Informal Finance And Macroeconomic Shocks In The Nigerian Economy

As the informal sector grows and lacks access to formal finance, unlocking its financial potential is crucial. Thus, this study examines innovative solutions for this essential portion of the economy and the interaction between informal and formal markets during economic crises in Nigeria. This study addresses these research questions: How does Nigeria's formal and informal financial markets interact? How does Nigeria's informal financial market affect growth? How does the informal banking sector react to a Nigerian economic shock? This study utilises the open economy Dynamic Stochastic General Equilibrium (DSGE) model. DSGE model parameters were calibrated and computed using Bayesian methods as well as the Dynare 4.6.4 in Matlab R2021a. The impulse response function reveals that monetary shock increased GDP but decreased government expenditure. Examining Nigeria's fiscal, monetary, and production shocks, the study finds that monetary policy shocks increased output and decreased government expenditure, while fiscal policy shocks decreased output and interest rates. The shock indicates that reduction in government spending diminishes aggregate demand as well as the real GDP. Given the informal finance's response to monetary policy shocks, the central bank should, therefore, be more hawkish, especially in times of high inflation, to achieve macroeconomic goals. Thus, the study suggests that future research should examine how the Nigerian economy reacts to shocks like oil shocks

Innovations

Traditional monetary policy methods have been criticized for their efficacy in reducing inflationary pressures throughout the years. Inflation has recently become a hot topic, owing to the impact of government-led efforts to alleviate the influences of the COVID-19 epidemic as well as the supply train disruptions caused by the conflict in Russia and Ukraine. As a result, the purpose of this study is to find out how Nigeria's informal economy has changed over time and how this has affected inflation from 1980 to 2021. Estimation using OLS-based ARDL with EViews software. The estimated model was reviewed using some diagnostic tests (serial correlation test, normality test, and stability test). Only interest rate had a noteworthy positive influence on inflation in the long run in Nigeria. As opposed to that, exchange rate and the informal sector impacted Nigeria's inflation significantly. It is crucial that the apex bank adopts a more practical approach to root out inflation, such as bolstering the value of the Naira, minimizing supply bottlenecks, and striving for financial inclusion, in order to effectively deploy monetary policy tools in attaining a single figure inflation

Access to Electricity, Information and Communications Technology (ICT), and Financial Development: Evidence from West Africa

Poor Access to electricity may hinder West African countries from raising levels of financial development with the aid of Information communication Technology (ICT). Using 16 West African countries, and data over the period of 2000 to 2017, this present study analyses the effect of greater access to electricity on financial development through ICT. ICT was measured using mobile use and internet use, while financial development was measured using private bank credit to GDP ratio and Broad Money Supply to GDP ratio. Panel data fixed effect instrumental variables estimation was used for analysis and the study found that access to electricity significantly boosts mobile use and internet use, while resulting from access to electricity mobile use significantly boosted both measures of financial development but internet use significantly reduced the measures. Further categorizing sample countries into Anglophone and Francophone West Africa countries, access to electricity through ICT boosted both measures of financial development for Francophone countries, while only boosting broad money supply to GDP ratio for Anglophone countries. Thus greater access to electricity through for example provision of electricity infrastructure and regulation of electricity charges to households and firms is important to boost levels of financial development in West Afric

Effects of Technological Diffusion and Access to Electricity on Employment in Nigeria

Demographic transitions and technological advancements may lead to a net loss of 5 million jobs by 2020; hence, about 40% (1.4 billion) of the global workforce are vulnerable to unemployment. This is because a more significant percentage of tasks that are already being disrupted by automation are repetitive and standardized processes. At the same time, actions/jobs which require empathy, genuine creativity, and critical thinking will be in high demand in the new workforce, thereby achieving a human-machine collaboration. Thus, this study seeks to investigate the influence that technology has on employment in the Nigerian labor market and how Access to electricity and employment are connected using Nigeria as a case study. The unit root test was conducted via Phillip-Perron (PP) statistics and Augmented Dickey-Fuller (ADF) tests. The Auto-Regressive Distributed Lag (ARDL) model was also employed to evaluate the relationship between technology and employment in Nigeria using World Bank data (1960-2017). Results showed that technology and globalization have a long-run statistically significant inverse relationship with employment in Nigeria, which conforms to theory. Policy recommendations promote the acquisition of such skills encompassing critical thinking, empathy, and creativity to enable a better future for the Nigerian labor force

Misery and Economic Growth Nexus in Nigeria; Implications for Electrical Energy Management

At first glance, misery seems unquantifiable but has been established to be an aggregation of unemployment and inflation. Nigeria is in a pitiable condition as she is ranked the 6th most miserable country in the world. This study aims to ascertain the effect of economic growth on Misery in Nigeria, that is, to determine whether economic growth rate has strengthened or weakened the misery of Nigerians. This study adopts Autoregressive Distributed Lag (ARDL) model because it considers policy lags of economic phenomena and allows combined order of integrations. The study finds an inverse nexus between economic growth and misery. Hence, recommendations were made in form of measures to ensure the need for economic growth to increase at faster and higher pace to combat high misery levels in Nigeria