARDL) bound testing approach. Exchange rate was found as the only channel of monetary policy transmission with significantly negative effect on the manufacturing sector. This implies that manufacturing firms largely rely on foreign inputs for production and do not depend on the banking system for funding. The study, therefore, recommends indigenous technology and financial system development to reduce dependence on imported inputs and facilitate access to more funds
Non-oil exports, economic growth and macroeconomic stability
No full textThe author discussed the role of non-oil exports in the structural transformation and sectoral diversification processes which are inherently associated with sustainable growth and development outcomes as well as the focus of the analysis shifts to an examination of the role of non-oil exports in promoting economic growth and development
Financial inclusion and growth of the banking system in Nigeria
No full textFinancial inclusion suggests an innovative concept which helps to achieve sustainable development, by making available financial services to the unbanked and underbanked with the help of financial institutions. The concept of financial inclusion gained popularity from year 2000. Thus, it is a great weapon to overcomes financial backwardness. This paper attempts to assess the current status of financial inclusion by examining recent policies and developments toward achieving financial inclusion in Nigeria. Specifically, the framework aimed at enhancing financial inclusion in Nigeria while also supporting the growth and stability of the financial sector, including policies around microfinance, mobile payment, KYC, electronic payments bank charges, non-interest banking and agent banking, financial literacy, consumer protection, the implementation of MSME development fund credit enhancement programme among others. the fundamental objectives of all these initiatives are to reach the larger section of the financial excluded Nigerian populace and improve on their welfare and put them into the banking stream. Nevertheless, illiteracy, incidence of poverty, low income savings and lack of bank branches in some rural areas continue to pose serious challenge
Mortgage refinancing in Nigeria: prospects and challenges
No full textThe paper examines the mortgage (re)finance market in Nigeria with a view to identifying its prospects and challenges. The method adopted included a review of jurisdictional experiences on mortgage refinance and thereafter draw on some lessons of experience as the Nigeria case is considered as a country in transition. Further discussions centered on the challenges of financialization of mortgages, mortgage affordability, low awareness of mortgage refinancing, macroprudential risks and moral hazard that confronts mortgage refinance in the country. The paper, further, provides considerations with regard to value-reorientation, institutional, regulatory and legal infrastructures as prerequisites for successful mortgage refinance system
Do survey-based expectations mimic inflation in Nigeria?
No full textSurvey-based expectations are mostly used by monetary authorities for inflation forecasts and evaluation of the credibility of their inflation fighting policies. It is also an important link in the monetary policy transmission mechanism. This study examined the predictive ability of business expectations survey (BES) inflation index on movements of inflation as well as the relationship between BES indicators and selected macroeconomic indicators in Nigeria. The study employed the modified Kaminsky-Reinhart (KLR) Signal Approach, correlation and trend analyses. The results of the modified KLR approach showed that BES inflation index predicts inflation rate only between 5 to 20 per cent threshold, which corresponds with Nigeria inflation series covered by the study. The paper found a weak and statistically insignificant relationship between the BES indicators and the selected macroeconomic indicators (inflation rate, exchange rate and lending rate). The study recommended that BES confidence indicators should be employed with some level of caution in making decision since the precision of its predictive ability is only moderate
Factors explaining exchange rate volatility in Nigeria: theory and empirical evidence
No full textThe study empirically investigated the factors explaining the volatility of the bilateral exchange rate of the naira to the U.S. dollar, using data for 1970-2013 period. The EGARCH (1.1) modeling technique was used. The empirical evidence indicated that volatility of the naira exchange rate was characterised by clustering, strong leverage effect and moderate degree of persistence. It was found that increased net capital flows, greater integration of the Nigerian economy into the global market, deepening of the nation’s financial system, favourable crude oil prices, increase in the level of external reserves as well as economic growth were germane to dampening conditional volatility of the country’s exchange rate. It was also found that external debt and monetary expansion had the potential to exacerbate volatility in the exchange rate. Policies recommended to mitigate volatility of the exchange rate included greater integration of the economy into the global market, which implies diversification of the country’s export base, less reliance on external borrowing, building up and maintaining a robust external reserves position, financial system development and use of contractionary monetary policy to control broad money growth
Financing government deficit during economic downturn: options for consideration
No full textThe author examines the efficacy of the conventional approach to financing budget deficit during economic downturn in Nigeria. He also considers other (unconventional) options for financing budget deficits during economic downturn in Nigeria
Implication of closure of RDAS and WDAS segment of the foreign exchange market in Nigeria
No full textThe Nigeria foreign exchange market has transitioned a great deal since the country gain independence. Nigeria had a pegged exchange control until the introduction of the structural adjustment program (SAP) in 1986. which brought about dual exchange rate system, the first and second tier foreign exchange market that later metamorphosed into the Foreign Exchange Market (FEM). Hence there continue to be policy reversals as a result of the volatility in the exchange rate
Capital flows to Nigeria: a structural VAR analysis
No full textOne of the utmost desire of every developing economy nurturing the aspiration of joining the league of developed nations is to pursue a course of plan that would makes it realisable. Undeniably, different channels have been identified in the economic literature as possible ways through which growth can be achieved. Attraction of foreign capital inflows has been identified of possible channel through which sustainable growth can be easily achieved. To this end. the paper empirically unravels both the pull and push factors in determining foreign capital flows, with special reference to the Nigerian economy. An empirically tractable structural VAR model is developed, and variance decomposition and impulse response analyses are used to investigate the temporal dynamic effects of shocks to both the pull and push factors on different components of foreign capital flows namely: overseas development assistance (ODA), foreign direct investment (FDI) and remittance (REM) flows. Prominently, the significant roles of shocks to domestic productivity, domestic real interest rate and foreign interest rate with their associated and magnifying impacts consistently featured across the various components as major determining factors. However, on the policy front, the paper emphasises the concomitant need for policy makers to design domestic policy that account for both external and internal shocks for real variables of the economy
Financial soundness indicators: the case of Nigeria
No full textThis paper adopted the concept as designed by the Fund to examine the soundness of the Nigeria Banking Sector from 3007Q1 to 20014Q4. From the result of the financial Soundness Indicators (FSIs) complied for Nigeria, it is obvious that the indicators can serve as reliable and consistent tools, capable of detecting vulnerabilities in the system. The study, therefore, recommends that adequate attention be paid to the indicators by the Central Bank. The Bank is urged to strive to gain full understanding of the concept as well as design additional framework for using the indicators so as to enable her take bold and proactive policy measures capable of entrenching discipline and corporate governance in the system so as to avert impending crisis or drastically reduce the potential impact of the crisis on the economy