A Parametric Debate of Corruption and Economic Growth in Sub-Saharan African Countries

This paper investigates the determinants of corruption and its impact on economic growth in 39 sub-Saharan African countries. The significance of this study would be to add to extant literature on causes of corruption in sub-Saharan African countries and the results obtain could further raise cautions about casual attempts at institutional reform. In an attempt to empirically investigate on corruption, the corruption index was obtained from the Worldwide Governance Indicators (WGI) and data for the study span from 1996 to 2011. In a Barro-styled economic growth model, the dynamic panel regressions were conducted for both corruption determinants and growth-corruption models. Panel unit root test following lm, Pesaran and Shin W-Stats, Model reliability tests and cointegration test were also conducted. From the model to find the determinants of corruption, empirical result suggests that natural resource (ore, fuel, food and Agriculture), rule of law, secondary school enrollment and foreign direct investment are relevant in explaining spate of corruption. Corruption was important in explaining GDP per capita. Overall, our result suggests that natural resource wealth, irrespective of the types (whether ores, fuel, food and agriculture) tends to consolidate and conserve bad political regimes which undermines appropriate social-cultural changes that in turn breeds corruption via institutional weakness, and in the process distorts economic growth dynamics in countries studied. Keywords: Corruption, Economic Growth, Barro-Growth Model, Institutional Weakness, Dynamic Panel Regression, Point-Source and Diffused Natural Resource

Application of Taylor Principle to Lending Rate Pass-Through Debate in Nigeria: A Parametric Approach

The paper makes clear evidences on the lending rate pass-through from policy to retail interest rates and points out some recent findings on implications for both monetary policy and financial variable flows. Thus the stability properties associated with monetary policy rules have attracted a substantial amount of attention.  Several studies argued that the comparatively successful conduct of monetary policy since the early 1980s is primarily due to the implementation of an appropriate policy rule. The estimation procedures follow the modern econometric methodology, such as, a parametric test which consists of the weighted least square technique, Unit root test and co-integration technique, respectively. Empirical result recommends that the pass-through is incomplete for Nigeria within the period under review, which contradicts the Taylor principle.  As the pass-through is incomplete, policy rates have to respond by even more to compensate for the smoothing of retail rates. Besides, our findings show that an incomplete pass-through has implications for the stabilizing role of monetary policy and the oscillations arising from price and liquidity shocks. JEL Classification: E43, E51, E52, E58 Keywords: Taylor Principle, Lending Rate Pass-Through, Liquidity Shocks, Weighted Least Square

Microfinance Banks’ Credit and The Performance of Micro, Small, and Medium Scale Enterprises in Lagos State, Nigeria

Micro, Small, and Medium Enterprises (MSMEs) are economy-boosters in most countries across the globe. The availability of capital to MSMEs is crucial for growth and survival. This study investigates the relationship of Micro-Finance Banks’ (MFB) credit with the growth of MSMEs in Lagos state, Nigeria. Three hundred copies of structured questionnaires were administered to a purposively selected sample of MSMEs owners/managers that had accessed loans from MFBs in Lagos state. Two hundred and ninety copies of the research questionnaire were retrieved and analyzed with descriptive statistics and Pearson chi-square statistics. The results show that credit facilities from MFBs are not only positively related to the productivity of MSMEs but also significantly contribute to their expansion. Furthermore, the non-monetary services of MFBs are related to the growth of MSMEs. This study concludes that credit facilities from MFBs are positively related to the growth of MSMEs in Lagos State. The study recommends that funds should be made available to MSMEs at a business-friendly lending interest rate