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An empirical investigation on the effectiveness of Open Market Operations (OMO) in Nigeria
No full textThis article attempts to investigate the effectiveness of the open market operations in Nigeria adopting an error correction methodology. The study showed that in the conduct of defensive open market operations, inflationary expectations, treasury bill rate, income and fiscal balances exert significant influences on the volume of bank reserves. The persistent effect of fiscal balances on the volume of bank reverses in the short run shows that consideration of government activities remains important in developments in the financial sector. Findings from the study revealed that the system adjusts itself to equilibrium within three quarters in the event of a shock. The finding that sales of government securities in the secondary market do not exert effect in the long-run conforms to the Keynesian postulations that monetary policy becomes less effective in the long-run
The Remittance Environment in Nigeria
No full textThis preliminary study is on the remittance environment in Nigeria which became compelling because of low availability of information and empirical research on the subject. The need to obtain evidence-based information to drive policy formulation on remittances inflow which grew from US17.9 billion in 2007 and tap its potentials to promote economic growth in Nigeria were the rationale for the study. An understanding of the drivers, inhibitors, characteristics, cost of transaction and channels of the flows would promote policy formulation to improve the remittance environment. The objectives of the survey were to examine current trend in remittance inflow, operations of the service providers, identification of the channels of inflow and to proffer policy recommendations. The study was conducted through a field survey in the five geopolitical zones of the country through the administration of questionnaire to 1,405 recipients of remittances at the point of collection of their funds. A questionnaire each was administered to the Central Bank of Nigeria, 17 deposit money banks, the Nigeria Immigration Services, and the Nigerian Postal Services to obtain data on their processes that relates to remittances. From the study, remittances were identified as an important source of funds for recipients to meet their basic needs and therefore could be a viable poverty reducing instrument
A test of the validity of export-led growth hypothesis in Nigeria: a further evidence
No full textThis study tests the validity of the hypothesis of export-led growth in Nigeria. Several arguments have been adduced with respect to this hypothesis in the literature, while empirical studies for Nigeria had put forward different results based on the period of coverage and the methodology. The study found that both oil and non oil exports contributed to the enhanced economic growth in Nigeria
A test of the validity of export-led growth hypothesis in Nigeria: a further evidence.
No full textThis study tests the validity of the hypothesis of export-led growth in Nigeria. Several arguments have been adduced with respect to this hypothesis in the literature, while empirical studies for Nigeria had put forward different results based on the period of coverage and the methodology. Given that economic models perform better with large time series, this study has used the period from 1960-2005 with adoption of a neo-classical Cobb-Douglas production model that was estimated through both linear and log-linear least squares technique. The effects of shocks to the explanatory variables on economic growth were captured by the impulse response model, while the granger causality test shows the direction of causality in the model. The study found that both oil and non-oil exports contributed to the enhanced economic growth that the country witnessed, however, the oil export is more significant to economic growth in Nigeria. Thus, feedback causality exists between oil export and growth, while there is unidirectional causality that runs from economic growth to non-oil export. Furthermore, shocks to oil exports will significantly affect Nigeria’s economic growth. Therefore, this suggest that an outward-oriented industrialization strategy through export promotion policies, should be embarked upon by the government, especially those that will stimulate non-oil exports so as to averse the risk of negative oil export shock that would drop the level of economic growth
Special remarks at the seminar on: Financial sector developments: challenges for risk based supervision and effective monetary policy implementation
No full textThis is the Special remarks.at the opening ceremony of the 16th edition of the annual in-house Executive Policy Seminar organized by the Research Department, in collaboration with the Human Resources Department. As usual, the seminar is aimed at availing the Executives of the Bank the opportunity of brainstorming on contemporary economic issues in the economy and the globe at large. In this respect, the theme of this year\u27s Seminar Financial Sector Development: Challenges for Risk-Based Supervision and Effectiveness of Monetary Policy Implementation could not have come at a more opportune time, given the current financial meltdown ravaging global markets. This theme, therefore, provides the opportunity for us, as Executives of the Bank, to exchange views and reflect on the implications of our ever changing financial environment on the risk management of banks and effectiveness of monetary policy implementation in Nigeria
Implementation of Basel II: any role for international financial institutions?
No full textThis paper examines the three pillars of Basel II which provide a broad and coherent framework for linking regulatory capital to risk, for improving internal risk measurement and management and for enhancing supervisory and market discipline at large, complex and internationally-active banks
Analysis of the effects of policies of microfinance institutions on the technological capabilities of micro-borrowers in Nigeria.
No full textA study was conducted to determine the effects of Microfinance institutions’ (MFIs) policies on the technological capabilities of micro-borrowers in Nigeria. Nine (9) Microfinance institutions and 250 of their clients were surveyed in 2005 and 2006. The findings showed that between 2001 and 2005 there was significant growth in the clientele, savings, and loans made by the MFIs reflecting increasing demand for microfinance services. The regression results showed that the technological capability of micro-borrowers were affected by the number of employees/workers, duration of their loans, age of major machinery/ equipment of the enterprise, and the degrees of appropriateness of the machinery/equipment to workers’ skills, and available infrastructure. The operator’s length of experience, and interest rate on MFI loans negatively influenced technological capability. In order to encourage technology accumulation through micro-financing, the paper addresses an increase in the duration of clients’ loans, spreading the repayment over a longer period, and increase in the moratorium as well as introduction of low-interest loan products for technology acquisition by the MFIs
Appraising Nigeria\u27s tax effort: a comparative econometric analysis
No full textThe article employs the conventional model of tax effort to appraise Nigeria’s tax performance in comparison to other counties of the West African Monetary Zone (WAMZ). The key objective of the study is to determine whether Nigeria is limited it its revenue collections by a low capacity to generate tax revenue by non-commitment-towards using the available tax capacity to fund public services. If the country has the capacity to increase tax revenue, what are the appropriate channels through which tax revenue can be increased. Empirical evidence suggests that Nigeria is not making the optimal of her taxable capacity as the country\u27s potential for higher tax revenue exceeds actual tax collection, and its effort is least along the WAMZ countries in raising tax revenue. The article concludes that the country is not constrained in its revenue collections by a low capacity to generate tax revenue and could, in the event of a budgetary imbalance, choose to raise extra revenue rather than rationing expenditure when key sectors of the economy are yearning for greater financing. The findings further reveal that income and profit taxes are the most appropriate channels through which Nigeria can improve tax performance given the low index of tax effort the country is making in these areas. The willingness to evade taxes is also found to be associated with taxpayers’ zeal to operate in the shadow economy. The major, contribution of the study, therefore, lies in its ability to provide empirical support in identifying the right channels through which Nigeria can improve tax revenue. The study recommends the implementation of deliberate policies aimed at reducing the scope of the underground economy to curtail tax evasion, broaden the income tax base and enhance tax collection. The outcomes also divulge further possibilities for non-distortionary tax increase under indirect taxation
Integrated financial supervision for Nigeria: Emerging issues and challenges.
No full textIn the supervisory architecture of financial institutions have been of interest to policymakers and the academic. It began to be discussed in the late eighties when the Scandinavian countries were establishing a single supervisory authority in their country. The discussion heated up in the late nineties when the United Kingdom created the Financial Services Authority (FSA) and continued in this decade as many developed and developing countries consider the adoption of more integrated supervision structures. The paper considers the issues of separation of financial supervision from central banking and the rationale and challenges of establishing on integrated supervision structure in Nigeria. lt argues that since the Nigerian financial system is just recovering from shocks transmitted to the economy from the global financial crisis, this time may not be auspicious to introduce an integrated supervisory regime that is separate from the central bank. It recommends that the Government should consider carefully the cases for and against central bank\u27s financial supervision based on the circumstances and capacities in Nigeria. The paper has considered two basic issues in financial supervision. These are the separation of financial supervision from central banking and the rationale and challenges of establishing an integrated supervision structure in Nigeria. It\u27s identified three basic functions of financial supervision as micro prudential, macro prudential and conduct-of-business supervision, which address systemic stability, financial soundness of individual institutions and consumer protection respectively
Is Nigeria ready for inflation targeting
No full textInflation Targeting as a framework for monetary policy implementation simply describes a policy framework in which central banks accept and announce the realization of certain forecast targets of inflation, over a given time period, as the measure policy anchor and are accountable for deviations from actual inflation from the said target. The primary goal of the paper was to expose the prospects and challenges facing the implementation of inflation targeting in Nigeria. To put the subject in proper perspective, common terminologies often used in discussing lT were defined. The preconditions for effective lT were also highlighted. The paper has argued that most of the preconditions met in other jurisdictions before transition to lT are currently present in Nigeria. Notwithstanding some of the challenges that still lie ahead, it is concluded that Nigeria should begin to transit to inflation targeting framework for conducting monetary policy. The study concluded that Nigeria should begin to transit to inflation targeting framework for conducting monetary policy