Trade-Off Theory of Optimal Capital Structure and Adjustment towards Long Run Target: A Dynamic Panel Approach

   This paper examines the speed and costs of adjustment towards target capital structure choice of Nigerian firms based on the data of 115 Nigerian non-financial firms listed on the Nigerian stock exchange, for the period 1998-2012. The study employed two step system Generalized method of moment in a dynamic panel framework. The main finding of the study indicates that negative relationship exists between speed and costs of adjustment of firms in Nigeria. The study therefore concludes that firms in emerging market like Nigeria adjust relatively faster towards their target debt position.    &nbsp

Global Financial Recovery and the Stability of Africa Emerging Stock Markets

This study investigates the impact of the global financial recovery on the stability condition of Africa emerging stock markets by employing the normality statistics and trends analyses and the use of the panel quantile regression technique to achieve this objective under daily all-share-indices covering the series range of 04/06/2008-05/05/2011; spanning 3-year period of 729 data sets and betting on the hypothesis that the global financial recovery guarantees the stability condition of Africa emerging stock markets. Our findings suggest that this hypothesis should be rejected as it could be fathomed that most emerging Africa stock markets are unstable not due solely to the effect of global financial crisis but in addition to the presence of some institutional and structural rigidities inherent in the typical African economies. Therefore, it could be right to infer that the global financial recovery (which largely exhibits “U” shape behaviour from recession), and by extension, the normality of global stock, is only a necessary but not sufficient condition to satisfy the stability condition of emerging stock markets, at least, in the context of Africa economies. Key Words: Business fluctuations; Stock Market; Financial Crisis; Regression

Financial Development and Inclusive Growth in Nigeria: A Threshold Analysis

This study investigates the relationship between financial development and inclusive growth in Nigeria for the period 1980 – 2013. The technique of analysis is the quantile regression; which is to obtain a threshold for which the former impacts on the latter. Our result shows a threshold level of 90th percentile. Interestingly, we also found that the impact of financial development on inclusive growth depends on the measure of the former up to the threshold level and not beyond. Through a granger causality test, the direction of causality is through the inclusive growth rather than through financial development. While we found that either a low level or high level of openness on trade and capital investment that are desirable for inclusive growth in Nigeria, the results also reveal that government involvement in the workings of the Nigeria economy and financial openness are sensitive to the pattern of financial development. With financial deepening, both are negatively related to inclusive growth but positively related to inclusive growth when financial widening is considered. This suggests that regulating the activities of the private sector is not necessary when government engages them to facilitate financial development. However, the involvement of government in financial widening through the central bank produces a positive impact on growth.&nbsp

Financial Development And Inclusive Growth In Nigeria: A Threshold Analysis

This study investigates the relationship between financial development and inclusive growth in Nigeria for the period 1980 – 2013. The technique of analysis is the quantile regression; which is to obtain a threshold for which the former impacts on the latter. The result shows a threshold level of 90th percentile. Interestingly, the study also found that the impact of financial development on inclusive growth depends on the measure of the former up to the threshold level and not beyond. Through a granger causality test, the direction of causality is through the inclusive growth rather than through financial development; through the financial deepening measure. While the study found that either a low level or high level of openness on trade and capital investment are desirable for inclusive growth in Nigeria, the results also reveal that government involvement in the workings of the Nigeria economy and financial openness are sensitive to the pattern of financial development. With financial deepening, both are negatively related to inclusive growth but positively related to inclusive growth when financial widening is considered. This suggests that government intervention in the activities of the private sector is detrimental when the latter are to drive financial development process. However, the involvement of government in ensuring the appropriate level of financial widening, through the central bank operations, produces a positive impact on growth.   &nbsp

Impacto de la membresía cooperativa en la generación de ingresos rurales en el suroeste de Nigeria

This study examines the impact of cooperative membership on rural income generation. It also analyzes the factors influencing participation in cooperatives among rural households in Southwest, Nigeria. The study was designed to account for selection bias into cooperative organizations. Rural household survey data were used and the estimates were based on both the Probit model and non-parametric propensity score matching method. The findings show that income generated through cooperative membership is approximately 10% higher than those generated by noncooperative members. Empirical estimates of determinants of cooperative membership indicate that years of education, age and land size have significant influences on the decision to join cooperatives.Este estudio examina el impacto de la membresía cooperativa en la generación de ingresos rurales. También analiza los factores que influyen en la participación en cooperativas entre los hogares rurales en el suroeste de Nigeria. El estudio fue diseñado para tener en cuenta el sesgo de selección en las organizaciones cooperativas. Se utilizaron datos de encuestas de hogares rurales y las estimaciones se basaron tanto en el modelo Probit como en el método de emparejamiento de puntaje de propensión no paramétrico. Los hallazgos muestran que los ingresos generados a través de la membresía cooperativa son aproximadamente un 10% más altos que los generados por los miembros no cooperativos. Las estimaciones empíricas de los determinantes de la membresía cooperativa indican que los años de educación, la edad y el tamaño de la tierra tienen una influencia significativa en la decisión de unirse a las cooperativas.Escuela de Estudios CooperativosFac. de Ciencias Económicas y EmpresarialesTRUEpu

SME Credit Financing, Financial Development and Economic Growth in Nigeria

This paper examines the impact of small and medium-scale enterprises (SMEs) credit financing and financial market development and their shocks on the output growth of  Nigeria. The study estimated a VAR model for Nigeria using 1970-2013 annual data  series. Unit root tests and cointegration are carried out. The study explores IRFs and  FEVDs in a system that includes output, commercial bank loan to SMEs, domestic  credit to private sector by banks, money supply, lending rate and investment. Findings  suggest that shocks in commercial bank credit to SMEs has a major impact on the  output changes of Nigeria. Money supply shocks also have a sizeable impact on output  growth variations amidst other financial instruments. Lastly, neutrality of investment  does not hold in Nigeria as it also has impact on output fluctuations.Keywords: SMEs financing, financial development, investment, output, Nigeria.JEL Classification:

Foreign Direct Investment and Financial Development in Economic Community of West African States

This paper examines the link between foreign direct investment and financial development with a view to ascertaining whether FDI is a substitute or complement to financial development in a sample of fifteen countries in ECOWAS from 1980-2014.  The study employed the two step system Generalized method of moment. The result of the study is mixed. Specifically, the findings reveal that the development of the financial sector in the West African sub-region is actually not aiding FDI inflows as it is evident from our analysis that financial development is not positively significantly correlated with FDI inflows into the region. However, the analysis of the effect of foreign direct investment on financial development indicates that FDI influences the domestic financial sector development positively and significantly in most of the ECOWAS countries. This indicates that FDI have been complementing financial sector development. Generally, the study submits that foreign direct investment and financial development can act as both substitute and complement in the ECOWAS regio

Capital structure and firm performance in Nigeria

This paper examines the impact of capital structure on firm performance in Nigeria as well as test the possibility of non-monotonic relationship between capital structure and firm performance based on the prediction of the agency cost theory of capital structure when firm use debt financing excessively. The study used dynamic panel model on panel data of 115 listed non-financial firms in Nigeria. Specifically, the paper employed the two step generalized method of moments (GMM) estimation method that recognizes the persistence of the dependent variable by including its lag value as an explanatory variable in the regression model. The major findings indicate statistical significant relationship exist between capital structure and firm performance particularly when debt financing is moderately employed. However, the paper found evidence of non-monotonic relationship between capital structure and firm performance when firms in Nigeria employed excessive debt financing which impinged on the performance of firms. The findings support the portability of the agency cost theory in the Nigeria context but with caution considering the facts that firms in Nigeria were largely finance through short term debt as against long term debt financing that was assumed in the agency cost theoretical proposition

Effect of Financial Innovation on Economic Growth: Evidence from African Countries

Financial innovation is a product of technology and the question whether financial innovation spurs economic growth is subject to level of technology in the financial sector of an economy as well as other factors. On this note, this study examines the impact of process financial innovation on economic growth in some selected African countries. The study used annual panel data obtained from the World Bank Development Indicator comprising of seventeen cross section countries covering the period of fifteen years from 2004 to 2018. Generalized Method of Moment (GMM) was employed to analyze the panel data system. The result shows that financial innovation has significant impact on economic growth of selected countries. Automated Teller Machine (ATM) which is a major measure of our process financial innovation has significant impact on economic growth. Number of Bank branches on the other hand has positive but insignificant impact on the economic growth. Financial innovative products such a domestic bank credit also contributes significantly to the economic growth of African countries. It is therefore recommended that policy makers should encourage establishment of more ATM terminals, increase the number of bank branches and improve the credit to private sector of the economy