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Financial sector development and economic growth: a theoretical exposition.
No full textThe various literature and studies reviewed in this exposition have underscored the positive impacts of a developed financial sector on an economy. Whilst a few studies showed that finance follows growth, the majority opinion is that finance leads growth. Unfortunately, growth has not led to economic development in many developing economies, necessitating intervention by such bodies as the United Nations, International Labour Organization and United Nations Development Programme. Economists are equally concerned about this development and have, therefore, conducted studies to show the relationship between economic growth and poverty alleviation. They generally agreed that growth is good for poverty reduction. The objective of this paper is to examine some of the major studies to derive some theoretical basis for the relationship between financial sector development and economic growth. Furthermore, the paper examines some topical issues in financial sector development as well as share thoughts on the seeming aberration that economic growth fails to lead to economic development in many developing economies. The paper is organised in five sections. Following this introduction, major issues in financial sector development are reviewed in Section 2, while Section 3 highlights major studies and findings in respect of the relationship between financial sector development and economic growth. Section 4 reviews some related literature on growth and development. The paper is concluded in section 5
Finance for growth and policy options for emerging and developing economies: Nigeria.
No full textThe analysis in the paper clearly revealed that finance is important for a sustainable economic growth. It also shows that financial policies designed in various EME countries had the main aim of making the financial system provide financial functions. However, there are large differences in how well the financial system in each country performed these functions. Also, it is well noted that what matters to economic growth is access to financial services and not who supplies them, whether it is private sector as in South Africa and Nigeria or the combination of public and private sectors as in China. The financial policy in Nigeria has not been able to achieve the desired result in providing financial services. The country has not experienced a remarkable economic growth like other EMEs. It has very weak money and capital markets that can perform the role of mobilising savings and financial intermediation. The private sector is weak and there is an unhealthy competition between the private and public sectors in terms of access to bank credits. The country fails in attracting appropriate FDI and shows a remarkable performance in terms of remittance that is very difficult to channel to investment ventures. All these challenges are attributed to weak and unstable banking system, high lending rate coupled with wide interest rate gap and fiscal misalignment of the public sector
Liquidity forecasting: Nigeria\u27s experience
No full textThis paper discusses the experience of the Central Bank of Nigeria (CBN) in liquidity forecasting by examining the key components of the Central Bank balance sheet. The paper is divided into four sections; following this, is section two which discusses the conceptual framework. Section three covers Nigerian experience in liquidity forecasting and techniques employed while section four contains the challenges of liquidity forecasting in Nigeria and the way forward and lastly, section five concludes the paper
Best Linear Unbiased Estimate using Buys-Ballot Procedure when Trend-Cycle Component is Linear
No full textThe Best linear unbiased estimate (BLUE) of Buys-Ballot estimates when trend-cycle component is linear are discussed in this paper. The estimates are those proposed by Iwueze and Nwogu (2004). Discussed are the Chain Based Estimation (CBE) method and the Fixed Based Estimation (FBE) method. The variates for the CBE method were found to have constant mean and variance but are correlated with only one significant autocorrelation coefficient at lag one. The variates for the FBE method were found to have constant mean, non-constant variance but with constant autocorrelation coefficient at all lags . Because the CBE variates exhibit stationarity, Best Linear unbiased estimators of the slope and intercept were derived. Numerical examples were used to illustrate the methods
ECOWAS single currency by Year 2020: the need for timely and reliable data to enhance the achievement of the convergence criteria
No full textThe issue of single currency in West Africa has long been on the agenda of the political and monetary authorities since the inception of ECOWAS in 1975. The principal aim of economic and monetary integration effort was to expand intra-community trade. As obtained in other regional blocks especially in the euro area where a single currency the, \u27Euro\u27 is used. ECOWAS identified a number of impediments to the development of inter-regional trade. which include multiplicity of currencies, widespread controls and restrictions on exchange transactions. Consequently, member central banks and other relevant agencies adopted brood and diverse set of statistical data, namely budget deficits. Inflation, external reserves. central bank financing of the previous year\u27s budget, domestic arrears and tax revenue. These criteria are needed to guide the Convergence Council in policy decisions and thus timely rendition of data couple, with other ECOWAS integration programmes such as the payment system development statistical harmonization and ECOMAC database. ECOWAS Trade liberalization Scheme (EILS) and other issues are required to fast-track the 2020 project
Money and inflation: evaluating the effectiveness of monetary policy in Nigeria
No full textThe paper establishes the relationship between monetary policy and inflation
Financing the Real Sector for Sustainable Economic Growth in Nigeria: Performance, Challenges and Prospects
No full textThis paper examines some of the challenges constraining the financial sector in stimulating sustainable growth in Nigeria. It observes that for a successful real sector financing in Nigeria, a culture of accountability and transparency in the conduct of our national affairs must be taken seriously. The quality of governance must also be improved, to ensure that the legal framework for economic activities is well strengthened, such that the protection of creditors‘ rights may not be jeopardised
Building Dynamic Stochastic General Equilibrium Models for Monetary Policy Analysis
No full textDynamic Stochastic General Equilibrium (DSGE) models are powerful tools that provide a coherent framework for policy discussion and analysis. In principle, they can help to identify sources of fluctuations, answer questions about structural changes, help to forecast and predict the effect of policy changes, and perform counterfactual experiments. Against this background, this paper aims at providing an insightful discussion on DSGE models by developing a simplified version of the models to explain the behavior of key macroeconomic variables in Nigeria namely: the growth rate of gross domestic product (GDP), headline inflation, exchange rate and the monetary policy rate. The estimated results highlight the central role of expectations in the transmission of shocks and policy impulses in DSGE models. The main lesson that we derive from the study is that management of expectations provides an effective approach to controlling inflation
Special remarks at the CBN Executive Seminar on Financial Sector Development, Economic Growth and the Nigerian Economyâ€.
No full textSpecial remarks at the opening ceremony of the 19th edition of the annual in-house Executive Seminar organised by the Research Department in collaboration with the Human Resources Department
Policy choices and challenges in expanding access to finance for growth in rural Nigeria.
No full textRural finance is now recognised as an important tool in the fight to reduce poverty, increase growth and enhance donors‘ development effectiveness agenda. It encompasses all savings, lending, financing and risk-minimising opportunities (formal and informal) and related norms and institutions in rural areas. In addition to fostering rural development, rural finance is increasingly used as an incentive to promote sustainable use of natural resources, use of alternative energies, and environmentally-sound behaviour. However, despite the importance of rural finance for growth and the significant demand for financial services, financial service providers, such as banks, credit unions, microfinance institutions or insurance companies, are typically reluctant to serve rural areas. Consequently, majority of the country‘s rural population does not have access to the formal financial system. The reluctance of financial institutions to serve rural areas is not unconnected with the various challenges involved in such endeavour. These challenges include the weak infrastructure and low population density that characterized the rural subsector. The capacity of financial service providers and the level of client education in rural communities are quite limited. Moreover, financial institutions are tardy in granting loans to the agricultural sector given its seasonality and the inherent risks of farming. These challenges explain the high transaction costs and the risks inherent in serving the rural areas by the financial institutions. This study address these challenges so as to enhance rural dwellers‘ access to finance