Re-examining the Relationship between Inflation, Exchange rate and Economic Growth in Nigeria

This paper re-examining the relationship between inflation, exchange rate and economic growth in Nigeria. The study used annual time series data from 1981 to 2016 sourced from Central Bank of Nigeria Statistical Bulletin (CBN). The study employed ARDL Model to test for short and long run relationship among the variables. The empirical results show that there is long run relationship among the variables. The short run result reveals that only inflation has a negative relationship with economic growth in Nigeria. The indirect relationship between inflation and economic growth requires urgent attention by government because variation in exchange rate translate to export and import of goods and services will be associated with inflation as the fluctuation in exchange rate leads to upward and downward trend in price

Currency Substitution and General Business Indicators in Nigeria

Purpose: This paper examines the effects of currency substitution on general business indicators in Nigeria.   Theoretical framework: This paper is based on portfolio balance theory which is concerned with interest rate adjustment and achieving the market equilibrium on currency substitution aggregate.   Design/Methodology/Approach: The paper employed appropriate econometric techniques such as the cointegration and error correction model (ECM) approach to examine the long run and short run attendant relationships.   Findings: Empirical findings from this study indicate that there is a long run relationship between currency substitution and general business indicators variables as inflation, interest rate differentials, and exchange rate depreciation in Nigeria, the magnitudes of the impact of each are weak.   Research, Practical & Social implications: The construction and analysis of currency substitution and general business environment by this study have provided relevant information for Nigerian economy in preparing for substantial currency substitution that would give clear understanding of the aggregate business environment on existing currency substitution policy that may lessen the anxiety of the apparent environmental challenges faced by the countries, and this will further provide policy directions for future currency substitution reforms in the various segment of the economy.   Originality/Value: The originality of this study lies in its analysis of currency substitution and general business environment. Furthermore, the study highlights the relevance of tackling regulatory issues to ensure the safe and effective use of currency substitution

Taxable Capacities: How has Economic Transformation and Resource Dependency Work?

Purpose: This paper examines the impact of economic transformation and natural resource dependency on the taxable capacity of SSA countries.   Theoretical framework: This paper is based on positive tax theories which is concerned with who bears the burden of various taxes, and the incidence of a particular tax.   Design/Methodology/Approach: This paper employed Stochastic Tax Frontier Analysis (STFA) using annual data for thirty-three SSA countries for eighteen years that range from 2002-2019.   Findings: Empirical findings from this study indicate that most Middle-Income Countries (for example, Botswana, Cameroun, Cote d’ Ivoire, Lesotho etc) dominate the High Tax Performance category. This further confirm the positive and significant influence of real per capita income in the taxable capacity model of the SSA region as well as that of the MICs. However, exception to this trend is those of countries with relatively low per capita income (for example, Mali and Burundi) but operating near their tax potential, and with appreciable tax effort. The reason that may be attributed for this exception may be the rise of mining activities (though, this may not be enough to raise 30% of the countries’ hydrocarbon revenue) by large companies.   Research, Practical & Social implications: The construction and analysis of tax revenue performance matrix for the sub-Saharan Africa by this study have provided relevant information for sub-Saharan Africa countries in preparing for substantial fiscal independence and would give clear indications of the revenue productivity of existing taxes that may lessen the anxiety of the apparent fiscal deficit challenges faced by most SSA countries, and this will further provide policy directions for future tax reforms in the various countries of the region.   Originality/Value: The originality of this study lies in its investigation of the taxable capacities; how has economic transformation and resource dependency works. Additionally, the study highlights the relevance of tackling regulatory issues to ensure the safe and effective use of taxable capacities

Re-examining the casuality between Capital Flight and Foreign Direct Investmen in Nigeria

 The relationship between capital flight and Foreign Direct Investment(FDI) has generated continuous debate in literature. This study aims at providing quantitative analysis of cointegration and causality between capital flight and FDI in Nigeria from 1985 to 2015. The study employed secondary data which was obtained from Statistical bulletin of Central Bank of Nigeria and data base of World Bank.The data obtained were subjected to Units root test, Co-integration test and Pair–Wise test of Granger Causality. The findings of co-integration revealed that the estimated equation and the series are co-integrated. The Granger-Causality test shows that there is no bi-directional causality between FDI and Capital Flight in Nigeria.The study concludes that the success to curtail capital flight in Nigeria is to improve level of infrastructural facilities in the country which can  facilitate increase in domestic investment and also attract FDI. It is recommended that enhancing investment environment by minimizing the obstacles to doing economic activities, and increasing the effort against international financial crime will help reduce capital flight and improve FDI in Nigeria

Financial Statements Fraud of Banks and other Financial Institutions in Nigeria

Purpose: There is evidence that managers engage in opportunistic practice to manipulate reported performance to attract unsuspecting investors. This paper seeks to detect the likelihood of manipulations on the financial reports of financial service firms (banks and other financial institutions) as well as to identify the financial indicators that are the likely predictors of the probability of manipulations in Nigeria.   Theoretical framework: The M-score models, from Beneish (1999), are employed as theoretical basis for the paper. The model use financial ratios computed using accounting data to confirm the probability that firms’ reported earnings are manipulated.   Design/Methodology/Approach: The study uses data from the Nigerian Exchange Group, from 2010 to 2019 to compute M8/M5-scores and classify firms into likely manipulators and unlikely manipulators. In addition, a probit regression model was applied to establish financial ratios that significantly predict the likelihood of FSF amongst the financial firms.   Findings: The results based on M8 (M5)-score indicate that 26.67% (23.33%) of firms likely manipulate financial books and exhibit the possibility of FSF. In addition, only sales in receivable, sales growth, depreciation expenses, leverage and accruals to assets ratios are found to be (positive) significant predictors of the probability of manipulations.   Research, Practical & Social implications: The implication of the outcome is that subjecting financial statements to empirical and statistical scrutiny should not be ignored because it would detect and reduce associated risks to manipulations. Therefore, more regulatory interventions and empirical auditing of reports are needed to ensure their readability and reliability to the investors.   Originality/Value: The study offers a novel and first evidence, based on Beneish M-score, to scrutinise reports of financial firms in Nigeria. The evidence ensures quality reporting of the financial statements in order to credibility as well as protect the integrity of the capital markets

The Relationship between Import, Export, Domestic investment and Economic Growth in Nigeria

This paper examines the relationship between imports, exports, domestic investment and economic growth in Nigeria. The study make used of annual time series data which span from 1981 to 2016, which is sourced from World Development Indicator (WDI) and Central Bank of Nigeria Statistical Bulletin. The study employed ARDL Model and VEC Granger Causality Test to explore the relationship among the variables. The empirical results show that there is long run relationship among the variables. In the short run, empirical results show that only imports have negative effect on economic growth in Nigeria. The VEC Granger Causality Test indicates that there is relationship among the variables. This negativity effect of imports on economic growth in Nigeria requires stringent economic reforms

DIGITAL FINANCIAL SERVICES AND THE PERFORMANCE OF THE QUOTED COMMERCIAL BANKS IN NIGERIA

Objective: The study aims to examine the causal relationship as well as short-term and long-term dynamic effects between digital financial service components and on the performance of the quoted commercial banks.   Method: The study employs a cross-sectional descriptive survey research with ex-post facto research. Descriptive statistics were used to analyze responses and opinions, while inferential statistics including the dynamic Panel Autoregressive Distributed Lag (PARDL) approach, Panel Granger Causality Test.   Results: The Granger Causality analysis reveals that Agency banking exhibits a strong causal link to ROA (p=0.003<0.05), emphasizing its predictive power for ROA variations. Also, ATM banking has a weaker influence on ROA (p=0.08>0.05), while internet banking (p=0.049<0.05) and mobile banking (p=0.0001<0.05) both impact ROA significantly. The long-term analysis using the autoregressive distributed lag (ARDL) model indicates that agency banking (β=0.128, p < 0.05), ATM banking (β=0.566, p < 0.05), internet banking (β=0.514, p < 0.05), and POS activities (β=0.118, p < 0.05) all have positive impacts on ROA. In the short term, these variables also show positive coefficients, suggesting immediate effects on ROA. Error correction (ECTt−1) has a negative coefficient (β=-0.06, p < 0.05), indicating its role in short-run adjustments to deviations from long-run equilibrium. Overall, agency banking, ATM banking, internet banking, and POS activities are crucial drivers with strong statistical significance, while mobile banking has limited influence on ROA. Based on these findings.   Conclusion: The study recommends that financial institutions should strategically prioritize agency banking services and enhance internet banking services to positively impact ROA. Resource allocation for ATM banking should be reevaluated, and POS-related strategies may not be a priority for improving ROA. Additionally, financial institutions should adopt a long-term perspective when planning and implementing these services, and invest in enhancing their digital financial services to boost customer satisfaction, fostering loyalty and retention

GLOBALIZATION AND FINANCIAL DEVELOPMENT IN AFRICA

Objective: Given the relevance of globalization on the integration of a country to the global economy and financial development, it is important to investigate the concept of globalization and evaluating the relationship between their determinants.   Method: this study adopts qualitative techniques to examine the conceptual inter-relationship and the theoretical and empirical analysis of globalization and financial development from 2013 to 2023 using groupings based on the findings from the various samples articles that met the selection criteria of the dimensions of the concepts. On the other hand, this study adopts quantitative techniques to examine the relationship and causal effects of globalization dimension on financial development using some selected economies (developed and developing) for a period of 5 years (i.e. 2017 – 2021).   Results: The finding of this study reveals that several studies have been conducted in relation to globalization and financial development, but at a decreasing rate which is against the expected results. Also, despite the increasing role of socio-economic variables of international crises, exchange rate and interest rate in financial development of economies, majority of the literatures have not shown sufficient interest as the few available reveal inconsistence in the relationship and causal effects of the variables. However, empirically, this study reveals that foreign direct investment, trade openness, exchange rate and interest rate but international crises have causal effect on financial development.   Conclusion: This study therefore concludes that despite there are no convenient and consistent understandings, globalization has effect on financial development

BTC price volatility: Fundamentals versus information

This paper offers a plausible response to “what explains the sporadic volatility in the price of Bitcoin?” We hypothesized that market “fundamentals” and “information demands” are key drivers of Bitcoin’s unpredictable price fluctuation. We adopt the transfer-function [Autoregressive Distributed Lag, ARDL] model and its Bounds testing approach to verify how the volatility of the price of Bitcoin responds to its transaction volume, cryptocurrency market capitalisation, world market equity index and Google search. We found the existence of long-run cointegration relation and observed that all the variables except the equity index positively explain the volatility of Bitcoin price. The result established evidence that market fundamentals drive erratic swing in Bitcoin price than information. Keywords: Bitcoin price volatility Bitcoin market fundamentals information demand ARD

THE IMPACT OF MONETARY POLICY ON SMALL AND MEDIUM SCALE ENTERPRISES (SMES) IN THE PERIOD OF ECONOMIC CRISES

The study examines how monetary policy affects small and medium-scale (SMEs) in Nigeria during 1991–2020. The paper shows how monetary policy variables, such as the interest rate, money supply and inflation rate, drive the relative outputs of the SMEs to GDP (SMEGDP). In line with theoretical consideration, the estimation includes other control variables including gross fixed capital formation and secondary school enrolment rate to represent proxies for capital and labour, respectively. The result shows that the Johansen cointegration establishes long-run relationship amongst the considered determinants of the SMEGDP. The study finds that the money supply and interest rate, respectively, have significant positive and negative impact on the SME outputs, whist inflation rate produces adverse but insigificnat effect on output. The magnitude and significance of interest rate is more than that of the money supply. Generally, the evidence suggests the need for policy to reposition SMEs. The paper recommends that there should be discretionary use of monetary policy in enhancing SMEs and efforts at promoting macroeconomic stability