CBN Digital Commons (Central Bank of Nigeria)
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Welcome Address
No full textThis is the Welcome Address presented by the Director of Research, Central Bank of Nigeria during the 28th Edition of the CBN Executive Seminar held at Transcorp Hilton, Abuja. The year’s theme: ‘Digitalisation of Money and Monetary Policy in Nigeria’ was motivated by the need to keep pace with monetary policy design and implementation in the digital age
Effects of Central Bank Independence and Financial Stability on Inflation in Selected African Countries
No full textThis study examines the relationship between central bank independence (CBI), financial stability, and inflation in 14 African countries within the period 1985-2019. Initial test revealed the presence of cross-sectional dependence (CD) among the countries. Thus, the Mean Group (MG), Common Correlated Effect Mean Group (CCEMG) and Augmented Mean Group (AMG) were employed for the analysis. The CCEMG and AMG results showed a significant and negative correlation between central bank independence and inflation. On the other hand, financial stability is only significant in the MG Model. Additional results obtained using the Garriga CBI index is consistent with our main results. The study recommends greater independence of central banks from all forms of political and government influence in order to have greater chance of achieving lower inflation within the African nations
Keynote Address
No full textThis is the keynote address delivered by the Governor of Central Bank of Nigeria at the Annual Executive Seminar of the Central Bank of Nigeria, holding in Abuja, the Federal Capital Territory. The theme of the Seminar was Digitisation of Money and Monetary Policy in Nigeria.
Digital Currencies: emerging trends, challenges and the future of the monetary system
No full textThis paper discusses the relevance and significance of digital currencies within the context of the monetary system. The next section presents a global picture of the emerging trends followed by challenges from different jurisdictions. The final section discusses the future of the monetary system as shaped by digital currencies
Digital Financial Services and Financial Inclusion in Nigeria: milestones and new directions
No full textDigital Financial Services are ushering in an age of financial innovation and convenience with technology as the driver. It aims at solving several needs of the public, helping the governments tackle newer problems and identify the potentials of new technology that may be conceived in a competitive landscape. The aim of financial inclusion is to bring as many unserved and underserved Nigerians into the formal financial sector. Thus, digital financial services are revealing gaps in the market that will allow the Federal government intervene and cater to more members of the public than ever, using technology
Market Risk Factors and Stock Returns in the Nigerian Bourse
No full textThis study examines the link between market risk and equity return in Nigeria between 1980 to 2019. It employs the vector error correction model (VECM) to determine the short run dynamics and long run effect of market risk factors on stock return. The findings revealed that a dynamic relationship exists between market risk factors and stock returns in Nigeria. Also, exchange rate risk and oil price risks have significant influence on stock return, while inflation and interest rate risk, and political instability risks have a non-significant impact on stock return. Finally, a unidirectional relationship was detected between interest rate, oil price, political instability and stock return. The study concludes that market risk factors of exchange rate, oil price, interest rate and political instability risks are major determinants of stock return in Nigeria. It is recommended that rational investors seeking maximum returns should minimize market risk factors by diversifying their portfolios and study the risk behaviour and level in the market before taking investment decisions
Do Geopolitical Risks and Economic Uncertainty Matter for Fiscal Sustainability in Nigeria?
No full textThis paper attempts to answer the question about whether geopolitical risks and economic uncertainty matter for fiscal sustainability in Nigeria. The paper employs the ARDL model and bounds test approach to cointegration to analyse quarterly data for the period 2010Q1 to 2021Q4. The main finding indicates that geopolitical risks significantly enhance fiscal sustainability in the short- and long-run, while economic uncertainty does not. Accordingly, the study recommends the implementation of policies aimed at maximising the benefits of rising oil price triggered by geopolitical risks to improve fiscal sustainability in Nigeria
The Evolution of Money and the Changing Role of Central Banks in the Digital Age
No full textAs a medium of exchange, money has evolved throughout the ages from barter system to fiat money issued by central banks. The digital age has ushered in new realities for central banks, transforming the nature of money and challenging monetary authorities to new roles required to implement their core mandate of maintaining monetary and price stability. The main purpose of this paper is to examine the changing roles of central banks occasioned by the challenges posed by digitalisation. Based on available literature surveyed, this changing role is principally evident in the recent move by most central banks to issue their own digital currencies with a view to achieving orderly conduct of payment systems already threatened by the proliferation of private digital currencies. This paper submits that in order to enhance their chances of success and maintain trust in their digital currencies, central banks should continuously innovate, in partnership with private firms, as well as rise to the challenge of the key forces likely to shape the path of any Central Bank Digital Currency project including changing user needs, competitive pressure from private digital currencies, complex regulations and cybersecurity threats
Digital Currencies: emerging trends, challenges and the future of the monetary system
No full textThis paper discusses the nature and types, trends, prospects and benefits, challenges and demerits of digital currencies, as well as, the link between digital currencies and the monetary system
Interest Rate Pass-through in Nigeria: An Asymmetric Cointegration Approach
No full textThis paper empirically examines the pass-through of the Central Bank of Nigeria policy rate to commercial banks’ retail rates. The study covers the pre-liberalization (1962M01–1987M07) and post-liberalization (1987M08–2020M09) periods, and employs asymmetric cointegration and error-correction modelling approach. The empirical results indicate that the pass-through is incomplete during both periods, though, it is larger during the pre-liberalization period. The study further reveals that the banking crises lead to an increase in the lending rate in the long and short run. The effect of the crises on the deposit rate is also positive but only significant in the short run. The empirical analysis demonstrates that all the threshold cointegration tests for the two sample periods exhibit asymmetric behaviour. The retail loan/lending rate adjustment to changes in the policy rate during both periods appears asymmetric with upward rigidity. The finding supports the adverse customer reaction hypothesis, suggesting that banks are more rigid in raising loan rates than reducing them. The results also support customer reaction on the deposit side, showing among others, downward rigidity in deposit rates in both periods. Therefore, the study recommends that the monetary authorities should strengthen monetary operations to ensure efficient transmission of monetary policy rate. There is also a need for measures that can enhance competitiveness in the banking sector and improve the efficacy of the interest rate channel. More commitments to preventing a systemic crisis in the industry and those that can effectively contain unavoidable ones are also desirabl