This document examines the impact of the global financial crisis on Nigeria's crude oil revenue. It uses monthly data from 24 months before the crisis and 24 months during the crisis. The study found that the crisis significantly reduced Nigeria's oil revenue, though the impact has begun to lessen over time. The author recommends tighter financial regulation and economic diversification to mitigate future crises. Oil is Nigeria's main export and source of government revenue, so reductions in global oil demand and prices during the crisis negatively affected the country.
Roger federer (PDF ) current global financial crisis and its implication on ...Fatfat Shiying
This document discusses a research project on the implications of the global financial crisis in the United States for international financial institutions. The crisis originated from the subprime mortgage crisis in the US in 2007. It affected the activities of international financial institutions like the IMF and World Bank. The research aims to evaluate the performance of these institutions before and after the crisis, and identify factors that caused the crisis and its implications. It provides background on the crisis and reviews literature on its causes and effects.
The document is a financial analysis of Hindalco Industries for 2006-07 to 2007-08. It includes an acknowledgement, synopsis, and sections on the global and country environment/outlook. The synopsis indicates the analysis contains EIC analysis, Porter's Five Forces industry analysis, and financial statement analysis including various ratios and Du-Pont analysis to examine trends. The global environment section describes the large global financial crisis and economic downturn, while the country outlook section discusses how past crises have impacted India's exports and real economy.
The document discusses the global financial crisis, its impact on India, and the country's medium-term economic challenges. It outlines the causes of the crisis, differences between its effects in the US/Europe versus India, measures taken by the RBI in response, and lessons learned. Key medium-term issues for India include the need for fiscal prudence to reduce deficits and inflation, adapting monetary policy to a growing economy, managing large capital flows, and further developing financial markets while ensuring stability.
Global Financial Crisis and its impact on economic growthKruti Kamdar
What is Financial Crisis?
Definition: A situation in which the supply of money is outpaced by the demand for money.
This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse. A financial crisis is often associated with a panic or a run on the banks, in which investors sell off assets or withdraw money from savings accounts with the expectation that the value of those assets will drop if they remain at a financial institution...
SmithStreetSolutions has broken down the US and China stimulus packages into ten spending categories in order to compare and analyze their effects. Our research shows that both packages will help bring global recovery by promoting trade. Additionally, China has seized the opportunity to use its package to advance two key long-term development goals, upgrading manufacturing and opening up its rural and western markets, that are critical milestones in the transition from ‘Made in China’ to ‘Created in China’.
The Turkish Financial Crisis of 2000-01 -- Logan CooperLogan Cooper
The document provides an overview of the Turkish Financial Crisis of 2000-2001. It discusses how Turkey had high inflation and debt in the late 1990s. In 1999, Turkey implemented an IMF program with three pillars: fiscal adjustment, structural reforms, and a fixed exchange rate policy pegging the Turkish lira to a basket of currencies. However, the program failed to address fragilities in Turkey's banking system, which was highly exposed to government debt and relied on foreign borrowing. This set the stage for a banking crisis in 2000-2001 when the lira came under pressure.
The document defines a recession as two consecutive quarters of declining GDP according to the National Bureau of Economic Research. It then summarizes several historical US recessions from the 1930s to the Great Recession of 2007-2009, including their duration, GDP decline, unemployment rates, and primary causes such as financial crises, wars, and changes in government policy. Common effects of recessions are listed as bankruptcies, unemployment, and deflation. While India was less impacted than other countries, its growth declined and key sectors like IT, banking, and automobiles were affected.
Roger federer (PDF ) current global financial crisis and its implication on ...Fatfat Shiying
This document discusses a research project on the implications of the global financial crisis in the United States for international financial institutions. The crisis originated from the subprime mortgage crisis in the US in 2007. It affected the activities of international financial institutions like the IMF and World Bank. The research aims to evaluate the performance of these institutions before and after the crisis, and identify factors that caused the crisis and its implications. It provides background on the crisis and reviews literature on its causes and effects.
The document is a financial analysis of Hindalco Industries for 2006-07 to 2007-08. It includes an acknowledgement, synopsis, and sections on the global and country environment/outlook. The synopsis indicates the analysis contains EIC analysis, Porter's Five Forces industry analysis, and financial statement analysis including various ratios and Du-Pont analysis to examine trends. The global environment section describes the large global financial crisis and economic downturn, while the country outlook section discusses how past crises have impacted India's exports and real economy.
The document discusses the global financial crisis, its impact on India, and the country's medium-term economic challenges. It outlines the causes of the crisis, differences between its effects in the US/Europe versus India, measures taken by the RBI in response, and lessons learned. Key medium-term issues for India include the need for fiscal prudence to reduce deficits and inflation, adapting monetary policy to a growing economy, managing large capital flows, and further developing financial markets while ensuring stability.
Global Financial Crisis and its impact on economic growthKruti Kamdar
What is Financial Crisis?
Definition: A situation in which the supply of money is outpaced by the demand for money.
This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse. A financial crisis is often associated with a panic or a run on the banks, in which investors sell off assets or withdraw money from savings accounts with the expectation that the value of those assets will drop if they remain at a financial institution...
SmithStreetSolutions has broken down the US and China stimulus packages into ten spending categories in order to compare and analyze their effects. Our research shows that both packages will help bring global recovery by promoting trade. Additionally, China has seized the opportunity to use its package to advance two key long-term development goals, upgrading manufacturing and opening up its rural and western markets, that are critical milestones in the transition from ‘Made in China’ to ‘Created in China’.
The Turkish Financial Crisis of 2000-01 -- Logan CooperLogan Cooper
The document provides an overview of the Turkish Financial Crisis of 2000-2001. It discusses how Turkey had high inflation and debt in the late 1990s. In 1999, Turkey implemented an IMF program with three pillars: fiscal adjustment, structural reforms, and a fixed exchange rate policy pegging the Turkish lira to a basket of currencies. However, the program failed to address fragilities in Turkey's banking system, which was highly exposed to government debt and relied on foreign borrowing. This set the stage for a banking crisis in 2000-2001 when the lira came under pressure.
The document defines a recession as two consecutive quarters of declining GDP according to the National Bureau of Economic Research. It then summarizes several historical US recessions from the 1930s to the Great Recession of 2007-2009, including their duration, GDP decline, unemployment rates, and primary causes such as financial crises, wars, and changes in government policy. Common effects of recessions are listed as bankruptcies, unemployment, and deflation. While India was less impacted than other countries, its growth declined and key sectors like IT, banking, and automobiles were affected.
Financial deregulation bounding to credit mobilization in real sector...Donald ofoegbu
This document summarizes the decline of Nigeria's agricultural and manufacturing sectors following financial deregulation in the 1980s. It finds that deregulating the financial system had a negative long-term impact on credit allocation to the real sectors of agriculture and manufacturing. In both the short and long-run, there is evidence of credit crunch in these vital sectors as indicated by the inverse relationship between increasing deposit liabilities and credit flows to agriculture, manufacturing, and small and medium enterprises. The document examines trends in several key Nigerian agricultural crops and finds that deregulation contributed to Nigeria shifting focus to oil and importing processed goods rather than developing domestic food production and manufacturing.
The global financial crisis of 2008 is the most severe financial crisis that the world has ever faced since the Great Depression of 1930s.The ‘Financial Crisis of 2008’,also called the US Meltdown has its origin in the US housing sector back in 2001-02,but gradually extended over a period of time and eventually brought the entire world under its grip.And India also get affected by it.In this slides we discussed the major effects
arifanee.com is world's leading website on the hottest financial news, perspectives and behind the scenes stories. arifanees.com brings you insight and information to inspire and transform your paradigm by enriching your with the best of facts and the vision.
arifanees.com
Information-Inspiration-Transformation
The document summarizes the impact of the global economic crisis between 2007-2011 on Egypt's economy. It led to a decline in Egypt's GDP growth from 7.2% to around 4%. The real economy was more impacted than the banking sector. Unemployment increased from 8.4% to 8.8% and is expected to reach 10%. The crisis exacerbated unemployment and vulnerable employment, particularly impacting women. It also increased poverty levels.
Egypt has faced an economic crisis in recent years due to political unrest. This has depleted foreign currency reserves and increased the budget deficit. While GDP growth was recently 2.3%, key sectors like tourism and manufacturing have underperformed. Foreign reserves decreased to $17.76 billion in November 2013 due to declines in foreign investment and tourism. Domestic and external debt have also increased. The central bank has maintained interest rates to control inflation, but the pound's value has fallen, risking higher food prices and more unrest.
2003 jetro white paper on international trade and foreign direct investment b...Pim Piepers
This document is a 2003 white paper by the Japan External Trade Organization (JETRO) that analyzes global trade and foreign direct investment trends. Some key points:
1) Global trade showed mild recovery in 2002 but global FDI continued declining, falling to 40% of its 2000 peak.
2) China became Japan's top trading partner as China drove Japanese trade recovery. European FDI in Japan doubled from 2001 to 2002.
3) Growing East Asian consumer markets presented new potential opportunities for Japanese firms, but also increased competition in the region. Strategic action would be required.
Global economic crisis(2008), and i̇ts effect in Lithuania and Other Baltic c...Khaalid Barre
This article discusses the 2008 global economic crisis and its effects in Lithuania. It describes how Lithuania experienced rapid economic growth before the crisis, with GDP increasing 10.3% in some years. However, the country was unprepared for the crisis. When it hit in 2008, Lithuania's GDP declined sharply by about 15%. Like other Baltic states, Lithuania faced issues like production decreases, unemployment, inflation, and lower foreign investment. The government took some steps that lacked responsibility, like austerity measures that reduced incomes and consumer demand, weakening the domestic market further. Reviving Lithuania's economy required restoring population incomes and consumer demand.
The document discusses India's economic growth and whether it could experience a bubble and crisis similar to Japan in the 1980s-90s. It notes that India's stock market has grown strongly but questions if this is a bubble close to bursting. It analyzes India's stock market performance and P/E ratios, finding the market fell after two years when P/E ratios exceeded 20. This raises concerns current high P/E ratios could lead to a crash. It also notes India's industrial output has recently slumped, posing another threat to economic growth. The document questions if India is on the verge of an economic bubble bursting.
The Soundness of Financial Institutions In The Fragile Five CountriesCSCJournals
In recent years, economic globalization and technological development have contributed to a substantial rise in the integration of financial markets. Research findings in this area have indicated that a financial shock in one market can easily be transmitted to other markets globally. Especially, recent experiences showed that financial markets of some developing economies may even be more vulnerable to financial shocks than the emerging markets. There are several reasons, such as current account deficits, instability of local currencies, weaker financial institutions, for this situation. Contrary to the popular perception, this may be due to the lack of knowledge and prejudices of international investors about some emerging markets. This study evaluates and compares the financial soundness of 18 countries selected on the basis of the “Fragile Five” countries. The soundness of the financial structures of these countries has been evaluated based on the soundness of their financial institutions. The findings indicate that the countries with the weakest performance in the selected period are not the “Fragile Five” countries when compared with the countries in the whole sample.
The document discusses the need for a planned rollback of economic stimulus packages as economies show signs of recovery. It notes that while stimulus was needed to boost economies, prolonged reliance on stimulus can undermine sustainable growth and fiscal stability. A gradual, coordinated reduction in stimulus by governments and central banks is necessary to transition economies off artificial support. However, full recovery is not yet assured given remaining risks, so stimulus withdrawal needs careful management.
A recession is defined as a decline in a country's GDP for two or more successive quarters. It is caused by factors like fiscal and monetary policy changes, shocks from increasing oil prices or geopolitical events, and the 2008 housing and subprime mortgage bubbles. The effects of a recession include declining home values, higher unemployment, reduced business expansion and stock market performance. While recessions are a normal part of the economic cycle, the current risks of a global recession are estimated at 25% due to interconnected global markets and trade. Individuals can recession-proof themselves by reducing debt, saving an emergency fund, continuing education and staying positive.
2008 Q4: The Impact of the Global Financial and Economic Crisis on Botswana...econsultbw
The document summarizes the global economic crisis and its impact on Botswana. It discusses how the crisis originated as a financial crisis but developed into a major global economic downturn. It outlines how most major economies have entered recession, with the US economy contracting sharply in Q4 2008. The crisis has negatively impacted commodity prices and global trade, issues that directly affect Botswana given its reliance on diamond, copper, and tourism exports. The summary concludes that the downturn in the global diamond industry as a result of reduced credit and demand will significantly impact Botswana's economy in 2009 through lower government revenues and macroeconomic effects.
Does asian financial crisis serves as a precursor for global financial crisisAlexander Decker
This document discusses the Asian Financial Crisis of 1997-1998 and whether it served as a precursor to the global financial crisis of 2008. It provides background on the Asian Financial Crisis, including that it started with the depreciation of Thailand's currency and spread to other Asian countries. It also reviews literature on the causes of the Asian Financial Crisis, including financial liberalization, currency mismatches, and weak government regulation. The document examines debates around whether lessons were learned from the Asian Crisis and the role of the Washington Consensus policies in the crises.
2008 Q3: The Impact of the Global Financial and Economic Crisis on Botswanaeconsultbw
The global economic and financial crisis is adversely affecting Botswana in several ways:
1) Financial markets have been impacted by a reduction in credit availability, sharp falls in asset values, and a rise in risk aversion.
2) The real economy will likely experience slowing growth, rising unemployment, and declining incomes as global economic growth slows.
3) Botswana's financial markets have been somewhat insulated so far, with the stock exchange recovering even as global markets dropped sharply. However, the crisis may still negatively impact Botswana's real economy going forward.
Financial crisis and india ppt @ bec doms bagalkotBabasab Patil
The document discusses the global financial crisis, its impact on India, and lessons learned. It outlines how India was less affected than the US/Europe due to differences in its financial system and policy approach. The RBI implemented measures to ensure liquidity and credit flow. Key lessons include avoiding volatile monetary policy and managing capital flows. Medium-term challenges include reducing fiscal and current account deficits and adapting monetary policy to India's growing, open economy.
The document discusses the impact of the recent global financial crisis on financial institutions in developing countries. It provides context on the causes of the crisis originating from the US subprime mortgage market collapse. It then discusses how the crisis spread globally and impacted developing country financial institutions through contractions in credit lines and reduced financial flows from tightened foreign banks. The document also examines specific impacts in Pakistan, including tightened domestic money markets, a sharp decline in the Karachi stock exchange, and high inflation exacerbated by currency depreciation and central bank financing of fiscal deficits.
The document discusses the difference between recession and stagflation using global case studies. It provides definitions and examples of each. A recession is defined as two consecutive quarters of negative economic growth along with rising unemployment and falling inflation. Examples given include recessions in the US, Brazil, and Russia. Stagflation is defined as slowing economic growth combined with high unemployment and high inflation. Examples given include stagflation in OECD countries in the 1970s-1980s due to oil shocks. The document concludes that while Nigeria is experiencing negative growth and inflation, falling monthly inflation indicates the country is currently in a recession rather than stagflation.
The document provides an overview and analysis of the global economic outlook by the IMF staff. It finds that:
1) Global economic activity has fallen sharply, with advanced economies experiencing their worst declines since World War 2.
2) The IMF forecasts that the global economy will contract by 0.5-1% in 2009 on average before a gradual recovery in 2010.
3) Turning the global economy around depends critically on concerted policy actions to stabilize financial conditions and support demand through fiscal and monetary policies.
The global financial crisis negatively impacted Cambodia's economy through various channels. GDP growth slowed from an estimated 6% in 2008 to a projected 5.1% in 2009 due to declines in investment, exports, and tourism receipts. A multiplier model was used to estimate that the cumulative impact would increase expenditures by $486 million and output by $518 million, dampening but not eliminating economic growth. Other institutions projected 2009 GDP growth between 4.8-6%, with the exact impact depending on assumptions about how severely the crisis affected Cambodia. Overall, the crisis disrupted Cambodia's economy by slowing growth in key sectors.
This document discusses the causes and impacts of the 2007-2008 global financial crisis. It identifies several factors that contributed to the crisis, including low interest rates, excessive lending, deregulation, and the growth of risky financial instruments. The crisis began with the collapse of the US housing market and spread globally. While India's banking system was not directly impacted, the country still experienced effects such as declines in its stock and currency markets, slower industrial and export growth, job losses, and increased poverty. Agriculture, IT, and other sectors were also negatively impacted.
11.crude oil price, stock price and some selected macroeconomic indicatorsAlexander Decker
This document analyzes the impact of crude oil prices, stock prices, and macroeconomic indicators like interest rates and exchange rates on Nigeria's economic growth from 1980-2010. Using techniques like Johansen cointegration, unit root tests, and error correction modeling, the study finds that crude oil prices, stock prices, and exchange rates have a significant influence on economic growth in Nigeria. Specifically, GDP growth is positively associated with stock prices and exchange rates, but negatively associated with crude oil prices and interest rates. The study recommends that Nigeria diversify its economy away from oil reliance and ensure transparency in financial markets to boost growth.
The document summarizes the global economic crisis, providing details on what an economic crisis is, the history of past crises like the Great Depression, common causes of crises, and the overall effects on countries. Specific countries that were heavily impacted by the crisis are discussed, such as Argentina, Australia, Thailand, and conclusions call for reforms to the international financial system to prevent future crises.
Financial deregulation bounding to credit mobilization in real sector...Donald ofoegbu
This document summarizes the decline of Nigeria's agricultural and manufacturing sectors following financial deregulation in the 1980s. It finds that deregulating the financial system had a negative long-term impact on credit allocation to the real sectors of agriculture and manufacturing. In both the short and long-run, there is evidence of credit crunch in these vital sectors as indicated by the inverse relationship between increasing deposit liabilities and credit flows to agriculture, manufacturing, and small and medium enterprises. The document examines trends in several key Nigerian agricultural crops and finds that deregulation contributed to Nigeria shifting focus to oil and importing processed goods rather than developing domestic food production and manufacturing.
The global financial crisis of 2008 is the most severe financial crisis that the world has ever faced since the Great Depression of 1930s.The ‘Financial Crisis of 2008’,also called the US Meltdown has its origin in the US housing sector back in 2001-02,but gradually extended over a period of time and eventually brought the entire world under its grip.And India also get affected by it.In this slides we discussed the major effects
arifanee.com is world's leading website on the hottest financial news, perspectives and behind the scenes stories. arifanees.com brings you insight and information to inspire and transform your paradigm by enriching your with the best of facts and the vision.
arifanees.com
Information-Inspiration-Transformation
The document summarizes the impact of the global economic crisis between 2007-2011 on Egypt's economy. It led to a decline in Egypt's GDP growth from 7.2% to around 4%. The real economy was more impacted than the banking sector. Unemployment increased from 8.4% to 8.8% and is expected to reach 10%. The crisis exacerbated unemployment and vulnerable employment, particularly impacting women. It also increased poverty levels.
Egypt has faced an economic crisis in recent years due to political unrest. This has depleted foreign currency reserves and increased the budget deficit. While GDP growth was recently 2.3%, key sectors like tourism and manufacturing have underperformed. Foreign reserves decreased to $17.76 billion in November 2013 due to declines in foreign investment and tourism. Domestic and external debt have also increased. The central bank has maintained interest rates to control inflation, but the pound's value has fallen, risking higher food prices and more unrest.
2003 jetro white paper on international trade and foreign direct investment b...Pim Piepers
This document is a 2003 white paper by the Japan External Trade Organization (JETRO) that analyzes global trade and foreign direct investment trends. Some key points:
1) Global trade showed mild recovery in 2002 but global FDI continued declining, falling to 40% of its 2000 peak.
2) China became Japan's top trading partner as China drove Japanese trade recovery. European FDI in Japan doubled from 2001 to 2002.
3) Growing East Asian consumer markets presented new potential opportunities for Japanese firms, but also increased competition in the region. Strategic action would be required.
Global economic crisis(2008), and i̇ts effect in Lithuania and Other Baltic c...Khaalid Barre
This article discusses the 2008 global economic crisis and its effects in Lithuania. It describes how Lithuania experienced rapid economic growth before the crisis, with GDP increasing 10.3% in some years. However, the country was unprepared for the crisis. When it hit in 2008, Lithuania's GDP declined sharply by about 15%. Like other Baltic states, Lithuania faced issues like production decreases, unemployment, inflation, and lower foreign investment. The government took some steps that lacked responsibility, like austerity measures that reduced incomes and consumer demand, weakening the domestic market further. Reviving Lithuania's economy required restoring population incomes and consumer demand.
The document discusses India's economic growth and whether it could experience a bubble and crisis similar to Japan in the 1980s-90s. It notes that India's stock market has grown strongly but questions if this is a bubble close to bursting. It analyzes India's stock market performance and P/E ratios, finding the market fell after two years when P/E ratios exceeded 20. This raises concerns current high P/E ratios could lead to a crash. It also notes India's industrial output has recently slumped, posing another threat to economic growth. The document questions if India is on the verge of an economic bubble bursting.
The Soundness of Financial Institutions In The Fragile Five CountriesCSCJournals
In recent years, economic globalization and technological development have contributed to a substantial rise in the integration of financial markets. Research findings in this area have indicated that a financial shock in one market can easily be transmitted to other markets globally. Especially, recent experiences showed that financial markets of some developing economies may even be more vulnerable to financial shocks than the emerging markets. There are several reasons, such as current account deficits, instability of local currencies, weaker financial institutions, for this situation. Contrary to the popular perception, this may be due to the lack of knowledge and prejudices of international investors about some emerging markets. This study evaluates and compares the financial soundness of 18 countries selected on the basis of the “Fragile Five” countries. The soundness of the financial structures of these countries has been evaluated based on the soundness of their financial institutions. The findings indicate that the countries with the weakest performance in the selected period are not the “Fragile Five” countries when compared with the countries in the whole sample.
The document discusses the need for a planned rollback of economic stimulus packages as economies show signs of recovery. It notes that while stimulus was needed to boost economies, prolonged reliance on stimulus can undermine sustainable growth and fiscal stability. A gradual, coordinated reduction in stimulus by governments and central banks is necessary to transition economies off artificial support. However, full recovery is not yet assured given remaining risks, so stimulus withdrawal needs careful management.
A recession is defined as a decline in a country's GDP for two or more successive quarters. It is caused by factors like fiscal and monetary policy changes, shocks from increasing oil prices or geopolitical events, and the 2008 housing and subprime mortgage bubbles. The effects of a recession include declining home values, higher unemployment, reduced business expansion and stock market performance. While recessions are a normal part of the economic cycle, the current risks of a global recession are estimated at 25% due to interconnected global markets and trade. Individuals can recession-proof themselves by reducing debt, saving an emergency fund, continuing education and staying positive.
2008 Q4: The Impact of the Global Financial and Economic Crisis on Botswana...econsultbw
The document summarizes the global economic crisis and its impact on Botswana. It discusses how the crisis originated as a financial crisis but developed into a major global economic downturn. It outlines how most major economies have entered recession, with the US economy contracting sharply in Q4 2008. The crisis has negatively impacted commodity prices and global trade, issues that directly affect Botswana given its reliance on diamond, copper, and tourism exports. The summary concludes that the downturn in the global diamond industry as a result of reduced credit and demand will significantly impact Botswana's economy in 2009 through lower government revenues and macroeconomic effects.
Does asian financial crisis serves as a precursor for global financial crisisAlexander Decker
This document discusses the Asian Financial Crisis of 1997-1998 and whether it served as a precursor to the global financial crisis of 2008. It provides background on the Asian Financial Crisis, including that it started with the depreciation of Thailand's currency and spread to other Asian countries. It also reviews literature on the causes of the Asian Financial Crisis, including financial liberalization, currency mismatches, and weak government regulation. The document examines debates around whether lessons were learned from the Asian Crisis and the role of the Washington Consensus policies in the crises.
2008 Q3: The Impact of the Global Financial and Economic Crisis on Botswanaeconsultbw
The global economic and financial crisis is adversely affecting Botswana in several ways:
1) Financial markets have been impacted by a reduction in credit availability, sharp falls in asset values, and a rise in risk aversion.
2) The real economy will likely experience slowing growth, rising unemployment, and declining incomes as global economic growth slows.
3) Botswana's financial markets have been somewhat insulated so far, with the stock exchange recovering even as global markets dropped sharply. However, the crisis may still negatively impact Botswana's real economy going forward.
Financial crisis and india ppt @ bec doms bagalkotBabasab Patil
The document discusses the global financial crisis, its impact on India, and lessons learned. It outlines how India was less affected than the US/Europe due to differences in its financial system and policy approach. The RBI implemented measures to ensure liquidity and credit flow. Key lessons include avoiding volatile monetary policy and managing capital flows. Medium-term challenges include reducing fiscal and current account deficits and adapting monetary policy to India's growing, open economy.
The document discusses the impact of the recent global financial crisis on financial institutions in developing countries. It provides context on the causes of the crisis originating from the US subprime mortgage market collapse. It then discusses how the crisis spread globally and impacted developing country financial institutions through contractions in credit lines and reduced financial flows from tightened foreign banks. The document also examines specific impacts in Pakistan, including tightened domestic money markets, a sharp decline in the Karachi stock exchange, and high inflation exacerbated by currency depreciation and central bank financing of fiscal deficits.
The document discusses the difference between recession and stagflation using global case studies. It provides definitions and examples of each. A recession is defined as two consecutive quarters of negative economic growth along with rising unemployment and falling inflation. Examples given include recessions in the US, Brazil, and Russia. Stagflation is defined as slowing economic growth combined with high unemployment and high inflation. Examples given include stagflation in OECD countries in the 1970s-1980s due to oil shocks. The document concludes that while Nigeria is experiencing negative growth and inflation, falling monthly inflation indicates the country is currently in a recession rather than stagflation.
The document provides an overview and analysis of the global economic outlook by the IMF staff. It finds that:
1) Global economic activity has fallen sharply, with advanced economies experiencing their worst declines since World War 2.
2) The IMF forecasts that the global economy will contract by 0.5-1% in 2009 on average before a gradual recovery in 2010.
3) Turning the global economy around depends critically on concerted policy actions to stabilize financial conditions and support demand through fiscal and monetary policies.
The global financial crisis negatively impacted Cambodia's economy through various channels. GDP growth slowed from an estimated 6% in 2008 to a projected 5.1% in 2009 due to declines in investment, exports, and tourism receipts. A multiplier model was used to estimate that the cumulative impact would increase expenditures by $486 million and output by $518 million, dampening but not eliminating economic growth. Other institutions projected 2009 GDP growth between 4.8-6%, with the exact impact depending on assumptions about how severely the crisis affected Cambodia. Overall, the crisis disrupted Cambodia's economy by slowing growth in key sectors.
This document discusses the causes and impacts of the 2007-2008 global financial crisis. It identifies several factors that contributed to the crisis, including low interest rates, excessive lending, deregulation, and the growth of risky financial instruments. The crisis began with the collapse of the US housing market and spread globally. While India's banking system was not directly impacted, the country still experienced effects such as declines in its stock and currency markets, slower industrial and export growth, job losses, and increased poverty. Agriculture, IT, and other sectors were also negatively impacted.
11.crude oil price, stock price and some selected macroeconomic indicatorsAlexander Decker
This document analyzes the impact of crude oil prices, stock prices, and macroeconomic indicators like interest rates and exchange rates on Nigeria's economic growth from 1980-2010. Using techniques like Johansen cointegration, unit root tests, and error correction modeling, the study finds that crude oil prices, stock prices, and exchange rates have a significant influence on economic growth in Nigeria. Specifically, GDP growth is positively associated with stock prices and exchange rates, but negatively associated with crude oil prices and interest rates. The study recommends that Nigeria diversify its economy away from oil reliance and ensure transparency in financial markets to boost growth.
The document summarizes the global economic crisis, providing details on what an economic crisis is, the history of past crises like the Great Depression, common causes of crises, and the overall effects on countries. Specific countries that were heavily impacted by the crisis are discussed, such as Argentina, Australia, Thailand, and conclusions call for reforms to the international financial system to prevent future crises.
Crude oil price, stock price and some selected macroeconomic indicatorsAlexander Decker
This document analyzes the impact of crude oil prices, stock prices, and macroeconomic indicators like interest rates and exchange rates on Nigeria's economic growth from 1980-2010. Using techniques like Johansen cointegration, unit root tests, and error correction modeling, the study finds that crude oil prices, stock prices, and exchange rates have a significant influence on economic growth in Nigeria. Specifically, GDP growth is positively associated with stock prices and exchange rates, but negatively associated with crude oil prices and interest rates. The study recommends that Nigeria diversify its economy away from oil reliance and ensure transparency in financial markets to boost growth.
Stock market performance of some selected nigerian commercial banks amidst ec...Alexander Decker
This document summarizes a research study that assessed the stock market performance of selected Nigerian commercial banks from 2007 to 2010, a period of economic turbulence in Nigeria coinciding with the global financial crisis. The study examined stock price trends of 8 banks and whether performance differed between banks. It found that stock prices declined significantly from May 2008 for all banks. Banks facing financial troubles showed greater weakness in stock prices than healthy banks. The turbulence likely caused investors to lose confidence and reduce shareholdings. The study concluded that governments should act proactively to address threats to investment during periods of economic instability.
The document provides an overview of the global financial crisis of 2008. It discusses several key points:
- The US housing market boom from 2002-2006 led to a housing price bubble that eventually burst, contributing to the crisis. As housing prices declined sharply from their 2006 peak, foreclosures and defaults increased substantially.
- Loose monetary policy by the US Federal Reserve from 2002-2004, keeping interest rates low, fueled risky lending and the housing bubble. When rates rose in 2005-2006, the default rate on adjustable mortgages skyrocketed.
- Highly leveraged investment banks collapsed in 2008 as default rates rose due to declining lending standards. Stock prices around the world plummeted nearly 40
Financial liberalization and economic growth implications for the conduct of...Alexander Decker
This document summarizes a study that examined the impact of financial liberalization on economic growth in Nigeria. It provides background on theories around how financial liberalization can impact capital accumulation, productivity, and economic growth. The study used cointegration methods to analyze the relationship between financial liberalization and growth in Nigeria. The results showed that financial liberalization had some impact on growth, but not a remarkable impact, possibly due to an underdeveloped financial market and inadequate oversight. The study recommends better monitoring of commercial banks to boost Nigeria's real economic sector.
The document discusses the possibility of a global recession in 2009-2010. It defines a recession as two consecutive quarters of negative economic growth. While some countries like India are experiencing a slowdown, factors like falling stock markets, rising unemployment, and cuts to jobs and salaries indicate many economies have entered a recession. The IMF predicts global growth will slow to just over 2% in 2009, meeting the definition of a global recession. Macroeconomic models are used to understand how recessions occur on a national or regional scale.
The major reasons for the recession that hit worldwide especially the US and Eurozone.
The subprime Crises, US housing Crisis with Facts and Figures and The Fix.
11.exchange rate and macroeconomic aggregates in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of exchange rates on macroeconomic aggregates in Nigeria from 1970 to 2009. It uses simultaneous equation models and vector-autoregressive models to examine the relationship between real exchange rates and GDP growth. The results show no strong direct relationship between exchange rate changes and GDP growth. Rather, Nigeria's economic growth has been directly affected by fiscal and monetary policies and exports. Exchange rate overvaluation has been unfavorable for growth. The conclusion is that exchange rate management improvements are necessary but not sufficient to revive the Nigerian economy and broader economic reforms are required.
Exchange rate and macroeconomic aggregates in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of exchange rates on macroeconomic aggregates in Nigeria from 1970 to 2009. Using simultaneous equation models and vector-autoregressive models, the study finds no strong direct relationship between exchange rate changes and GDP growth in Nigeria. Rather, economic growth has been directly affected by fiscal and monetary policies and exports, which have sustained an overvalued exchange rate that has been unfavorable for growth. The conclusion is that improving exchange rate management is necessary but not sufficient to revive the Nigerian economy, and a broader program of economic reforms is required, including complementary restrictive monetary policy.
The nexus between budget deficit and inflation in the nigerianAlexander Decker
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11.0001www.iiste.org call for paper.yamden pandok bitrus 1--1-17
1. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.2, No.5, 2011
Global Financial Crisis and Oil Revenue in Nigeria
YAMDEN, PANDOK BITRUS
Department of Economics,
University of Jos, P.M.B. 2084,
Jos Nigeria
Tel: +2348032104525 E-mail: pandoky@yahoo.com
Abstract
This study examines the recent global financial crisis and its impact on the Nigerian crude oil revenue. The
study used monthly data on crude oil revenue spanning 24 months before the crisis and the first 24 months
during the crisis. The study employed the use of small sampling theory for analysis and the result showed
that global financial crisis significantly affected oil revenue in Nigeria-even though the magnitude of the
impact is beginning to ease from earlier reports. Tighter controls and regulation of the financial system
together with economic diversification are recommended to mitigate against future occurrence.
Keywords: Financial Crisis, Oil Revenue, Small Sampling Theory
1. Introduction
Global financial crisis began in the United States and the United Kingdom when the global credit market
came to a standstill in July 2007 (Avgouleas, 2008). The crisis really started to show its effects in countries
like Nigeria in the middle of 2008 as it began to spread rapidly around the world, leading to a global
downturn of economic activity . Around the world stock markets have fallen, large financial institutions
have collapsed or been bought out, and governments in even the wealthiest nations have had to come up
with rescue packages to bailout their financial systems (Gbolahan 2010).
This crisis has since become a major concern for political leaders, economists, and managers of financial
institutions around the globe as it spread beyond the borders of the United States. Analysts have noted its
numerous causes, including excessive corrupt practices, particularly the ‘Sub-prime mortgage lending that
led to high mortgage default and delinquency rates in the United States, the “hands-off approach to
regulation” (or greed and unregulated capitalism), massive funding of the “war on terrorism,” and
erroneous belief that “free market” principle is perfect, fair and efficient (The New York Times, Nov 20,
2008) as cited in Gbolahan, (2010). Others have observed that the ‘financial instability’ is caused largely by
inconsistent monetary and fiscal policy, politicians spending and borrowing excessively, inconsistent and
unsustainable macro-economic policy, weak financial systems and institutions, and poor structure of
international financial markets (Eichengreen, 2004) as cited in Gbolahan (2010). Yet it is possible that the
crisis was caused by nature or regular economic boom-bust cycle.
The crisis has exposed weaknesses in the functioning of the global economy and led to calls for the reform
of the international financial architecture (UNECA, 2009). Although the crisis was triggered by events in
the US housing market, it spread to all regions of the world with dire consequences for global trade,
investment and growth. It represents a serious setback for Africa because it is taking place at a time when
the region is making progress in economic performance and management. Since 2000 the African region
has had an average growth rate of real output above 5 percent and inflation has declined to single digit.
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2. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.2, No.5, 2011
There have also been significant improvements in governance and a reduction in armed conflicts which
have made the region more conducive to the attraction of private capital flows.
The global financial crisis has affected Nigeria through the reduction in volume and price of oil, low
commodity prices, cut in tourism, cut in foreign credit lines and low remittances, reduction in foreign
portfolio investment, soaring risk aversion, tumbling equity market and falling exchange rates.
Oil is a major source of energy in Nigeria and the world in general. Petroleum production and export are
the mainstay of the Nigerian economy providing a greater percentage of the country`s revenue earnings
(Ogbonna, 2004). The economy’s dependence on the oil sector is very significant; 99 per cent of foreign
exchange and 85 per cent of local revenues are directly derived from activities related to export of a single
commodity - oil, which is at the center of the current financial crisis (Adamu, 2009). Oil, being the
mainstay of the Nigerian economy plays a vital role in shaping the economic and political destiny of the
country. Although Nigeria’s oil industry was founded at the beginning of the century, it was not until the
end of the 1970s that the oil industry began to play a prominent role in the economic life of the country
such that Nigeria is now categorized as a country that is primarily rural, which depends on primary product
exports especially oil products (Odularo, 2007).
The reduction in the demand for, and price of, oil in particular is providing a platform for reduced
macro-economic performance through its usual channel of government revenue and foreign exchange
earnings, and this portends serious implication for the growth and development of the economy. The global
financial crisis which has led to the decline in the international oil price that peaked at $147 per barrel in
July 2008 and declined to $47 per barrel portends a great danger for the economy of Nigeria because it has
led to a significant reduction in the oil revenue of the Nigerian government which is bound to have a
negative implication for the economy (Gbolahan 2010).
The crisis is beginning to ease around the globe with oil prices picking up as time went by. Gbolahan
(2010) reported significantly lower oil revenue in the crisis period compared to the period before the crisis,
it is pertinent to note that several developments have taken place in the period succeeding his findings.
Financial markets picking up and oil price increase have steadied for some time now.
This study therefore, seeks to examine whether the situation has change or is still the same –using an
expanded data to include more recent developments. The rest of the study is organized thus; Section two is
a review of related literature. Section three is methodology while section four offers data analysis. Section
five is summary and conclusion.
2. Review of Related Literature
According to Wikipedia (2009), a financial crisis occurs when there is a disorderly contraction in money
supply and wealth in an economy. It is also known as credit crunch, it occurs when participants in an
economy lose confidence in having loans as well as recall existing loan. The financial banking system relies
on credit creation as a result of debtors spending, this money is in turn “banked” and loaned to other
debtors, as a result, a relative small contraction in lending can lead to a dramatic contraction in money
supply.This study concurs with Wikipedia since the situation has discourage credit creation due to financial
institutions reluctance to offer credit and the public sceptical about bank loans.
Eichengreen and Porters (1987) defined financial crisis “as a sharp change in asset prices that leads to
distress among financial markets participant”. But as Eichengreen (2004) has observed, it is not very “clear
where to draw the line between sharp and moderate price changes or how to distinguish severe financial
distress from financial pressure”.The changes in asset prices was not just evident but significant. The stock
market indicators in Nigeria crashed and so also the crude oil price around the world.
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3. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.2, No.5, 2011
Several factors have been advanced as causes of financial crisis. These factors include:
Regulatory failures:
Some financial crises have been blamed on insufficient regulation, and have led to changes in regulation in
order to avoid a repeat. According to (Strauss-kahn, 2008), the present financial crisis is as a result of
'regulatory failure to guard against excessive risk-taking in the financial system, especially in the US.
Likewise, the New York Times (2008) singled out the deregulation of credit default swaps as a cause of the
crisis .This study concur with the view that loose regulation is a major cause of the financial crisis hence
tightenening of regulation is required to prevent any future occurrence
Contagion:
This refers to the idea that financial crises may spread from one institution to another, as when a bank run
spreads from a few banks to many others, or from one country to another, as when currency crises,
sovereign defaults, or stock market crashes spread across countries. When the failure of one particular
financial institution threatens the stability of many other institutions, this is called systemic risk (Kaufman
et al, 2003).the contagion effect is not just evident in one industry but also spread to others. For example,
many bank invested heavily in stock market speculation leading to excessive losses for the banks when the
bubble burst.
Recessionary effects:
Some financial crises have little effect outside of the financial sector, like the Wall Street crash of 1987, but
other crises are believed to have played a role in decreasing growth in the rest of the economy. There are
many theories why a financial crisis could have a recessionary effect on the rest of the economy. These
theoretical ideas include the 'financial accelerator', 'flight to quality' and 'flight to liquidity', and the
Kiyotaki-Moore model. Some 'third generation' models of currency crises explore how currency crises and
banking crises together can cause recessions (Burnside et al, 2008). The recent financial crisis affected
growth of several economies around the globe with the emerging economies recently identified as growth
prospect for the global economy in the short term.
According to Stiglitz (2008), “A unique combination of ideology, special-interest pressure, populist politics,
bad economics, and sheer incompetence has brought us to our present condition. Ideology proclaimed that
markets were always good and government always bad. The fact is that key problems facing our society
cannot be addressed without an effective government”. He said this mess (market failures) was just the tip
of the iceberg and that beneath the surface lies a myriad of smaller micro problems.
The reasons for the global financial crisis are varied and complex, but largely it can be attributed to a
number of factors in both the housing and credit markets, which developed over an extended period of time.
Some of these include: the inability of homeowner to make their mortgage payments, poor judgment by the
borrower and or lender, speculation and overbuilding during the boom period, risky mortgage products,
high personal and corporate debt levels, financial innovation that distributed and concealed default risks,
central bank policies, and regulation (Stiglitz, 2008).
The history of crude oil development or oil prospecting in Nigeria began as far back as 1908, when a
German company, the Nigerian Bitumen Corporation started its exploration. Their pioneering efforts
however, ended with the outbreak of the First World War in 1914.In 1937 oil prospecting resumed again in
Nigeria. Shell D`Arcy, the forerunner of the present Shell Petroleum Development Company of Nigeria
obtained the sole concession to explore and prospect oil in Nigeria. Their activities were again terminated
by the outburst of the Second World War in 1947. The company resumed its operations with a renewed
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4. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.2, No.5, 2011
vigour and the first well was drilled in iho near Owerri in 1957. This was followed in 1958 by another well
drilled in Akata in Akwa Ibom State. It should be noted that these two wells yielded no oil (Ogbonna,
2004).
Oil was eventually discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of
exploration. Following the discovery of crude oil by Shell D’Arcy Petroleum, at the time the sole
concessionaire, pioneer production began in 1958 from the company’s oil field in Oloibiri in the Eastern
Niger Delta. Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream
producing 5,100 bpd. After 1960, exploration rights in onshore and offshore areas adjoining the Niger Delta
were extended to other foreign companies such as Mobil, Agip, Safrap, Gulf, Chevron, Amoseas (Texaco)
etc. In 1965 the EA field was discovered by Shell in shallow water southeast of Warri. Oil production by
the joint venture (JV) companies accounts for about 95 per cent of Nigeria’s crude oil production. Shell,
which operates the largest joint venture in Nigeria, with 55 per cent Government interest (through the
Nigerian National Petroleum Corporation, NNPC), produces about 50 per cent of Nigeria’s crude oil.
Exxon Mobil, Chevron, Texaco, ENI/Agip and TotalfinaElf operate the other JV’s, in which the NNPC has
60 per cent stake. By the late sixties and early seventies, Nigeria had attained a production level of over 2
million barrels of crude oil a day.
In 1970, there was a rise in the world oil price, and Nigeria was able to reap instant riches from its oil
production. Nigeria joined the Organization of Petroleum Exporting Countries (OPEC) in 1971 and
established the Nigerian National Petroleum Company (NNPC) in 1977; a state owned and controlled
company which is a major player in both the upstream and downstream sectors (Madujibeya, 1976).
Petroleum production and export play a dominant role in Nigeria's economy and account for about 90 per
cent of her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the
economy, from the early fifties and sixties, to the background.
Government policies and the increasing market forces of demand and supply has significantly affected the
production of crude oil in Nigeria. The era when total production infrastructure was owned by the oil
companies (as the government provided only regulatory framework) witnessed speedy increases in the
output or productivity of crude oil. For instance the output increased from 1.9 million barrels in 1958 to
152.4 million barrels in 1966. Until 1965 when the first refinery was built in Port Harcourt, Nigeria used to
export almost all her crude oil as the record rose from 1.8 million barrels in 1958 to 139.5 million barrels in
1966. History was made in the Nigerian production and exportation of crude oil between 1970 and 1986 as
output of crude oil rose from 395.7 million barrels in 1970 to 660.1 million barrels in 1975 (Ogbonna,
2004).
At present, Nigeria has four refineries with a combined installed refining capacity of 445,000 barrels per
day[bpd]. These four refineries are:
1. The first Port Hacourt refinery, commissioned in 1965 with an installed capacity of 35,000 bpd and later
expanded to 60,000 bpd.
2. The Warri refinery, commisioned in 1978 with an installed refining capacity 100,000 bpd and upgraded to
125,000 bpd in 1986.
3. The Kaduna refinery, commissioned in 1980 with an installed refining capacity of 100,000 bpd and
upgraded to 110,000 bpd in 1986.
4. The second Port Hacourt refinery which was commissioned in 1989 with 150,000 bpd processing capacity
and designed to fulfil the dual role of supplying the domestic market and exporting its surplus.
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5. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.2, No.5, 2011
The combined capacities of these refineries exceed the domestic consumption of refined products, chief of
which is premium motor spirit (petrol), whose demand is estimated at 33 million litres daily. However, the
refineries are operating far below their installed capacities as they were more or less abadoned during the
military era, skipping the routine and mandatory turn around maintenance that made products importation
inevitable. The monetization of oil revenue has been a major factor in liquidity and fiscal management in
Nigeria.
2.1 Contribution of the Nigerian Oil Sector to the Economy
Over the past years the oil industry has made a number of contributions to the Nigerian economy. These
contributions include the contributions to government revenues, foreign exchange reserves; creation of
employment opportunities; gross domestic product, local expenditure on goods and services; and the supply
of energy to industry and commerce.
The payment of substantial revenues to the government is undoubtedly one of the most important
contributions of the oil industry to the Nigerian economy. It has dominated government finances,
particularly since 1971 when it constituted about half of total federally collected revenue (Ogbonna, 2004).
According to Gbolahan (2010), the significant increase in government receipts in recent years is a reflection
of three factors: increased crude oil production in Nigeria; the huge increase in crude oil prices and the
more favorable fiscal arrangements obtained by the government as a result of its improved bargaining
position over the years. There was a phenomenal rise in the sector`s contribution to government revenue in
the period 1971-1980 as its dominant role became apparent. It has since remained the backbone and
propelling engine of the Nigerian economy such that both the first and second National Development plans
were anchored on the revenue projections from the oil sector.
As noted above, a large part of the increase in oil revenues was accounted for by the huge increase in crude
oil prices. How far oil prices will continue to be high in the future will depend on the balance between the
demand for and the supply of energy-in particular, on the level of economy in energy consumption, and the
speed of development of substitute fuels in consuming nations (Odularo, 2008).
2.2 The Impact of Financial Crisis on Crude Oil Revenue
Oil revenue is derived from three basic areas: export volume, price per barrel, petroleum profit tax (PPT)
and royalties. Nigeria has no control over the first two factors; the Organization of Petroleum Exporting
Countries (OPEC) and the intake capacity of the international market can dictate the volume of oil
produced. Similarly, the price of crude oil is dictated largely by market forces, hence Nigeria has no control
over the activities of speculators on the oil market during a bullish period. Therefore, the federal
government should not rely on oil market speculators to determine the directions of its revenue (Gbolahan,
2010).
Nigeria’s revenue volatility is directly correlated to its dependence on oil proceeds for the bulk of its fiscal
revenues, with over 80 per cent of all federally collected revenues related to oil. The oil revenue accruable
to all tiers of government has declined considerably as compared to its rise over the last few years,
particularly the immediate period before the crisis` impact hit the oil sector. According to Balouga (2009),
oil revenue was N30.894 billion in May 1999, N196.383 billion in May 2004, N746.745 billion in May
2008, and N435.40 billion in January 2009, as compared to the lowly amount of N285.58 billion distributed
in February 2009.
The crash in oil prices at the international market has manifested in the depletion of Nigeria's revenue as the
nation recorded a drop of N177.52 billion in accruals to the Federation Account in November 2009.
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According to a communiqué by the Technical sub-committee of the Federation Account Allocation
Committee (FAAC), the revenue that accrued to the Federation Account from oil slumped from N530.86
billion in October 2008 to N353.34 billion in November 2008 (Somali-press, 2008).
According to the Accountant-General of the Federation, the deficit of N35.54 billion in the revenue
allocation to the three tiers of government, when compared with revenue shared in January 2009 can be
attributed to the decline in crude oil prices in the international market and the reduction in production quota
of Nigeria by the Organization of Petroleum Exporting Countries (OPEC) which necessitated Nigeria's
production quota to be cut back to 1,673,000 barrels per day (bpd) in January 2009 from 2,050,000 bpd in
December 2008. All this is as a result of the global financial and economic environments which have
changed drastically due to the global financial crisis (Nduwugwe, 2009).
Records have indeed indicated that the country recorded a shortfall in oil revenue from an average of $2.2
billion monthly recorded in 2008 to about $1 billion in January 2009, representing a 50 percent reduction.
This drastic drop is also attributable to the fall in the price of crude in the international market occasioned
by the global economic crisis (Babalola, 2009). This have further implication on growth and development
in the economy because less funds means less government spending and further lead to low standard of
living, due to the importance of government spending in the economy coupled with the fact that
government is the largest employer of labour in the country.
3. Methodology
This study adopts the methodology used by Gbolahan (2010).The methodology used is the small sampling
theory (sampling distribution of statistics) otherwise called exact sampling theory. Small sampling theory is
used in this research study because the number of observation is less than 30, that is, (N > 30). The
specification is as follows:
X1 - X2
σX1 - X2 = σ2X1 + σ2X2
σ2 =
t* = where σ =
X2 = =
V = N-1
Definition of Sampling Equations;
X₁ : mean of sampling distribution of sample statistic I (X₁ )
X2: mean of sampling distribution of sample statistic II (X 2)
X1 - X2: sampling distribution of differences of means (sample I and II)
X1 - X2: difference between revenue earnings before and during the global financial crisis
σX1 - X2: sampling distribution of differences of standard deviation (sample I and II)
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S12 = σ2X₁ : variance of sampling distribution of sample statistic I
S22 = σ2X2: variance of sampling distribution of sample statistic II
t*: t- distribution for test of hypothesis and significance under students t-test
X2: chi-square distribution for test of hypothesis and significance
N1: number of sample size I
N2: number of sample size II
V: degree of freedom
4. Data Analysis
Bonny Light is Nigeria’s reference crude oil in the international oil market. Its price on the table is the
monthly average spot price; the current ask or bid price for Bonny Light in the market. Production is the
estimated average output of crude in millions of barrels of all oil drilling and exploration companies on a
day to day basis. Exports constitute the portion of crude that is shipped outside the country after a part is
separated for distribution to the domestic refineries for eventual local consumption (Gbolahan, 2010).
In order to analyze the significant impact of the 21 st century global financial crisis on the Nigerian crude oil
revenue in the absence of readily available data of revenue gotten from the sales of crude oil in the
international market, we have thus computed the revenue of crude oil for each month by multiplying the
price and export of crude oil, therefore crude oil revenue in the tables below is the outcome of price and
export.
The data are presented in two tables; the first table shows the data for price, export and crude oil revenue
before the crisis from August 2006 to July 2008, while the second table shows the data for price, export and
crude oil revenue during the crisis from August 2008 to July 2010.
The month before August 2008 is chosen as the period before the crisis because as at then, the global
financial crisis which started in July 2007 has not yet affected the Nigerian economy, most especially the
Nigerian oil sector because it was not yet global in scope. The crisis began to affect the Nigerian oil sector
during the third quarter of the year 2008 (Gbolahan, 2010).
In the data below; crude oil price is in US dollar per barrel (US$/Barrel), export of crude oil is in millions
of barrels per day (mbd), while the crude oil revenue is in millions of dollars.
4. 1 Estimation of Sample Equations
After the specification of the sampling equations, we proceed by estimating the equations. The estimation
stage requires a good knowledge of statistical analysis with particular reference to small sampling theory.
Thus, given our sampling equations, the estimates computed and obtained (see appendix ) are presented as
follows:
= 3329.55 = 2780.74
X1 = 138.73 X2 = 115.86
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S12 = σ2X₁ = 791.32 S22 = σ2X2 = 1427.91
σX1 - X2 = 47.10 t* = 2.32
EX1 -E X2 = 548.81 X1 - X2 = 22.87
X2 = 46.02 V = 23
4.2 Interpretation of Results
From the estimation of the equations above, it is clear that the total summation of crude oil revenue before
the crisis ( X1 = $3329.55 million) is higher than the revenue earned during the crisis ( X2 = $2780.74) by
$548.81 million. This implies that the revenue earned during the global financial crisis has fallen by 16.48
percent. This result is actually lower than the figure reported by Gbolahan (2010) by $300 or 27.52%.
Also, the sampling distribution of differences of mean (X 1 – X2 = 22.87) is positive thereby strengthening
the result above which shows that the revenue earned during the crisis has declined as compared to the
period before the crisis. Even though the result is lower than reported by Gbolahan (2010) – who reported a
difference of 70.
Furthermore, standard deviation which measures the dispersion between statistics shows that the crude oil
revenue during the crisis (σ2X2 = S22 = 1427.91) has further dispersed than the period before the crisis (σ 2X1
= S12 = 791.32), which also shows that the crude oil revenue earned during the crisis has declined by not
moving in the direction (that is, increasing) of the revenue earned before the crisis. Thus, it shows that the
global financial crisis has negatively affected the Nigerian crude oil revenue.
4.3 Test of Hypothesis
The test of hypothesis employed by this research study are the student`s T-test and the Chi-square test
which are meant to test the hypothesis, differences of mean (that samples comes from the same population)
and the significance of the population sample.
The Student’s T-Test (T*)
The student`s T-test is employed because the sample size of this research is less than 30 (N > 30). Using a
one sided test at 95% level of significance with degree of freedom as 23 (V = N-1) and decision rule as:
If t* (t - calculated) is greater than the ttable (t - tabulated), we reject the null hypothesis. If otherwise, we
accept the null hypothesis.
The t* is 2.32 and ttable is 1.71, and since the t* is greater than the t-table (2.32 > 1.71), we therefore reject
the null hypothesis (H0) and accept the alternative hypothesis (H1) which says that the global financial crisis
has a significant impact on the Nigerian crude oil revenue. Thus, we conclude that our population samples
are statistically significant.
The Chi-Square Test (X2)
The employment of the chi-square test in this research is to further test the hypothesis and significance of
the population samples. Using a one sided test at 95% level of significance, with degree of freedom as 23
(V = N-1) and decision rule as:
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Vol.2, No.5, 2011
If the calculated chi-square (X2) is greater than the chi square table (X2table), we reject the null hypothesis. If
otherwise, we accept the null hypothesis.
The X2 is 46.02 and X2table is 35.2, since the X2 is greater than the X2table (46.02 > 35.2), we therefore reject
the null hypothesis (H0) and accept the alternative hypothesis (H1) which says that the global financial crisis
has a significant impact on the Nigerian crude oil revenue. Thus, we conclude by saying also that our
population samples are significantly different hence global financial crisis has significantly affected the
Nigerian oil revenue.
4.4 Graphical Representation and Analysis
The line graph below pictorially depicts the impact of the global financial crisis on the oil sector through
the fall in crude oil earnings. This covers a period of 24 months each from August 2006 to July 2008 when
the oil sector was in a boom, and from August 2008 to July 2010 when the impact took its toll on the price
of crude oil.
From the graph below (Figure 1), we can clearly see the upward movement in the revenue from crude oil
from August 2006 to July 2008. This increase is as a result of the unprecedented rise in the price of crude
oil as presented in the statistics from the CBN.
The graph below (Figure 2), however shows the adverse effect of the impact of the global financial crisis on
the oil sector through the decline in revenue. The impact precisely hit the oil sector during the month of
August 2008 and led to a continuous decline in the revenue from crude oil up to the end of the first quarter
of 2009. The implication of these movements is further reflected negatively on the gross domestic product
(GDP), foreign exchange reserve as well as the budget. According to Gbolahan(2010), there was a relative
stability in the price of crude oil in the first quarter of 2009 due to Organization of Petroleum Exporting
Countries (OPEC) cut in the quota allocations to member nations and this led to an improvement in crude
oil earnings during the same period. Crude oil revenue started increasing upwards until October 2009 when
it decline a bit before picking up in December 2009. The trend in revenue then was up and down but
relatively stable.
4.7 Discussion of Findings
From the analysis, it can be seen that global financial crisis significantly affected the Nigerian economy
through a decline in revenue. The positive nature of the sampling distribution of differences of mean shows
that the revenue earned during the period of the financial crisis has declined as compared to the period
before it. Even though the difference is lower than earlier reported by Gbolahan (2010). The implication of
this is that there will be less finance for the economic activities, particularly the budget.
The statistical tests conducted, the student`s t-test and the chi-square test all rejected the null hypothesis.
This implies that our population samples are statistically significant, thus the global financial crisis
significantly affects the earnings from crude oil. The standard deviation also shows that the dispersion in
crude earnings during the global financial crisis is far greater than the period before it. The summation of
the total crude oil earnings during the first twenty four months of the financial crisis revealed a 16.48%
reduction compared to the revenue in the period preceeding the effect This figure is lower than the one
reported earlier by gbolahan(2010) who found a decrease of 44%
5. Summary and conclusion
This paper examined the impact of the recent global financial crisis on the Nigerian oil revenue. Using
small sampling theory and descriptive analysis, the null hypothesis that global financial crisis has no effect
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Vol.2, No.5, 2011
on oil revenue in Nigeria was rejected in favour of the alternative that global financial crisis has significant
impact on oil revenue in Nigeria.
The study shows that the effect has reduced from the position that was last reported hence indicative of
easing of the effect of the crisis in Nigeria. It should be the goal of policy makers to reduce the
overdependence on crude oil by diversifying the economy to reduce the magnitude of the negative
impact ,as such, there should be stiffer control and regulation of the financial system so as to reduce risk
within the financial sector and the economy at large.
References
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www.cenbank.org/rates/crudeoil.asp?year
APPENDIX
RESULTS OF THE ESTIMATION OF SAMPLING EQUATIONS
TABLE 1 - Sample Period Before The Crisis Comprising Of Monthly Crude Oil Prices (Us$/Barrel),
Export (Mbd) And Crude Oil Revenue (`Million Us$), August 2006 – July 2008. (Sample Statistics I)
MONTH/YEAR PRICE (P) EXPORT (Q) REVENUE (PQ)
AUG-2006 75.15 1.95 146.54
SEPT-2006 63.46 1.95 123.74
OCT-2006 59.44 1.93 114.71
NOV-2006 60.10 1.89 113.58
DEC-2006 65.46 1.91 105.92
JAN-2007 55.57 1.87 103.91
FEB-2007 59.97 1.86 111.54
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= 46.02
Figure 2: Monthly Movement of Crude Oil Price and Earnings, Aug 2006 – Jul
2008.
REVENUE (PQ)
250
200
150
100 REVENUE (PQ)
50
0
Apr-07
Apr-08
Feb-07
Feb-08
Jun-07
Jun-08
Dec-06
Dec-07
Oct-06
Oct-07
Aug-06
Aug-07
Figure 3: Monthly Movement of Crude Oil Price and Earnings, Aug 2008 – Jul
2010.
REVENUE (PQ)
200
150
100
REVENUE (PQ)
50
0
Apr-09
Apr-10
Feb-09
Feb-10
Jun-09
Jun-10
Dec-08
Dec-09
Oct-08
Oct-09
Aug-08
Aug-09
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