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The Nigerla inter-bank and monetary policy rates nexus: any discernable long run relationship?
No full textInterbank markets are among the most important in the financial system. They are the focus of central banks implementation of monetary policy and have a significant effect on the economy. It is the relationship between the inter-bank and monetary policy rates that this paper examined. The findings indicate that the rates are co-integrated and have a long-run relationship, judging from the significance of the unit root test for the residual and the coefficient of the error correction variable in the error correction model
Estimating a Small-Scale Macroeconometric Model (SSMM) for Nigeria: a Dynamic Stochastic General Equilibrium (DSGE) approach
No full textThis paper attempts to develop a small scale macroeconometric model for the Nigerian economy using dynamic stochastic general equilibrium (DSGE) methodology. Particular attention is paid to using impulse responses to explain the dynamic properties of the model. This model incorporates expectation as an anchor in the forward-looking monetary policy objective of the Central Bank of Nigeria (CBN). It captures most of the channels through which policymakers believe monetary policy can influence a small open economy with a managed floating exchange rate. The model was taken to the data by means of Bayesian estimation with the following major findings. First, although inflation holds forward-looking component, the backward-looking one is substantial. Also, income elasticity of the real demand for money in Nigeria is estimated to be 0.871, justifying the high volume of day-to-day transactions that use cash. Moreover, the paper identifies the existence of exchange rate pass-through, confirming the import-dependent nature of the Nigerian economy. Also, the paper estimates a sacrifice ratio of 1.306. Lastly, the paper shows that the best Taylor-type policy rule for Nigeria is to focus on a monetary policy rule that gives higher weight to inflation gap than output gap
Overview of the four pillars of the Banking Reforms.
No full textThe reports of the risk assessment exercise formed the basis of the intervention by the CBN in some banks and the introduction of the four pillar reform programme, to guarantee the safety and soundness of the banking system. The four pillars of the banking system reforms, which is the main subject, are as follows: Enhancing the quality of banks; Establishing financial stability; Enabling healthy financial sector evolution; and Ensuring that the financial sector contributes to the real economy
The Nigerian financial crisis: Lessons, prospects and way forward
No full textThis paper x-rays the recent banking sector crisis in Nigeria, its resolution, lessons learned and way forward. The paper is divided into six main sections. Following the introduction, section 2 highlights country experiences of banking crisis and resolution options, while section 3 gives an overview of financial crisis in Nigeria; section 4 discusses the recent financial crises in Nigeria (2000-2009), while section 5 presents the 2009 banking crises and its causes. The most recent reform measures are discussed in section 6. ln sections 7 and 8, the lessons of experience and the way forward are presented, while the concluding remarks are made in section 9. The finding reveals the need for an appropriate mechanism to be put in place to ensure that erring directors are prosecuted on accelerated basis. There is need for a forward-looking supervisory regime which would ensure appropriate and sustained capacity building initiatives. Also, bank supervisors should keep abreast of state-of-the art practices and procedures in order to discharge their functions efficiently, effectively and creditably
A bound testing analysis of tourism demand in Nigeria.
No full textThis study empirically examines aggregate tourism demand function for Nigeria using the time series data for the period 1995:QJ-2006:Q4. The total tourist arrivals into Nigeria are related to world income, relative prices and transportation cost. Bounds testing cointegration procedure proposed by Pesaran et al. (2001) is employed to compute the short and long-run elasticities of income, price, political stability and transportation cost variables and the CUSUM and CUSUMSQ is implemented for stability tests on the aggregate tourism demand function. The empirical results indicate that income, transportation cost, political stability and relative prices are the variables explaining the total tourist arrivals to Nigeria and a stable tourism demand function exists
Why has growth slowed in Sub-Saharan Africa? a System IV-GMM approach.
No full textThe paper estimated the traditional cross-country growth model and corrected for model endogeneity bias and country-specific heterogeneity effects. Using the System-IV Generalized Method of Moments (GMM) approach, it identified the key factors that determine GDP per capita growth rate in a panel regression model of I 00 countries. Parameter robustness test was applied to the models which also included: Within Fixed Effects; Pooled-Ordinary Least Square and Levels-IV GMM models, using the Extreme Bounds Analysis (EBA). It found that most of the estimated covariates that show significant coefficients in the regression model are actually fragile, except for initial income, institutions and real exchange rate overvaluation. More importantly too, the results suggested that natural resource endowment, such as oil, may not have accounted for why some resource rich developing countries (e.g. Nigeria) have grown slowly as is commonly argued in the literature
Keynote address at the CBN Executive Seminar , December 2009
No full textThis is the keynote address delivered by the Governor, Mallam Sanusi, Lamido Sanusi in December 2009 at the CBN Executive Seminar titled Cross-border banking challenges and implications for monetary management
Cross-boder transactions of deposit money banks and the issue of monetary control
No full textThe author focused on the activities of the deposit money banks depicted by their deposits and credits. This was particularly the implications of deposits and credits and credits for monetary control in an economy
Economic liberalization and job creation in Nigeria
No full textThis study examines the concept of liberalization and effects of economic liberalization on job creation in Nigeria. It narrows globalization to economic liberalization and looks at its effect on job opportunities in Nigeria. It recommends that the government should undertake regulated/guided liberalization policies such that the dictate of the economy will not be left in the hands of oligopolists
Determinants of capital flows in Nigeria and challenges for macroeconomic stability
No full textCapital flows into developing countries in the 1960s through the 1980s were mainly in the form of overseas development assistant (ODS) to governments as well as private capital through domestic multinational bank. Nigeria, like unit developing countries, is characterized by a low\u27 level of domestic savings and in order to attain a desirable level of investment that would guarantee sustainable development, the economy needs some foreign sayings to bridge the savings investment gap. These savings come in the form of \u27new money’ or capital inflows which are expected to provide financial capital for economic activities. Foreign participation is directed associated with investment booms which is expected to increase industrial capacity and production. The paper empirically examined the current drivers of capital inflows in Nigeria from 2003 to 2007 using high frequency data. The study employs the Johansen’s Cointegration analysis to identify the long run relationship among the variables as well as granger causality test. The results of the model and the causality tests have shown that the inflows foreign capital are influenced by the level of reserves, degree of openness or liberalization of current capital and financial accounts, two-period lag interest rate, and the depth of the financial system. These variables should be closely monitored in order to sustain the current tempo in the attraction of global capital into the Nigerian economy