This study examined the effect interest rate on economic growth in Nigeria. Augmented Dickey – Fuller (ADF), Bound Test and Autoregressive Distributed Lag (ARDL) were employed to examine the effect of impact of interest rate on economic growth in Nigeria. The unit root test showed gross domestic product was 1(0) while interest rate, investment and gross capital formation were 1(1). The result of the Bound Test indicated long run relationship among the macroeconomic variables employed in the study. The result of the ARDL indicated that interest rate had negative effect on economic growth both in short run and long run. However, in the long run investment and gross capital formation were established to have positive effect on economic growth with gross capital formation being insignificant. It was concluded that interest rate has a macroeconomic tool is not effective in stimulating economic growth in Nigeria. It was recommended that the level of interest rate should be adequately controlled for the purpose of stimulating economic growth without inflationary pressure. Finally, robust macroeconomic policies aimed at ensuring economic stability should be formulated in order to increase capital formation and attract investment in order to promote economic growth.
6 the economic implications of monetization 60-71Alexander Decker
This document summarizes a study on the economic implications of monetization policy in Nigeria. Some key points:
1) Monetization policy in Nigeria involves converting fringe benefits that were previously provided to public servants in-kind, such as housing and vehicles, into cash payments. This was intended to reduce government spending and corruption.
2) However, the costs of running the government continued to escalate after monetization. There are also questions around whether the policy has been effectively implemented long-term.
3) The study uses regression analysis to examine the relationship between monetization and GDP in Nigeria, finding a significant but negative relationship. This suggests monetization has not achieved its goals of improving economic
Impact of macroeconomic variables on government budget deficit in nigeriaAlexander Decker
This document examines the relationship between macroeconomic variables and government budget deficits in Nigeria from 1981 to 2010. It finds that real GDP, inflation, exchange rate, interest rate, government budget deficit, and gross investment are cointegrated, indicating a long-run relationship. However, there is no statistical significance between budget deficits and economic growth in Nigeria. The paper recommends improving economic and political institutions to enhance policymaking, fully implementing fiscal responsibility acts to reduce leakage, and decreasing corruption to achieve fiscal responsibility.
1. The document analyzes the relationship between domestic savings, investment, and economic growth in Nigeria from 1970-2015.
2. It finds that domestic savings, investment, and GDP growth were low over the period studied, with fluctuating trends.
3. The study employs various econometric techniques including unit root tests, cointegration tests, vector error correction models, and Granger causality tests.
4. The results show domestic investment has a positive and significant long-run impact on economic growth in Nigeria. There is also bidirectional short-run causality between domestic investment and economic growth.
Extant literature revealed that international trade plays a key role to address the economic phenomena and can help to earn foreign exchange. Despite the accruable benefits from international trade and the countrys huge oil export that account for about 90 of its foreign exchange earnings, Nigerias trade balance and exchange rate remain unfavourable. The persistent rise in Nigerias exchange rate and unfavourable trade balance in recent time warrants an empirical probe. This study therefore examines the effect of exchange rate, domestic income, foreign income, consumption expenditure, money supply and interest rate on trade balance using a secondary time series data covering a period of thirty years from 1991 2020. The study employed a regression technique of the Ordinary Least Square OLS . All data used were secondary data obtained from the statistical bulletin of Central Bank of Nigeria CBN and National Bureau of Statistics NBS annual publications. After determining stationarity of the study variables using the ADF Statistic, it was discovered that the variables were all integrated at level, first and second difference, and found out to be stationary at their first difference. The study also using Johansen Cointegration Test, found that there is a long run relationship between the variables. Hence, the implication of this result is that there is a long run relationship between trade balance and other variables used in the model. From the result of the OLS, it is observed that exchange rate, domestic income, foreign income and money supply have a positive and significant impact on trade balance in Nigeria. The study recommends that the government should fixed or peg on the exchange rate through the central bank. This will enable the government to buy and sell its own currency against the currency to which it is pegged. The government should strive to reduce inflation to make exports more competitive. The government should also enhance supply side policies to increase long term competitiveness. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Exchange Rate and Trade Balance Nexus" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45079.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45079/exchange-rate-and-trade-balance-nexus/edokobi-tonna-david
Single digit inflation targeting does it promote economic growthAlexander Decker
This document summarizes a journal article that investigates the relationship between single-digit inflation and economic growth in South Africa using annual time series data from 1965-2010. The results of the analysis suggest that targeting single-digit inflation undermines economic growth in South Africa in the long run. While some studies have found that inflation below 11% promotes growth in developing countries, the mixed findings in the literature highlight the need to specifically examine the impact of single-digit inflation. The analysis in this document finds that periods of single-digit inflation are negatively correlated with economic growth in South Africa, questioning the benefits of targeting low single-digit inflation rates in developing countries.
6 the economic implications of monetization 60-71Alexander Decker
This document summarizes a study on the economic implications of monetization policy in Nigeria. Some key points:
1) Monetization policy in Nigeria involves converting fringe benefits that were previously provided to public servants in-kind, such as housing and vehicles, into cash payments. This was intended to reduce government spending and corruption.
2) However, the costs of running the government continued to escalate after monetization. There are also questions around whether the policy has been effectively implemented long-term.
3) The study uses regression analysis to examine the relationship between monetization and GDP in Nigeria, finding a significant but negative relationship. This suggests monetization has not achieved its goals of improving economic
Impact of macroeconomic variables on government budget deficit in nigeriaAlexander Decker
This document examines the relationship between macroeconomic variables and government budget deficits in Nigeria from 1981 to 2010. It finds that real GDP, inflation, exchange rate, interest rate, government budget deficit, and gross investment are cointegrated, indicating a long-run relationship. However, there is no statistical significance between budget deficits and economic growth in Nigeria. The paper recommends improving economic and political institutions to enhance policymaking, fully implementing fiscal responsibility acts to reduce leakage, and decreasing corruption to achieve fiscal responsibility.
1. The document analyzes the relationship between domestic savings, investment, and economic growth in Nigeria from 1970-2015.
2. It finds that domestic savings, investment, and GDP growth were low over the period studied, with fluctuating trends.
3. The study employs various econometric techniques including unit root tests, cointegration tests, vector error correction models, and Granger causality tests.
4. The results show domestic investment has a positive and significant long-run impact on economic growth in Nigeria. There is also bidirectional short-run causality between domestic investment and economic growth.
Extant literature revealed that international trade plays a key role to address the economic phenomena and can help to earn foreign exchange. Despite the accruable benefits from international trade and the countrys huge oil export that account for about 90 of its foreign exchange earnings, Nigerias trade balance and exchange rate remain unfavourable. The persistent rise in Nigerias exchange rate and unfavourable trade balance in recent time warrants an empirical probe. This study therefore examines the effect of exchange rate, domestic income, foreign income, consumption expenditure, money supply and interest rate on trade balance using a secondary time series data covering a period of thirty years from 1991 2020. The study employed a regression technique of the Ordinary Least Square OLS . All data used were secondary data obtained from the statistical bulletin of Central Bank of Nigeria CBN and National Bureau of Statistics NBS annual publications. After determining stationarity of the study variables using the ADF Statistic, it was discovered that the variables were all integrated at level, first and second difference, and found out to be stationary at their first difference. The study also using Johansen Cointegration Test, found that there is a long run relationship between the variables. Hence, the implication of this result is that there is a long run relationship between trade balance and other variables used in the model. From the result of the OLS, it is observed that exchange rate, domestic income, foreign income and money supply have a positive and significant impact on trade balance in Nigeria. The study recommends that the government should fixed or peg on the exchange rate through the central bank. This will enable the government to buy and sell its own currency against the currency to which it is pegged. The government should strive to reduce inflation to make exports more competitive. The government should also enhance supply side policies to increase long term competitiveness. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Exchange Rate and Trade Balance Nexus" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45079.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45079/exchange-rate-and-trade-balance-nexus/edokobi-tonna-david
Single digit inflation targeting does it promote economic growthAlexander Decker
This document summarizes a journal article that investigates the relationship between single-digit inflation and economic growth in South Africa using annual time series data from 1965-2010. The results of the analysis suggest that targeting single-digit inflation undermines economic growth in South Africa in the long run. While some studies have found that inflation below 11% promotes growth in developing countries, the mixed findings in the literature highlight the need to specifically examine the impact of single-digit inflation. The analysis in this document finds that periods of single-digit inflation are negatively correlated with economic growth in South Africa, questioning the benefits of targeting low single-digit inflation rates in developing countries.
Using a series of econometric techniques, the study analysed interaction between monetary policy and private sector credit in Ghana. This study made use of monthly dataset spanning January 1999 to December 2019 of credit to the private sector (PSC) and broad money supply (M2). The results reveal that there exists cointegration, a long run stationary relation between monetary policy and private sector credit. This implies, increases in credit should prompt long-term increases in monetary policy. It is not surprising that growth in the private sector might have a stronger effect on monetary policy. The Error Correction Test is statistically significant and that all the variables demonstrate similar adjustment speeds. This implies that in the short run, both money supply and credit are somewhat equally responsive to their last period’s equilibrium error. There is unidirectional causation from private sector credit to monetary policy. It can be said that, there is an interaction between money supply and private sector credit. Thus, credit to private sector holds great potential in promoting economic growth. It can be recommended to the government to increase the credit flow to the private sector because of its strategic importance in creating and generating growth of the economy.
Econometric analysis of the effectiveness of fiscal policy in economic growth...Alexander Decker
This document summarizes a study that analyzed the effectiveness of fiscal policy in Nigeria between 1985-2003. It investigated the impact of fiscal policy on GDP, inflation, and balance of payments. The study found that fiscal policy was effective in controlling inflation and balance of payments, as the models explained 75-76% of variations in these variables. However, fiscal policy was not effective in controlling GDP, as the model only explained 48% of GDP variations. The study concluded that government expenditure was not directed towards productive ventures that could increase GDP. It recommended that government redirect spending towards productive sectors and provide tax concessions to infant industries.
Does government spending spur economic growth evidence from nigeriaAlexander Decker
- The document examines the impact of government spending on economic growth in Nigeria using annual time series data from 1970 to 2010.
- The results show that at the aggregate level, government spending in Nigeria has a small positive impact on growth (0.16%), but at the disaggregated level only recurrent spending significantly and positively impacts growth while capital spending has a negative and insignificant effect.
- This finding contradicts economic theory, so the authors cautiously interpret it as a special case for Nigeria, which has poor institutions, corruption, and a weak capital infrastructure base.
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.
This study is about the impact of selected macroeconomic variables on economic growth of Bangladesh. Economic growth of Bangladesh is measured in terms of annual nominal GDP growth rate. Least squared regression model has been employed considering exchange rate, export, import and inflation rate as independent variables and gross domestic product as the dependent variable in this study. The results reveal that export and import have significant positive impact on GDP growth rate. The other variables (exchange rate and inflation) are not significant, indicating that there exists no significant relationship among the variables. The findings will help the policy makers to make policies concerning the country’s economic growth to remain robust in the near future.
EFFECTIVE MONETARY POLICY AS A RECIPE FOR MACROECONOMIC STABILITY IN NIGERIApaperpublications3
Abstract: The basic objective of this paper was to investigate effective monetary policy as a recipe for macroeconomic stability in Nigeria, using annual time series data from 1981 to 2014. The paper employs OLS methodology with all the BLUE assumption. The results show that considering the magnitude, 1% increase in RGDP (proxy for economic growth) is brought about by 0.86% increase in narrow money supply (M1), 0.63% increase in broad money supply (M2), 258% decrease in inflation rate (INFLARATE), 1276.3% increase in lending rate (LEDRATE), and 143.9% increase in gross fixed capital formation. This implies that an increase in lending rate and other related variables will lead to a significant increase in real GDP, proxy for economic growth in Nigeria. The estimated value of R2 (goodness of fit) of 0.67 or 67% shows that 67% systematic variation in Real GDP is caused by variation in narrow money supply, broad money supply, inflation rate, lending rate, and gross fixed capital formation. This indicates that indeed, monetary policy has an effect on macroeconomic stability in Nigeria. The study seems to suggest that concerted efforts should be made by the government to focus on increment in narrow and broad money supplies which will aid in the financing of the country’s monetary growth, balancing the price increase, stimulating increased spending, and further enhancing the country’s macroeconomic variables.
Monetary Policy and Trade Balance in NigeriaYogeshIJTSRD
Nigeria apex bank Central Bank of Nigeria CBN has continued to battle with the job of reviving the ailing economy and putting it on the path of growth. The economy has witnessed unprecedented job loss, rising poverty level, accelerating inflation, sluggish economic growth and disequilibrium in the balance of trade. The study therefore examine the effect of monetary policy on trade balance in Nigeria. Specifically the study ascertained the extent to which inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that monetary policy rate, demand deposit, liquidity ratio and exchange rate have a significant positive impact on foreign trade in Nigeria. This means that increases in monetary policy rate, demand deposit, liquidity ratio and exchange rate, will lead to increase in foreign trade in Nigeria. On the other, inflation rate and interest rate has a significant negative impact on foreign trade in Nigeria, meaning that as inflation rate and interest rate increases, will be bring about a decline in foreign trade in Nigeria. Based on the findings of this study, the study recommends that the government should employ a contractionary monetary policy to fight inflation by reducing the money supply in the country through decreased bond price. inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria. The government should intervene in the foreign exchange market in order to build reserves for themselves or provide them to the bank to help stabilize the exchange rate. The government should strive to improve trade performance in the short and long run. They should also reduce government spending and tax capital inflow. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Monetary Policy and Trade Balance in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45080.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45080/monetary-policy-and-trade-balance-in-nigeria/edokobi-tonna-david
1) The document analyzes macroeconomic variables like interest rates, exchange rates, money supply, inflation expectations, GDP, and inflation in China, India, Vietnam, and Indonesia from 2000 to 2017 to determine leading indicators of economic stability.
2) The ARDL panel analysis shows that leading indicators of controlling economic stability differ across countries. For India it is interest rates, exchange rates, money supply, inflation expectations, and GDP. For Vietnam it is interest rates, money supply, and GDP. For Indonesia it is interest rates and money supply, and for China it is money supply.
3) The analysis finds that money supply has a significant effect on inflation in the panel as a whole, but results vary by country
Effect of Monetary Policy on Economic Growth in Nigeriaijtsrd
"The chequered history of the Nigeria monetary policy has created a visible asymmetry in the two known monetary regimes before and after SAP in the country. Years after the Structural Adjustment Programme SAP , the Nigeria economy grew to become the strongest economy in Africa and suddenly plunging into recession, a situation that have adversely affected the growth and development of the economy by ways of rising unemployment rate, soaring poverty and swollen external debt, thus suggesting that the failure of the monetary policy in curbing price instability has caused growth instability as Nigeria's record of growth and development has become very poor. This study therefore examines the effect of monetary policy on economic growth in Nigeria using secondary data covering the period of 1980 2017 that were sourced from the Central Bank of Nigeria statistical bulletin. The model's estimates were estimated via multiple econometric model of the ordinary least square to ascertain the effect of money supply, credit in the economy, interest rate on credit, infrastructure, inflationary rate, external debts, price index on growth in Nigeria. The results show that money supply, interest rate on credit, infrastructure and external debt were statistically significant in explaining its impacts on economic growth while other variables used in the study were all found to be statistically insignificant in explaining the growth rate of the Nigerian economy. The study recommends among others that for effective operation of the monetary policy measures in the Nigerian economy, the Central Bank of Nigeria should be granted full autonomy on its monetary policy functions. Partial autonomy should be replaced with full autonomy for the central banks in the developing economies at large which is invariably subjected to government interference and its politics. Onwuteaka, Ifeoma Cecilia | Okoye, P. V. C | Molokwu, Ifeoma Mirian ""Effect of Monetary Policy on Economic Growth in Nigeria"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-3 , April 2019, URL: https://www.ijtsrd.com/papers/ijtsrd22984.pdf
Paper URL: https://www.ijtsrd.com/humanities-and-the-arts/economics/22984/effect-of-monetary-policy-on-economic-growth-in-nigeria/onwuteaka-ifeoma-cecilia"
This document analyzes the relationship between inflation and economic growth in Qatar from 1980 to 2016. It finds that inflation and economic growth are cointegrated, indicating a long-run relationship. A Granger causality test shows causality runs from inflation to economic growth. The study uses time series analysis methods including unit root tests, Johansen cointegration, and Granger causality tests. Unit root tests show inflation and economic growth are non-stationary in levels but stationary in first differences. Johansen cointegration finds the variables are cointegrated, implying a long-run equilibrium relationship. The Granger causality test then finds causality runs from inflation to economic growth in the long-run.
Effect of public investment on economic growth in bangladeshAlexander Decker
This document analyzes the effect of public investment on economic growth in Bangladesh through econometric analysis. It summarizes previous literature finding both positive and ambiguous effects of public investment on growth. The document then describes the author's methodology, including data sources and definitions of variables like GDP, public investment (ADP), and gross capital formation (GCF). Descriptive statistics of the variables from 1973-2011 are also provided. The author's model specifies GDP as a linear function of ADP and GCF to test the relationship between public investment and economic growth in Bangladesh.
China has a large land area and long borders with many neighboring countries. It has a diverse terrain and climate. The country's economy has grown rapidly in recent decades and it now leads the BRICS economies. China has a socialist market economy and continues to transition from a centrally planned system. The banking, insurance, and securities sectors are important and regulated.
An Analysis of the Relationship between Fiscal Deficits and Selected Macroeco...IOSR Journals
This study investigates the relationship that exists between the Government Deficit Spending and selected macroeconomic variables such as Gross Domestic Product (GDP), Exchange Rate, Inflation, Money Supply and Lending Interest Rate. The period covered is 1970 (when the civil war ended) and 2011. Ordinary Least Squares (OLS) technique was adopted to analyze the relationships. The study concludes that Government Deficit Spending (GDS) has positive significant relationship with GDP. Government Deficit Spending also has positive significant relationship with Exchange Rate, Inflation, and Money Supply. Government Deficit has negative significant relationship with Lending Interest Rate and most likely crowd-out the private sector by raising the cost of funds. Deficit spending has been known to have adverse effects on the economy and government is advised to curtail excessive deficit spending. It is recommended that further research is done to establish other variables that are affected by government deficit spending.
Impact of political stability on the macroeconomic variables and FDI of Pakis...journal ijrtem
Abstract: In this paper we have discussed the vital role of political stability on the link between macroeconomic variables and FDI .For this purpose we have used a data of year 1991 to 2011.In this empirical analysis we have used ADF test for the checking the stationary of the data and other software’s are SPSS and eviews.This result of this study have made sure that import ,BOP, export and GDP growth rate have significant impact on the FDI inflows in the Pakistan and inflation has a negative impact on the FDI based on this research has proved that political stability is crucial for the expansion of foreign direct investment.
Keywords: political stability, ADF, BOP, crucial etc.
This document examines the relationship between capital market development and economic growth in Nigeria from 2008 to 2018. It uses market capitalization, interest rate, and inflation rate as proxies for capital market development and GDP as the measure of economic growth. Multiple regression analysis is employed to analyze the data. The results suggest that the stock market has a positive but insignificant effect on economic growth in Nigeria. It is recommended that capital market regulators be more flexible to promote innovation without compromising investor protection. The government should also improve infrastructure to create a better business environment and boost productivity and economic activity.
Monetary Policy Shocks and Agricultural Output Growth in Nigeriaiosrjce
This document summarizes a research paper that investigated the transmission of monetary policy shocks to agricultural output growth in Nigeria from 1970 to 2012. The study used a vector autoregressive (VAR) model to analyze the data. The results showed that:
1) Both monetary policy shocks transmitted through interest rates and increases in production costs from inflation have significant impacts on agricultural output growth in Nigeria.
2) Monetary policy shocks transmitted through interest rate channels were found to be more effective at influencing agricultural output than other transmission mechanisms.
3) The study recommends Nigerian monetary policy focus more on using differential interest rates and other tools to revitalize the agricultural sector.
Impact of Visual Merchandising on Impulsive Buying Behavior of Sri Lankan Mod...YogeshIJTSRD
This document discusses a study on the impact of visual merchandising on impulsive buying behavior among Sri Lankan modern trade customers. It finds that product displays and promotional signs have a strong positive impact on impulsive purchases. The document provides background on visual merchandising and impulsive buying behavior. It also reviews theories and factors related to impulsive buying, such as consumer emotions and retail environment characteristics. Visual merchandising techniques aim to attract customers and elicit desires to influence spontaneous purchasing.
Inflation Targeting and Growth: The Way Forward for IndiaBIOLOGICAL FORUM
ABSTRACT: This paper looks at the genesis of inflation targeting and the impact of repo rate on Gross Domestic Product (GDP) and brings out our experience with a reconstituted Monetary Policy Committee (MPC) with its thrust to combine inflation targeting [1] with growth. It brings out how an extremely cautionary approach in fixing repo rate can have deleterious impact on growth and concomitantly on private sector investment and animal spirits. Tracing the importance of Taylor rule in taking a balanced approach towards actual and potential growth and inflation for repo rate determination, the paper brings out, how there is a broad congruence now between growth and inflation, once the MPC system fixes a reasonable repo rate. The paper also looks at macro economic variables like low PLF in power sector combined with surging thermal generation, twin balance sheet challenges that continue to confront the corporate and banking sector affecting capacity utilization and dissuading new investment. The paper makes a strong case for a much lower repo rate, in order to take the country come out of its morass of low investment trap and kindle the animal spirits of the investors.
This document reviews the literature on the impact of monetary policy on growth and employment in developing countries. It finds that monetary policy has limited impact on growth as money plays a small role in developing economies and much of inflation is imported. While monetary policy aims to control inflation, there is little evidence it directly impacts investment, technological change, or employment. The document argues growth does not guarantee development and examines whether growth improves living standards, creates formal jobs, or moves workers from low- to high-productivity sectors.
Foreign Direct Investment (FDI) has been seen as an important factor influencing economic growth directly and indirectly in both developed and developing countries. This study assesses the impact of FDI on growth in Ghana since the return to constitutional rule in 1993. The study uses time series data from 1993 to 2016. Using the Autoregressive Distributed Lagged model (ARDL), the study finds a positive impact of FDI on growth both in the short-run and long-run. However, there is a lag period of two. The study equally finds that Gross Saving has a positive impact on growth. On the other hand inflation has a negative effect on growth both in the short and long run. The study also discovered that FDI granger causes growth but GDP does not granger cause FDI. Post-election years with incidence of political uncertainty slow down FDI inflow into Ghana. The study recommends the adoption of stringent fiscal and monetary policies to keep inflation low. It also recommends maintaining and improving the liberal market environment to attract investors, policies to encourage saving, and improving on political transitions to avoid uncertainties for investors.
This study examined the relationship between interest rate and economic growth in Nigeria, using secondary time series panel data for the period 1985 – 2014. Data was collected from various issues of the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The study employed Augmented Dicker-Fuller (ADF) unit root tests as well as Johansen co-integration test followed by Error Correlation Model (ECM) approach. The ADF unit root test results indicated that the variables are all stationary at first difference. The variables were integrated of order one (1) which implies that the null hypothesis of non-stationary for all the variables of interest is rejected. The Johansen co-integration test result revealed the existence of two co-integrating relationship between the variables at 5% level of significance. The study proceeded to perform the ECM approach and found that interest rate is inversely related to economic growth, but the relationship is statistically insignificant. The recommended that monetary authorities should adopt appropriate polices that would promote and stimulate economic growth in Nigeria.
Effect of Government Policies on Price Stability in Nigeriaijtsrd
This study examined the effect of monetary and fiscal policies on price stability in Nigeria using a data rich framework spanning from 1986 2020. The main problem with the macro economic policies that prompted this study was the fact that despite the series of the CBN Monetary Policy Committee decisions and government tax and expenditure implementation there is apparently no useful effect on inflation price . The study employed Auto regression Distributed Lag ARDL Bound Test for Co integration of data analysis depending upon the time series properties of the data that confer mixed order of integration in addition to the conduct of the unit root test and Error Correction Model ECM estimation. The ADF test revealed that LNCPI, EXR, GSDMD, GEXP, GTX and M2 were stationary at 1 1 while RIR, MPR and BOP at 1 0 . Pesaran, Shin and Smith 2001 established that the ARDL bounds technique allows a mixture of 1 1 and 1 0 variables as regressors. Hence, we proceed to perform the ARDL bounds test for integration. The results of the ARDL bounds revealed that the null hypotheses were all rejected implying that a long run effect exists among monetary and fiscal policies variables and CPI in a multivariate framework. ECM coefficient of 0.2942 conforms with expectation. Durbin Watson statistic 0f 1 9925 revealed that the model seems not to have any case of autocorrelation. The result of our analysis shows that fiscal policy rather than monetary policy exerts a more potent effect on price stability in Nigeria. The study recommends that both monetary and fiscal policies should be complementary in order to be effective in taming inflation in Nigeria. Onehi, Damian Haruna | Ibenta, Steve Nkem | Adigwe, Patrick, K. | Emejulu, Ikenna Justin "Effect of Government Policies on Price Stability in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-1 , February 2023, URL: https://www.ijtsrd.com/papers/ijtsrd52766.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/52766/effect-of-government-policies-on-price-stability-in-nigeria/onehi-damian-haruna
Using a series of econometric techniques, the study analysed interaction between monetary policy and private sector credit in Ghana. This study made use of monthly dataset spanning January 1999 to December 2019 of credit to the private sector (PSC) and broad money supply (M2). The results reveal that there exists cointegration, a long run stationary relation between monetary policy and private sector credit. This implies, increases in credit should prompt long-term increases in monetary policy. It is not surprising that growth in the private sector might have a stronger effect on monetary policy. The Error Correction Test is statistically significant and that all the variables demonstrate similar adjustment speeds. This implies that in the short run, both money supply and credit are somewhat equally responsive to their last period’s equilibrium error. There is unidirectional causation from private sector credit to monetary policy. It can be said that, there is an interaction between money supply and private sector credit. Thus, credit to private sector holds great potential in promoting economic growth. It can be recommended to the government to increase the credit flow to the private sector because of its strategic importance in creating and generating growth of the economy.
Econometric analysis of the effectiveness of fiscal policy in economic growth...Alexander Decker
This document summarizes a study that analyzed the effectiveness of fiscal policy in Nigeria between 1985-2003. It investigated the impact of fiscal policy on GDP, inflation, and balance of payments. The study found that fiscal policy was effective in controlling inflation and balance of payments, as the models explained 75-76% of variations in these variables. However, fiscal policy was not effective in controlling GDP, as the model only explained 48% of GDP variations. The study concluded that government expenditure was not directed towards productive ventures that could increase GDP. It recommended that government redirect spending towards productive sectors and provide tax concessions to infant industries.
Does government spending spur economic growth evidence from nigeriaAlexander Decker
- The document examines the impact of government spending on economic growth in Nigeria using annual time series data from 1970 to 2010.
- The results show that at the aggregate level, government spending in Nigeria has a small positive impact on growth (0.16%), but at the disaggregated level only recurrent spending significantly and positively impacts growth while capital spending has a negative and insignificant effect.
- This finding contradicts economic theory, so the authors cautiously interpret it as a special case for Nigeria, which has poor institutions, corruption, and a weak capital infrastructure base.
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.
This study is about the impact of selected macroeconomic variables on economic growth of Bangladesh. Economic growth of Bangladesh is measured in terms of annual nominal GDP growth rate. Least squared regression model has been employed considering exchange rate, export, import and inflation rate as independent variables and gross domestic product as the dependent variable in this study. The results reveal that export and import have significant positive impact on GDP growth rate. The other variables (exchange rate and inflation) are not significant, indicating that there exists no significant relationship among the variables. The findings will help the policy makers to make policies concerning the country’s economic growth to remain robust in the near future.
EFFECTIVE MONETARY POLICY AS A RECIPE FOR MACROECONOMIC STABILITY IN NIGERIApaperpublications3
Abstract: The basic objective of this paper was to investigate effective monetary policy as a recipe for macroeconomic stability in Nigeria, using annual time series data from 1981 to 2014. The paper employs OLS methodology with all the BLUE assumption. The results show that considering the magnitude, 1% increase in RGDP (proxy for economic growth) is brought about by 0.86% increase in narrow money supply (M1), 0.63% increase in broad money supply (M2), 258% decrease in inflation rate (INFLARATE), 1276.3% increase in lending rate (LEDRATE), and 143.9% increase in gross fixed capital formation. This implies that an increase in lending rate and other related variables will lead to a significant increase in real GDP, proxy for economic growth in Nigeria. The estimated value of R2 (goodness of fit) of 0.67 or 67% shows that 67% systematic variation in Real GDP is caused by variation in narrow money supply, broad money supply, inflation rate, lending rate, and gross fixed capital formation. This indicates that indeed, monetary policy has an effect on macroeconomic stability in Nigeria. The study seems to suggest that concerted efforts should be made by the government to focus on increment in narrow and broad money supplies which will aid in the financing of the country’s monetary growth, balancing the price increase, stimulating increased spending, and further enhancing the country’s macroeconomic variables.
Monetary Policy and Trade Balance in NigeriaYogeshIJTSRD
Nigeria apex bank Central Bank of Nigeria CBN has continued to battle with the job of reviving the ailing economy and putting it on the path of growth. The economy has witnessed unprecedented job loss, rising poverty level, accelerating inflation, sluggish economic growth and disequilibrium in the balance of trade. The study therefore examine the effect of monetary policy on trade balance in Nigeria. Specifically the study ascertained the extent to which inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that monetary policy rate, demand deposit, liquidity ratio and exchange rate have a significant positive impact on foreign trade in Nigeria. This means that increases in monetary policy rate, demand deposit, liquidity ratio and exchange rate, will lead to increase in foreign trade in Nigeria. On the other, inflation rate and interest rate has a significant negative impact on foreign trade in Nigeria, meaning that as inflation rate and interest rate increases, will be bring about a decline in foreign trade in Nigeria. Based on the findings of this study, the study recommends that the government should employ a contractionary monetary policy to fight inflation by reducing the money supply in the country through decreased bond price. inflation, demand deposit, liquidity ratio, exchange rate and interest rate have influenced trade balance in Nigeria. The government should intervene in the foreign exchange market in order to build reserves for themselves or provide them to the bank to help stabilize the exchange rate. The government should strive to improve trade performance in the short and long run. They should also reduce government spending and tax capital inflow. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Monetary Policy and Trade Balance in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45080.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45080/monetary-policy-and-trade-balance-in-nigeria/edokobi-tonna-david
1) The document analyzes macroeconomic variables like interest rates, exchange rates, money supply, inflation expectations, GDP, and inflation in China, India, Vietnam, and Indonesia from 2000 to 2017 to determine leading indicators of economic stability.
2) The ARDL panel analysis shows that leading indicators of controlling economic stability differ across countries. For India it is interest rates, exchange rates, money supply, inflation expectations, and GDP. For Vietnam it is interest rates, money supply, and GDP. For Indonesia it is interest rates and money supply, and for China it is money supply.
3) The analysis finds that money supply has a significant effect on inflation in the panel as a whole, but results vary by country
Effect of Monetary Policy on Economic Growth in Nigeriaijtsrd
"The chequered history of the Nigeria monetary policy has created a visible asymmetry in the two known monetary regimes before and after SAP in the country. Years after the Structural Adjustment Programme SAP , the Nigeria economy grew to become the strongest economy in Africa and suddenly plunging into recession, a situation that have adversely affected the growth and development of the economy by ways of rising unemployment rate, soaring poverty and swollen external debt, thus suggesting that the failure of the monetary policy in curbing price instability has caused growth instability as Nigeria's record of growth and development has become very poor. This study therefore examines the effect of monetary policy on economic growth in Nigeria using secondary data covering the period of 1980 2017 that were sourced from the Central Bank of Nigeria statistical bulletin. The model's estimates were estimated via multiple econometric model of the ordinary least square to ascertain the effect of money supply, credit in the economy, interest rate on credit, infrastructure, inflationary rate, external debts, price index on growth in Nigeria. The results show that money supply, interest rate on credit, infrastructure and external debt were statistically significant in explaining its impacts on economic growth while other variables used in the study were all found to be statistically insignificant in explaining the growth rate of the Nigerian economy. The study recommends among others that for effective operation of the monetary policy measures in the Nigerian economy, the Central Bank of Nigeria should be granted full autonomy on its monetary policy functions. Partial autonomy should be replaced with full autonomy for the central banks in the developing economies at large which is invariably subjected to government interference and its politics. Onwuteaka, Ifeoma Cecilia | Okoye, P. V. C | Molokwu, Ifeoma Mirian ""Effect of Monetary Policy on Economic Growth in Nigeria"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-3 , April 2019, URL: https://www.ijtsrd.com/papers/ijtsrd22984.pdf
Paper URL: https://www.ijtsrd.com/humanities-and-the-arts/economics/22984/effect-of-monetary-policy-on-economic-growth-in-nigeria/onwuteaka-ifeoma-cecilia"
This document analyzes the relationship between inflation and economic growth in Qatar from 1980 to 2016. It finds that inflation and economic growth are cointegrated, indicating a long-run relationship. A Granger causality test shows causality runs from inflation to economic growth. The study uses time series analysis methods including unit root tests, Johansen cointegration, and Granger causality tests. Unit root tests show inflation and economic growth are non-stationary in levels but stationary in first differences. Johansen cointegration finds the variables are cointegrated, implying a long-run equilibrium relationship. The Granger causality test then finds causality runs from inflation to economic growth in the long-run.
Effect of public investment on economic growth in bangladeshAlexander Decker
This document analyzes the effect of public investment on economic growth in Bangladesh through econometric analysis. It summarizes previous literature finding both positive and ambiguous effects of public investment on growth. The document then describes the author's methodology, including data sources and definitions of variables like GDP, public investment (ADP), and gross capital formation (GCF). Descriptive statistics of the variables from 1973-2011 are also provided. The author's model specifies GDP as a linear function of ADP and GCF to test the relationship between public investment and economic growth in Bangladesh.
China has a large land area and long borders with many neighboring countries. It has a diverse terrain and climate. The country's economy has grown rapidly in recent decades and it now leads the BRICS economies. China has a socialist market economy and continues to transition from a centrally planned system. The banking, insurance, and securities sectors are important and regulated.
An Analysis of the Relationship between Fiscal Deficits and Selected Macroeco...IOSR Journals
This study investigates the relationship that exists between the Government Deficit Spending and selected macroeconomic variables such as Gross Domestic Product (GDP), Exchange Rate, Inflation, Money Supply and Lending Interest Rate. The period covered is 1970 (when the civil war ended) and 2011. Ordinary Least Squares (OLS) technique was adopted to analyze the relationships. The study concludes that Government Deficit Spending (GDS) has positive significant relationship with GDP. Government Deficit Spending also has positive significant relationship with Exchange Rate, Inflation, and Money Supply. Government Deficit has negative significant relationship with Lending Interest Rate and most likely crowd-out the private sector by raising the cost of funds. Deficit spending has been known to have adverse effects on the economy and government is advised to curtail excessive deficit spending. It is recommended that further research is done to establish other variables that are affected by government deficit spending.
Impact of political stability on the macroeconomic variables and FDI of Pakis...journal ijrtem
Abstract: In this paper we have discussed the vital role of political stability on the link between macroeconomic variables and FDI .For this purpose we have used a data of year 1991 to 2011.In this empirical analysis we have used ADF test for the checking the stationary of the data and other software’s are SPSS and eviews.This result of this study have made sure that import ,BOP, export and GDP growth rate have significant impact on the FDI inflows in the Pakistan and inflation has a negative impact on the FDI based on this research has proved that political stability is crucial for the expansion of foreign direct investment.
Keywords: political stability, ADF, BOP, crucial etc.
This document examines the relationship between capital market development and economic growth in Nigeria from 2008 to 2018. It uses market capitalization, interest rate, and inflation rate as proxies for capital market development and GDP as the measure of economic growth. Multiple regression analysis is employed to analyze the data. The results suggest that the stock market has a positive but insignificant effect on economic growth in Nigeria. It is recommended that capital market regulators be more flexible to promote innovation without compromising investor protection. The government should also improve infrastructure to create a better business environment and boost productivity and economic activity.
Monetary Policy Shocks and Agricultural Output Growth in Nigeriaiosrjce
This document summarizes a research paper that investigated the transmission of monetary policy shocks to agricultural output growth in Nigeria from 1970 to 2012. The study used a vector autoregressive (VAR) model to analyze the data. The results showed that:
1) Both monetary policy shocks transmitted through interest rates and increases in production costs from inflation have significant impacts on agricultural output growth in Nigeria.
2) Monetary policy shocks transmitted through interest rate channels were found to be more effective at influencing agricultural output than other transmission mechanisms.
3) The study recommends Nigerian monetary policy focus more on using differential interest rates and other tools to revitalize the agricultural sector.
Impact of Visual Merchandising on Impulsive Buying Behavior of Sri Lankan Mod...YogeshIJTSRD
This document discusses a study on the impact of visual merchandising on impulsive buying behavior among Sri Lankan modern trade customers. It finds that product displays and promotional signs have a strong positive impact on impulsive purchases. The document provides background on visual merchandising and impulsive buying behavior. It also reviews theories and factors related to impulsive buying, such as consumer emotions and retail environment characteristics. Visual merchandising techniques aim to attract customers and elicit desires to influence spontaneous purchasing.
Inflation Targeting and Growth: The Way Forward for IndiaBIOLOGICAL FORUM
ABSTRACT: This paper looks at the genesis of inflation targeting and the impact of repo rate on Gross Domestic Product (GDP) and brings out our experience with a reconstituted Monetary Policy Committee (MPC) with its thrust to combine inflation targeting [1] with growth. It brings out how an extremely cautionary approach in fixing repo rate can have deleterious impact on growth and concomitantly on private sector investment and animal spirits. Tracing the importance of Taylor rule in taking a balanced approach towards actual and potential growth and inflation for repo rate determination, the paper brings out, how there is a broad congruence now between growth and inflation, once the MPC system fixes a reasonable repo rate. The paper also looks at macro economic variables like low PLF in power sector combined with surging thermal generation, twin balance sheet challenges that continue to confront the corporate and banking sector affecting capacity utilization and dissuading new investment. The paper makes a strong case for a much lower repo rate, in order to take the country come out of its morass of low investment trap and kindle the animal spirits of the investors.
This document reviews the literature on the impact of monetary policy on growth and employment in developing countries. It finds that monetary policy has limited impact on growth as money plays a small role in developing economies and much of inflation is imported. While monetary policy aims to control inflation, there is little evidence it directly impacts investment, technological change, or employment. The document argues growth does not guarantee development and examines whether growth improves living standards, creates formal jobs, or moves workers from low- to high-productivity sectors.
Foreign Direct Investment (FDI) has been seen as an important factor influencing economic growth directly and indirectly in both developed and developing countries. This study assesses the impact of FDI on growth in Ghana since the return to constitutional rule in 1993. The study uses time series data from 1993 to 2016. Using the Autoregressive Distributed Lagged model (ARDL), the study finds a positive impact of FDI on growth both in the short-run and long-run. However, there is a lag period of two. The study equally finds that Gross Saving has a positive impact on growth. On the other hand inflation has a negative effect on growth both in the short and long run. The study also discovered that FDI granger causes growth but GDP does not granger cause FDI. Post-election years with incidence of political uncertainty slow down FDI inflow into Ghana. The study recommends the adoption of stringent fiscal and monetary policies to keep inflation low. It also recommends maintaining and improving the liberal market environment to attract investors, policies to encourage saving, and improving on political transitions to avoid uncertainties for investors.
This study examined the relationship between interest rate and economic growth in Nigeria, using secondary time series panel data for the period 1985 – 2014. Data was collected from various issues of the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The study employed Augmented Dicker-Fuller (ADF) unit root tests as well as Johansen co-integration test followed by Error Correlation Model (ECM) approach. The ADF unit root test results indicated that the variables are all stationary at first difference. The variables were integrated of order one (1) which implies that the null hypothesis of non-stationary for all the variables of interest is rejected. The Johansen co-integration test result revealed the existence of two co-integrating relationship between the variables at 5% level of significance. The study proceeded to perform the ECM approach and found that interest rate is inversely related to economic growth, but the relationship is statistically insignificant. The recommended that monetary authorities should adopt appropriate polices that would promote and stimulate economic growth in Nigeria.
Effect of Government Policies on Price Stability in Nigeriaijtsrd
This study examined the effect of monetary and fiscal policies on price stability in Nigeria using a data rich framework spanning from 1986 2020. The main problem with the macro economic policies that prompted this study was the fact that despite the series of the CBN Monetary Policy Committee decisions and government tax and expenditure implementation there is apparently no useful effect on inflation price . The study employed Auto regression Distributed Lag ARDL Bound Test for Co integration of data analysis depending upon the time series properties of the data that confer mixed order of integration in addition to the conduct of the unit root test and Error Correction Model ECM estimation. The ADF test revealed that LNCPI, EXR, GSDMD, GEXP, GTX and M2 were stationary at 1 1 while RIR, MPR and BOP at 1 0 . Pesaran, Shin and Smith 2001 established that the ARDL bounds technique allows a mixture of 1 1 and 1 0 variables as regressors. Hence, we proceed to perform the ARDL bounds test for integration. The results of the ARDL bounds revealed that the null hypotheses were all rejected implying that a long run effect exists among monetary and fiscal policies variables and CPI in a multivariate framework. ECM coefficient of 0.2942 conforms with expectation. Durbin Watson statistic 0f 1 9925 revealed that the model seems not to have any case of autocorrelation. The result of our analysis shows that fiscal policy rather than monetary policy exerts a more potent effect on price stability in Nigeria. The study recommends that both monetary and fiscal policies should be complementary in order to be effective in taming inflation in Nigeria. Onehi, Damian Haruna | Ibenta, Steve Nkem | Adigwe, Patrick, K. | Emejulu, Ikenna Justin "Effect of Government Policies on Price Stability in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-1 , February 2023, URL: https://www.ijtsrd.com/papers/ijtsrd52766.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/52766/effect-of-government-policies-on-price-stability-in-nigeria/onehi-damian-haruna
This document summarizes a research study on the impact of inflation on Nigeria's economic growth from 1981 to 2018. The study used an Auto Regressive Distributed Lag model and data from the Central Bank of Nigeria. The results showed that inflation had a negative and significant impact on economic growth, while exchange rate had a negative but insignificant impact. The study concluded that curbing inflation is important for Nigeria's economy. It recommended that monetary authorities reduce money supply through fiscal and monetary policies to lower inflation.
4.[30 39]long run relationship between private investment and monetary policy...Alexander Decker
This document summarizes a research journal article that investigates the long-run relationship between private investment and monetary policy in Nigeria from 1980-2009. It uses vector auto-regression techniques to test the relationship between private investment, GDP, money supply, and other factors. The results showed that money supply has a negative short-run impact on private investment, while GDP and other factors have a positive impact. In the long-run, all the variables became statistically significant. This implies that monetary policy in Nigeria has positively affected the growth of private investment and the economy over the long term. The document reviews several other studies on the relationship between financial development, private investment, and economic growth.
4.[30 39]long run relationship between private investment and monetary policy...Alexander Decker
This study investigated the long-run relationship between private investment and monetary policy in Nigeria from 1981 to 2009. The results of the vector autoregression model showed that in the short-run, money supply had a negative but insignificant impact on private investment, while GDP and other factors had a positive impact. However, in the long-run all variables became statistically significant, with money supply positively affecting private investment growth. This implies that monetary policy in Nigeria has positively influenced the growth of private investment over the long-run. The study concluded that private investment and monetary policy have been negatively related in the short-run in terms of money supply, but positively related based on GDP and other factors in the long-run.
11.long run relationship between private investment and monetary policy in ni...Alexander Decker
This study investigated the long-run relationship between private investment and monetary policy in Nigeria from 1981 to 2009. The results of the vector autoregression model showed that in the short-run, money supply had a negative but insignificant impact on private investment, while GDP and other factors had a positive impact. However, in the long-run all variables became statistically significant, with money supply positively affecting private investment growth. This implies that monetary policy in Nigeria has positively influenced the growth of private investment over the long-run. The study concluded that private investment and monetary policy have been negatively related in the short-run in terms of money supply, but positively related based on GDP and other factors in the long-run.
11.long run relationship between private investment and monetary policy in ni...Alexander Decker
This study investigated the long-run relationship between private investment and monetary policy in Nigeria from 1981 to 2009. The results of the vector autoregression model showed that in the short-run, money supply had a negative but insignificant impact on private investment, while GDP and other factors had a positive impact. However, in the long-run all variables became statistically significant, with money supply positively affecting private investment growth. This implies that monetary policy in Nigeria has positively influenced the growth of private investment over the long-run. The study concluded that private investment and monetary policy have been negatively related in the short-run in terms of money supply, but positively related based on GDP and other factors in the long-run.
Stock market and economic growth the nigerian experienceAlexander Decker
This document analyzes the relationship between the stock market and economic growth in Nigeria. It specifically examines the effects and causal relationship between market capitalization (a measure of stock market size) and gross domestic product (GDP, a measure of economic growth) in Nigeria from 1981 to 2008.
The study employs an error correction model and Granger causality tests to analyze the interaction between stock market and economic growth. The results show there is unidirectional causality from economic growth to the stock market in the short run, with the stock market having a negative effect on economic growth. However, in the long run the stock market has a positive effect on economic growth. The study concludes the Nigerian stock market can stimulate economic growth
FINANCIAL DEEPENING AND FOREIGN DIRECT INVESTMENT IN NIGERIAAJHSSR Journal
ABSTRACT : This study examined the impact of FDI on financial deepening in Nigeria from 1980 to 2022.
The research questions address the trend of FDI and financial deepening in Nigeria and the relationship between
the two variables. The study will used econometrics analysis basically cointegration and error correction model
to estimate the relationship between FDI and financial deepening . The findings of this researchrevealed that
foreign direct investment exert significant impact on financial deepening in Nigeria along the long run and short
run horizon. The findings have implications for policymakers, the Nigerian government, investors, and
businesses. Understanding the impact of FDI on financial deepening helpssuggests appropriate policy measures
and strategies to enhance Nigeria's financial sector and spur economic growth. Additionally, the study
contributes to the existing literature on FDI and financial deepening, providing valuable insights for future
research in this area.
KEY WORDS: Foreign Direct Investment; Financial Deepening; Relationship
The impact of interest rates on the development of an emerging market empiric...Alexander Decker
This document summarizes a journal article about the impact of interest rates on the development of emerging markets, using Nigeria as an empirical case study. It acknowledges people who assisted with the research. The abstract indicates that interest rates are difficult to forecast and impact borrowing costs for businesses. While higher rates could encourage savings in the long-run, current high rates in Nigeria of 12% are negatively impacting growth. The literature review discusses how inflation can stimulate or deter human capital formation and how interest rates influence savings, investment, and financial intermediation. It recommends Nigeria adopt pragmatic policies to reduce lending rates to single digits to boost the economy.
The Nigerian Government both previous and present has introduced several policies and programmes to reduce or proffer remedial measures to militate against the negative impact of high inflationary levels on the Nigerian economy. All these measures have not led to a productive result as the inflation rate has continued to sour higher over the years. This paper aimed at examining the economic influence of the determinant factors that influence inflationary trends that are multi-dimensional and dynamic which continue to defy solutions. The data used for this work was sourced from the National Bureau of Statistics and Central Bank of Nigeria, from 1983 to 2020. The ordinary least square approach was used to analyze the data and the result shows that consumer’s price index, interest rate and total export has a positive effect on Nigeria inflation, but only the Consumer’s Price Index (CPI) have a statistically significant effect on the Nigeria inflation at 99% confidence interval. Result also shows that the exchange rate, foreign reserve, money supply, real GDP, real income and total imports has a negative effect though not statistically significant on the Nigeria inflation rate. The result of the granger causality test shows exchange rate and total imports to granger cause Nigeria inflation. It is recommended that Government should improve locally manufacture products to meet international demands to reduce total imports.
This study examined the effect of interest rate deregulation on Nigerian banking system. The study adopted Augmented Dickey – Fuller (ADF), Bound test and Autoregressive Distributed Lag (ARDL). The correlation result indicated that of the correlation matrix that all the explanatory variables (interest rate, lending rate and deposit rate) had effect on loan and advances. The results of the unit root test revealed that interest rate and lending rate were stationary at level 1(0) while loan and advances and deposit rate were stationary at first difference 1(1). Also the results of the bound test revealed that there exist long run equilibrium relationship among the variables. The result of the ARDL indicated that interest rate had significant effect on loan and advances while lending rate and deposit rate had an insignificant effect on loan and advances. It was concluded that banks should monitor the level of loan and advances in respect to major ratios for effective performance. The study thus, recommended that banks should monitor lending rate which should be fixed in order to enhance lending performance. Regulatory authority should ensure that macroeconomic variables such as money supply, liquidity ratio, lending rate, monetary policy rate are effectively managed to enhance bank performance.
Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria 1...ijtsrd
Nigeria is a developing economy with active participation of the federal government in various economic sectors not only to promote economic growth and development but also to instill fiscal and economic discipline in the economy. Government participation in the economy means greater funding of economic activities and this is expected to impact on economic indicators. This study analyses the effect of government expenditure on inflation rate in Nigeria within a period of 39 years spanning 1981 2019 . The study specifically seek to ascertain, determine, explore and assess the extent to which government expenditures on key sectors of agriculture, education, health and telecommunications respectively affect inflation rate in Nigeria. In line with the specific objectives of this study, four research questions are raised and four hypotheses duly formulated. Data used for this study were collected from the Central Bank of Nigeria CBN Statistical Bulletin. Government Expenditure on Agriculture GOA , Government Expenditure on Education GOE , Government Expenditure on Health GOH and Government Expenditure on Telecommunication GOT are the independent variables while inflation rate INF is the dependent variable. Descriptive statistics, diagnostic test employing the Augmented Dickey Fuller and a multivariate regression based on Johanson Cointegration and Error Correction Model ECM are used to analyze the data. Our findings indicate that government expenditures on education and agriculture have positive but insignificant effect on inflation rate and on the other hand, government expenditure on health and government expenditure on telecommunications have positive and significant effect on inflation rate. Based on our findings, the study recommends that government should increase its allocation to the health and education sectors to trigger increased skills and healthcare of economic operators for enhanced human capital development and economic productivity. Government should also provide adequate infrastructures to facilitate economic growth and reduce high inflation rate. Mbanefo, Patrick Amaechi | Atueyi, Chidi Leonard "Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria (1981-2019)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-2 , February 2022, URL: https://www.ijtsrd.com/papers/ijtsrd49237.pdf Paper URL: https://www.ijtsrd.com/management/management-development/49237/analyzing-the-effect-of-government-expenditure-on-inflation-rate-in-nigeria-19812019/mbanefo-patrick-amaechi
A parametric debate of value added tax, economic growth and poverty reduction...Alexander Decker
This study examines the relationship between Value Added Tax (VAT) revenue, economic growth, and poverty reduction in Nigeria using time series data from 1994-2012. Two regression models are used. The first finds that VAT revenue has a positive and significant impact on economic growth. The second finds that economic growth has a negative but insignificant impact on poverty reduction. The descriptive statistics show average annual growth rates for GDP, government revenue, VAT, capital expenditure, secondary school enrollment, poverty rate, and labor force. Correlation analysis indicates GDP, government revenue, VAT, and secondary school enrollment are positively correlated, while capital expenditure and poverty rate are negatively correlated with other variables.
This study examined the impact of Bank credits to agricultural and manufacturing sectors on economic growth in Nigeria using annual time series data from 1970-2013. Using co-integration and error correction mechanism for the analysis, the study revealed that a long run relationship exists between Bank credits to agricultural and manufacturing sectors and economic growth. Given the error correction mechanism results, the study showed that Bank credits to agricultural sector exhibited an insignificant negative impact on economic growth while Bank credits to manufacturing sector exhibited a negative significant impact on economic growth in Nigeria. Based on these findings, the study recommends among others: Bank Credits to the Agricultural and Manufacturing Sectors should be properly monitored to ensure that funds meant for agricultural and manufacturing activities are not diverted for other purposes, Intending recipients of these Bank credits to the agricultural and manufacturing sectors should be made to undergo entrepreneurial training and how to pay back as at when due, so as to reduce the risks associated in giving out these Credits to the Agricultural and Manufacturing Sectors entrepreneurs.
This study examined the effects of exchange rate fluctuation on the Industrial Output Growth in Nigeria using time series data sparring from the period 1986 to 2015. Johansen’s Co-Integration model was employed to explore the long-run relationship among the variables used, while the Vector Error Correction model (VECM) was used to evaluate the short and long-run dynamic among the variables and the Granger Causality used to measure contemporaneous relationship among the endogenous variables. The dynamic correlation of the variables was captured by the analyses of impulse response and variance decomposition. The results of the analysis indicate a unidirectional causality from Exchange rate to Industrial output. The response of industrial output to the shock from exchange rate was positive and significant; more specifically in the initial years, while response to shock from other variables was little in magnitude and not as significant as exchange rate. From the Forecast Error Variance Decomposition (FEVD), the study revealed that although the main source of variance in output are own shocks, innovation in the exchange rate accounted for a higher proportion in the variation of industrial output than that of other associated variables (Inflation, Interest rate and Net Export). The study concluded that exchange rate has potentials of causing significant changes in industrial output in Nigeria. Against this backdrop, the study recommended the need for more macroeconomic policy attention to the proper management of the exchange rate, and the need to strengthen the link between agriculture and the industrial sector to reduce the reliance of the sector on import of inputs to a reasonable level.
Long run relations between the financial institutional reforms and the nigeri...Alexander Decker
This document summarizes a research paper that investigates the impact of financial institutional reforms on manufacturing performance in Nigeria from 1970 to 2005. It provides background on financial institutional reforms in Nigeria and discusses constraints on the manufacturing sector. The paper aims to examine the relationship between financial institutional reforms and manufacturing sector performance. It reviews several other studies that have analyzed the linkages between financial reforms and economic growth indicators.
Specific Analysis of FDI and Economic Growth in Nigeria and Ghanainventionjournals
This study analyses the relationship between FDI and economic growth in Nigeria and Ghana and how these relationship differ between both countries. This was explored using annual time series data obtained from the World Bank WDI for the period 1970-2015. This paper adopted the Absorptive Capacity theoretical framework and using the Seemingly Unrelated Regression (SUR) technique, regressed economic growth (proxied by the growth rate of per capita real GDP) on FDI, FDI transmission channels, and five other control variables. After conducting all the necessary and sufficient statistical, economic and econometric tests, the results show that: (i) generally, FDI exerts some positive impact on economic growth in both countries; (ii) the absorptive capacity theory does not hold in both countries, (iii) there is a bi-directional causality running from FDI to economic growth and from economic growth to FDI in both countries; (iv) the relationship between economic growth and FDI does not differ between both countries.
Similar to Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach (20)
This document analyzes different fraud theories - the fraud triangle, fraud diamond, and fraud pentagon - and their ability to detect corporate fraud in Indonesia. It reviews the literature on each theory and their components (pressure, opportunity, rationalization, capability, arrogance). The study uses secondary data from 310 publicly listed Indonesian companies from 2012-2017 to empirically test if the theories significantly affect corporate fraud. The results of statistical tests show the data supports all the hypotheses, indicating all three fraud theories can be used to investigate corporate fraud based only on publicly available secondary data.
Traditional markets in Indonesia were created so that people from all walks of life can fulfill their needs, especially staple food products, without having to spend a lot of money. However, the prices of food products in different markets vary depending on the consumers of the particular market. The aims of this article were to compare the price difference of staple food products in several traditional markets and to find out the factors that cause the price difference. The data were collected by carrying out a survey to five traditional markets around Jakarta regarding the prices of ten staple food products. The data were analyzed quantitatively using statistical calculation ANOVA from SPSS version 22, and also qualitatively to discuss several factors underlying the price differences. Results revealed that price differences of staple food products were not only caused by market location, but other factors such as pricing strategy and consumer specification. This research implied that traditional markets were still chosen by Indonesian consumers to fulfill their needs because of the competitive price.
Airport enterprise innovation performance is a crucial issue that planners, decision makers and managers should focus in order to drive the airport enterprise performance towards sustainable development. The strategic infrastructure needs, and investments need to include improvements across all major factors that affect the innovation dimension of sustainable development.
Key objective of the paper is to highlight the challenges in airport enterprise management towards sustainable development in terms of innovation improvement. A performance evaluation towards innovation and sustainable development framework is adopted and a case study application highlights the crucial role of airport enterprise management performance innovation dimension towards sustainable development. Conventional wisdom is to stimulate the interest on topic and promote a framework addressing to evaluate airport enterprise management performance towards innovation and sustainable development.
In the business world, companies need high performance. Performance is the result or overall success rate of a person over a period of time in carrying out tasks compared to various possibilities, such as predetermined standards of work, targets, or criteria. The purpose of the study was to analyze the influence of intellectual intelligence, emotional intelligence, and spiritual intelligence on employee performance. The population in this study were 63 employees of PT PLN (Persero). This study uses quantitative associative, with data analysis used is multiple linear regression analysis. The results showed that both intellectual intelligence, emotional intelligence, and spiritual intelligence had a positive and significant effect on employee performance. Intellectual intelligence has the greatest influence on employee performance, followed by spiritual intelligence and emotional intelligence. Intellectual intelligence, emotional intelligence and spiritual intelligence together have an effect of 52.4% on employee performance, and the remaining 47.6% is influenced by other factors not explained in this study.
The main purpose of the research study is to analyze the effect of organizational commitment, job satisfaction and work insecurity as well as their impact on the performance of Bank Aceh Syariah. The samples of the research are 209 employees which are selected with survey methods. Data was collected by using questionnaire, and then the data was analyzed with statistical methods of structural equation model (SEM). The study found that the organizational commitment and job satisfaction have a negative effect on turnover intention, but positive effect on the performance of Bank Aceh Syariah. The work insecurity has a positive effect on turnover intention, but negatif effect on the performance of the bank.
This study aims to test the effect of employee engagement and organization trust on organization citizenship behaviour and its impact on organization Effectiveness. The object of this research is the government organization of Pidie Jaya with Echelon IV Officers as a respondent. The number of sample is determined by using proportional sampling technique and Slovin equation, and it provides 171 respondents. Data is analyzed using the path analysis with the SPSS program assistance. The findings describes that employee engagement, organization trust, organization citizenship behaviour and organization Effectiveness have been going well. For the verification test of direct effect provides: employee engagement effects organization citizenship behaviour; organization trust effects organization citizenship behaviour significantly; employee engagement effects organization Effectiveness significantly; organization trust effects organization effectiveness significantly, and; organization citizenship behaviour effects organization Effectiveness significantly. These all findings prove that the previous theories are still applicable, and these also apply in Government organization of Pidie Jaya District. The originality of this research is in its novelty in term of the object, time, and statistic approach. This result contributes to academic and research area in order to develop the next model and method. For the practical, this has verified that the variables in this research need more attention from the managers especially in organization related.
This paper is an analysis on the impact machine learning, Artificial Intelligence, and robotics has on the supply chain management. The analysis covers the basis of AI in the SCM mechanisms while defining it from the ground up. Later on, to shed a true light on supply first the paper zooms in on the effects of machines in marketing. From what particular methodologies are deployed in today’s environment extending all the way to its anticipated outcomes. As the reader progresses he/she will find valuable studies on the main segments of machine learning within the supply chain itself. Certain novelties and innovations are scrutinized regarding SCM alongside these studies. These innovations are exemplified by certain cases presented in Part 3. The penultimate section briefly examines the possible drawbacks of the surge in machine application in SCM. The final section compiles the ideas presented in the paper as a whole and gives a glimpse of an estimate for the near future.
Huang (2018) decomposes the differences in quantile portfolio returns using distribution regression. The main issue of using distribution regression is that the decomposition results are path dependent. In this paper, we are able to obtain path independent decomposition results by combining the Oaxaca-Blinder decomposition and the recentered influence function regression method. We show that aggregate composition effects are all positive across quantiles and the market factor is the most significant factor which has detailed composition effect monotonically decreasing with quantiles. The main decomposition results are consistent with Huang (2018)
In Kenya, the newly promulgated constitution of 2010 (CoK, 2010), provides the basis of monitoring and evaluation as an important tool for operationalizing National and County Government projects to ensure projects success, integrity, transparency and accountability. The county governments are responsible for delivering basic services in collaboration with other agencies and partners to enhance quality of life: however, the county government projects has been marred by lack of integrity, transparency, accountability and litany of other monitoring and evaluation weakness which has undermined the impacts and success of projects including Regional Economic Blocs. Lake Region Economic Bloc (LREB) which comprised of fourteen counties bordering Lake Victoria Basin is not sparred either. The study was conducted in six LREB Counties namely, Migori, Homabay, Kisumu, Siaya, Kakamega and Vihiga chosen in a random manner. This study specifically assessed the effectiveness of Monitoring and Evaluation methods on the Performance of County Governments Projects. The study was guided by the theory of change. The research was carried out using descriptive survey design which entails both qualitative and quantitative data collection procedures. The researcher used stratified random sampling techniques to draw a sample from the study population. The qualitative method focused on group discussion and in-depth interviews. The quantitative techniques employed questionnaires to 398 purposively selected subjects from the county projects. Data collection was from two main sources; primary and secondary. Secondary sources included relevant county documents, constitution, legislations, policy documents and reports among others. The Study employed questionnaires, Focus group discussion and Interview guide as its primary data collection method. Statistical Package for Social Science (SPSS) version 18.0 was used for analysis. Data was analyzed using descriptive and inferential statistics techniques and presented in tables and figures. The study findings indicated thatM&E methods, indicated by the coefficient of effectiveness (R2) which is also evidenced by F change 109.403>p-values (0.05). This implies that this variableis significant (since the p values<0.05) and therefore should be considered as part of effectiveness of M&E systems on the performance of County Governments projects. The study concludes that there are no effective and adequate projects monitoring and evaluation methods in place for County Government Projects, which can facilitate the achievement of desired projects performance and outcomes. The study recommends that the County Government should develop a clear M&E methods for each project with clear data collection, analysis, reporting and implementation methods. This Study recommends further research to be conducted in the other Regional County Economic Blocs.
This document summarizes a study on trust among Igbo businessmen in Nigeria. It finds that Igbo businessmen predominantly practice affective-based trust (70%) over cognitive-based trust (18%) in business dealings. Affective trust is built through personal relationships and past experiences, while cognitive trust relies more on general beliefs. The study also explores the role of trust in Igbo culture and business, finding trust is important for negotiations, relationships, and future dealings. Dependability, quality, timeliness, and reputation were key factors that build trust among Igbo businessmen. The impact of trust is that it encourages more business and a peaceful environment.
This study is directed to determine the role of government treasurer in state university in tax compliance. With the spirit of the state apparatus, especially the Civil Servant, in reporting the taxes, it is expected to become a continuously growing and infectious snowball to the taxpayers to report their taxes correctly, completely and clearly as well as to avoid administrative sanctions that are subject to such non-compliance. This study method used is qualitative, the source of this study is government treasurer. The use of this qualitative approach is based on the concept of natural setting, grounded theory, descriptive, more concerned with the process than the outcome, temporary design, and research results are negotiated and agreed upon. The results show that treasurers have a big role in tax compliance, but however, there are still many obstacles that must be faced in fulfilling their financial obligations. this research was conducted only in one state university, so that data that could be processed was very limited.
The corporate governance is a popular topic within two last decade, and the emerging economies are practicing &enhancing their performances. The review is conducted to assess the effectiveness of the corporate governance implications on firm’s performances. The study followed the deductive approach and the journal articles, and the reports have used the source of the review. As per the literature findings, the researcher developed a conceptual design for the case review. The independent variable is the corporate governance mechanism, and the dependent variable is organizations performances. Both independent and dependent variables comprise the different type of corporate governance practice and the different function of the organizational performances. The review found that all the types of corporate governance practices are influenced to the organizational performance and the better corporate governance mechanism can enhance all type of performances.
Innovative work behavior is likely to be an important need for the increasing performance of the hospital to provide the health public services. Theoretically and empirically, the behaviors be related to employee perception on management support, information technology and employee empowerment. The study aims to determine the effect of management supports and information technology on employee empowerment as well as their impact on the innovative work behaviors of the employee of dr. Zainoel Abidin District Hospital Banda Aceh. The study conducted of 302 employees of the hospital. The data collected by questionnaire and then the data is analyzed by statistical means of structural equation model (SEM). The study found that management support and information technology have a positive and significant effect on the employee empowerment and innovative work behavior. The employee empowerment mediates the effect of management supports and information technology on the innovative work behavior.
This research deals with an insight and analysis of the economy projectification in a smaller country, here represented by Croatia. The study was inspired by similar research conducted in Germany, Island and Norway and it is based on similar but partly adapted methodology. The objective of this study is to measure level of economy projectification in a smaller country, and to provide relevant data related for the level of project work. The random sample of 250 companies, from both public and private sectors, was selected across nine sectors of the economy. A stratified random sampling was drawn and interviews were conducted via telephone, so as on-line survey. While analysing collected data and considering the objectives of this paper, only basic statistical analyses were applied for calculating averages and mean values. This study confirmed that projectification trends and figures in a smaller country are similar to those in larger or developed countries. During the period of last five years, the projectification level of the Croatian economy was increased from 27% (in 2013.) to33% (in 2018.). The results show significant difference in projectification among the different sectors of economy, so as changes and trends over the recent time period.
This paper is designed to show how integrated process planning and cross employee planning can be a vital part to any business operation. It will also uncover how different integrated processes and employee relations will help a business to grow. Various topics ranging from enterprise resource planning, integrated planning in supply chains, the non-linear approach, innovation and digitalization coupled with cross training and empowerment, Human resources, and Manager Employee relations complement each other and could bring an organization together. Various thought processes and intellectual reasoning skills were instrumental in all consideration of this project. Many antiquated processes were changed over the years to update operations in the business world where conventional means were not effective. Integrating product planning and employee planning optimized operations both in the product and service industry and I will accent many of these optimizations. With recent technological advances and human relations tactics, project management and organization has been streamlined and works more productively than its predecessors. Regardless of the industry, integrated process planning, and cross employee planning could possible turn a dinosaur into a competitive part of the economy.
One of the problems in big cities are transportation.They solve this problem by providing mass transportation such bus or train. People use this facility to travel between surrounding cities or within the city. Jakarta recently has a new public transportation called TransJakarta which serving people travelingfrom nearby cities and in the city.In order to move or doing business between places people in Jakarta use TransJakarta This research aims to analyse ticket price, service quality and customer value toward customer satisfaction. We conducted a research by using questionnaires given to thepassangers and developed a model using a multiple regression to process the result from questionnaires. Samples were taken from The number of sample for this reseach was 130 customers taken from one bus stop which passengers traveled from BSD City to Grogol and Slipi. The results from partial testing showed that customer value andservice quality have effect on customer satisfaction while ticket price does not have effect on customer satisfaction.
This document summarizes a research study that examined the relationships between perceived website quality, perceived benefits, electronic word of mouth (eWOM), trust, and consumer attitudes toward online shopping in Indonesia. The study used a survey of 118 online shopping consumers and structural equation modeling to analyze the data. The results showed that perceived website quality positively influences perceived benefits and trust. Perceived benefits and trust positively impact consumer attitudes toward online shopping. Additionally, perceived website quality indirectly influences consumer attitudes through its effect on trust.
Dairying is one of the livestock productions practiced almost all over Ethiopia, involving a vast number of small, medium, or large-sized, subsistence or market-oriented farms. However, the structure and performance of dairy sectors and its products marketing both for domestic consumption and for export is generally perceived poor in Ethiopia due to different challenges. These challenges vary across different production system to another and/or from one location to another. Among other challenges seasonality of production, spoilage (lack of milk collecting facilities), poor animal health and management, inadequate supply of quality feed, low productivity and genetics ,quality problem, weak vertical integration, absence processing plant, inadequate permanent trade routes and other facilities like feeds, water, holding grounds, lack or non-provision of transport, lack of access to land, ineffectiveness and inadequate infrastructural and institutional set-ups, prevalence of diseases, lack of credit and inadequate market information are dominant in Ethiopia. Therefore, market infrastructure facilities, producers cooperative, feed quality and quantity provision system need to be strengthen for effective dairy value chain development.
This research paper examines customer intention to reorder in respect to delivery service and product satisfaction. Our research model includes delivery service, satisfaction and reorder intention. Satisfaction in this research model work as mediating variable. A survey method was adopted to collect data, collected data were analysis using SPSS to see the correlation between variables. A significant relationship was found between delivery service and reorder intention as well as moderating role was also note with satisfaction and reorder intention.
This paper examines the impact of internet use on student performance. In this cross-sectional study, one hundred twenty survey responses were collected from plus two-level students from BirendranagarSurkhet. The respondents were selected from class 11 and 12 students randomly. Frequency of internet use, location of internet use, cooperation from teachers for internet learning and peer group influence on internet use for academic purpose has been analyzed with their academic performance.one sample t test was used to analyze the data. The finding concludes all these variables have positive impact if the student use internet for learning process. Similarly, the analysis shows that the student who used internet at home for learning purpose has found highest academic achievement.
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Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach
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The International Journal of Business Management and Technology, Volume 2 Issue 4 July-August 2018
ISSN: 2581-3889
Research Article Open Access
Interest Rate and Growth Nexus in Nigeria: The ARDL –
Bound Test Approach
Adekunle, E. Oludayo1
Department of Banking and Finance
Adekunle Ajasin University, Akungba Akoko, Ondo State, Nigeria.
adekunleoludayo864@yahoo.com
Adodo, Feyisayo Loveth2
Department of Banking and Finance
Adekunle Ajasin University, Akungba Akoko, Ondo State, Nigeria.
adodofeyisayo@gmail.com
Akindutire, Yetunde Tonia3
Department of Banking and Finance
Afe Babalola University, Ekiti State, Nigeria.
ABSTRACT: This study examined the effect interest rate on economic growth in Nigeria. Augmented Dickey – Fuller (ADF),
Bound Test and Autoregressive Distributed Lag (ARDL) were employed to examine the effect of impact of interest rate on economic
growth in Nigeria. The unit root test showed gross domestic product was 1(0) while interest rate, investment and gross capital
formation were 1(1). The result of the Bound Test indicated long run relationship among the macroeconomic variables employed in
the study. The result of the ARDL indicated that interest rate had negative effect on economic growth both in short run and long
run. However, in the long run investment and gross capital formation were established to have positive effect on economic growth
with gross capital formation being insignificant. It was concluded that interest rate has a macroeconomic tool is not effective
in stimulating economic growth in Nigeria. It was recommended that the level of interest rate should be adequately
controlled for the purpose of stimulating economic growth without inflationary pressure. Finally, robust
macroeconomic policies aimed at ensuring economic stability should be formulated in order to increase capital
formation and attract investment in order to promote economic growth.
Key Words: Economic Growth, Gross Capital Formation, Gross Domestic Product, Interest Rate and Investment
I. Introduction
Interest rate serves as one of the major macroeconomic variables that determine the level of stability and
growth of an economy. Interest rate serves as a tool that facilitate the allocation of scarce financial resources by financial
intermediaries for productive and development purpose.
Interest rate is the rate that is charge on lending which represents cost of investment. According to James,
Richard and Victor (2013) interest rate is regarded as the return that is received on investment or rate charged on
lending. Interest rates play significant role in transmitting monetary policy thrust to economic activities through its
influence on major macroeconomic variables (Jelilov, 2016). Reduction in interest rate spurs up liquidity by lowering
consumption costs thereby simulating aggregate demand which accelerated investment and growth (Ismail and Roux,
2004). Developing countries are faced with the task of efficiently allocating scarce financial resources among competing
investments opportunities (Etale & Ayunku, 2016).
The significant effect of interest rate on investment which determines the level of economic growth has been of
great concern in developing countries. James, et al., (2013) noted that financial sector serves as the main driver of growth
given the role it plays in the intermediation of funds among economic agents and the prevailing interest rate spread
between deposit rate and lending rate determines effectiveness of banks in promoting investment and growth. Interest
rate determination has undergone different regime in Nigeria. Before the deregulation, interest rate was determined and
fixed by the Central Bank of Nigeria (CBN) and the country moved towards market based financial system in 1986
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Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach
through the adoption of Structural Adjusted Programme in which interest rate is determined by the forces of demand
and supply for funds in the financial system in order to increase the depth and breadth of the Nigerian financial system
and moved the economy towards the path of growth (Etale & Ayunku, 2016). Obamuyi and Olorunfemi (2011) asserted
that the main aim of this reform is to eliminate financial repression and ensure allocative and productive efficiency in
the economy. In 1993, interest rate was very high and volatile which resulted in the fixing MPR at 13.5% (CBN, 1994).
However, market based determinants of interest rate has been affected with volatility which posed challenges to the
success of the reform in Nigeria (CBN 2006).
The Nigerian economy has continued to be retarded by several challenges which influenced economic activities
negatively. The demoralizing consequences of the global economic recession and financial meltdown have not only
affected economic performance but also financial system performance (Obansa, et al., 2010; Jelilov, 2016). One of the
major problems retarding the growth of the Nigerian economy is high interest rate and the inability of the policy makers
to fix rate that will engender growth. High interest rate will lead unemployment crisis, discourage investment thus
retarding growth and development (James, et al., 2013). Etale and Ayunku (2016) asserted that high interest rate depress
investments, reduce output, increase unemployment rate and impede growth through high cost of borrowing. Despite
formulation of different reforms to cushion the effect on interest rate volatility on the Nigerian economy, the growth rate
of the country still remains sluggish.
Researches on the effect of interest rate on economic growth in Nigeria showed an inclusive result on the
relationships between interest rate and economic growth which resulted in the need to further undertakes a further
study in the subject area. Thus, this study focused on the effect of interest rate on economic growth in Nigeria.
II. Literature Review
Figure 1: Trends of GDP
Sources: CBN Bulletin, 2016
Figure 1 showed the trends analysis of gross domestic product in Nigeria. It was revealed that gross domestic
was at its lowest ebb between 1981 and 1993. However, from 1993 there was sharp rise in gross domestic product to
2015.
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1981
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GDP
GDP
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Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach
Figure 2: Trends of Interest Rate
Sources: World Development Indicator, 2016
The figure above presents, the trends of interest rate. It was indicated that interest rate has remained
unstable in Nigeria. Interest rate was low from 1981 to 1985 before shooting up between 1985 and 1989. Interest rate falls
significantly in 1991 before rising again in 1993 and was low between 1995 and 1997. Interest rate started rising again
from 1991 and get to the highest level in 2001 before dropping in 2009 and had remained low to 2015 but without
reaching lowest point.
Obainuyi and Olorunfemi (2011) examined the implications of the financial reforms and interest rate behaviour
on the economic growth in Nigeria from 1970 to 2010 by employing co-integration statistics and error correction model
and it was found that that financial reforms and interest rates have significant impact on the Nigerian economic growth
Anaripour (2011) investigated the relationship between interest rate and economic growth using time series
panel data collected from 22 countries for the period 2004 – 2010 which was analyzed using and it was indicated that
there was a negative relationship between interest rate and economic growth. The result of Udoka and Roland (2012)
and Imoisi et al. (2012) indicated inverse relationship between interest rate and economic growth through the adoption
of OLS to examine the effect of interest rate on economic growth in Nigeria. Saymeh and Orabi (2013) investigated the
effect of interest rate, inflation rate and GDP on real economic growth in Jordan. The employed ADF unit root test,
Johansen co-integration test and regression statistics to analyse data and it was indicated interest rate had positive effect
on economic growth. Adeniran, Yusuf and Adeyemi (2014) examined the impact of exchange rate on economic growth
in Nigeria by adopting secondary time series data for the period 1986 and 2013 which was analyzed using regression
analysis and it was found that that interest rate had insignificant and negative impact on economic growth. By adopting
OLS to analyzed data set from 1986 to 2010, Ifeanyi and Chukwu (2014) examined the impact of interest rate
deregulation on economic growth in Nigeria and it was found that low interest rate stimulates and increase growth in
real domestic product. Mushtaq and Siddiqui (2016) examined the effect of interest rate on economic performance of
Islamic and non Islamic nation by adopting data from non-Islamic and 17 Islamic countries from 2005 to 2013 which was
analyzed using random effect and system generalized method of moments (GMM) and it was found that domestic credit
of banks had negative and significant effect on investment of non-Islamic countries, while in Islamic countries,
remittances show a positive significant impact on investment.
Recently, Etale and Ayunku (2016) employed Error Correction Model (ECM) to examine the relationship
between interest rate and economic growth in Nigeria by using secondary time series data from 1985 to 2014 and it was
revealed that interest rate negatively and insignificantly related to economic growth. However, Jelilov (2016) found
that interest rate had positive impact on growth by examining the effect of interest rate on economic growth in Nigeria
from 1990 to 2013 which was analyzed using Ordinary Least Square techniques. This finding was corroborated by the
result of Ajudua and Okonkwo (2015) who revealed that interest rate promote growth in Nigeria while examining the
determinants of interest rate in Nigeria by using error correction mechanism (ECM) to analyzed data obtained from the
Central Bank of Nigeria statistical bulletin and were analyzed.
0
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AxisTitle
INT
INT
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Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach
However, the finding of Jelilov (2016) was contradict by the empirical result of Nkemakolam (2017) and
Babalola, Danladi, Akomolafe and Ajiboye (2015) who establish negative relationship between interest rate and
economic growth through the adoption of Ordinary Least Square to examine the effect interest rate on economic growth.
However, Maiga (2017) examined the impact of interest rate of economic growth in Nigeria from 1990 to 2013 and found
that the interest rate had positive effect on growth.
From the review of empirical work of scholars, it could be seen that the nexus of the relationship between
interest rate and economic growth has generated controversial and inclusive results. The Findings of Udoka and Roland
(2012); Imoisi et al (2012) Adeniran, Yusuf and Adeyemi (2014); Babalola et al., (2015); Etale and Ayunku (2016);
Nkemakolam (2017) revealed that there exist an indirect relationship between interest rate and economic growth.
However, the empirical finings of Obamuyi and Olorunfemi (2013); Ifeanyi and Chukwu (2014); Ajudua and Okonkwo
(2015); Jelilov (2016); Maiga (2017) indicated positive relationship between interest rate and economic growth. This
inclusive results have generated the need for further empirical and more econometrics approach to examine the
relationship between interest rate and economic growth. Thus, this study examined the short run and long run effect of
interest rate on economic growth in Nigeria by adopting Auto-regressive Distributed Lag and Bound Test Approach.
III. Methods
In this study, expo facto research design was adopted to investigate the effect of interest rate on economic
growth in Nigeria because the data were mainly historical and non manipulative in nature. Data for the study spanned
through 1981 to 2016 and obtained from Central Bank of Nigeria Statistical Bulletin (2016) and World Development
Indicator (2016).
Model Specification
In order to capture the impact of interest rate deregulation on economic growth in Nigeria a multiple
regression model of James et al., (2013) was adopted with a little modification. The model for this work as:
GDP = f(INT, GCF, INV) (1)
GDP = B0 + B1INT + B2GCF + B3INV + u (2)
GDP = Gross Domestic Product
INT = Interest Rate
GCF = Gross Capital Formation
INV = Investment
B0 = Constant Term
B1 – B3 = Parameters of the variables to be estimated
u = Unexplained Error Term
The autoregressive distributed lag (ARDL) is suitable are either I(1) or the mixture of I(1) and I(0). The ARDL
model avoids endogeneity problems when compared with other form of co-integrating toques and also estimates the
long run and short run parameters simultaneously.
Where Δ denotes the first difference operator, 𝛽0 is the drift component, and et is the white noise residuals. The
expression (𝛽1 – 𝛽4) represents the short-run dynamics of the model. The remaining expression with the (𝛼1 – 𝛼4)
represents the long- run relationship of the model.
Method of Data Analysis
The preliminary test of analysis in this study commenced with Augmented Dickey Fuller (ADF) unit root test
in order to test order of integration of the variables and to overcome the problems of spurious regression often
associated with non-stationary time series data. The study employed Bound Test to establish the long run relationship
among the variable. However, Auto-regressive Distributed Lag was adopted to examine the long run and short run
relationship among the variables employed. This method enables the estimation of both short run and long run
coefficients when variables are either 1(1) or the combination of 1(1) and 1(0). Also, the variables take care of the
problem of endogeneity in the regression mole (Pesaran, Shin & Smith, 2001).
Some of the diagnostic techniques include Lagrange serial correlation test, Jarque Bera normality test, Breusch-
Pagan heteroscedasticity test and Ramsey Reset Test.
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Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach
IV. Interpretation of Results
Correlation Matrix
Table 1: Correlation Matrix
GDP INT GCF INV
GDP 1.000000
INT -0.145193 1.000000
GCF 0.628856 -0.021613 1.000000
INV 0.656234 -0.069682 0.285319 1.000000
Source: Researchers’ Computation, 2018
Table 1 above revealed that there is absence of multicollinearity among the variables since the correlation
value are less than 70%. The result revealed that interest rate had negative correlation with gross domestic with a value
of -0.145193. Also, it was revealed that Investment and Gross Capital Formation had positive correlation with gross
domestic product with correlation value of 0.628856 and 0.656234 for GCF and INV respectively.
Test of Stationarity
Table 2: Summary of Unit Root Result
VARIABLES TEST STATISTIC 5% CRITICAL
VALUE
Prob. LEVEL S/NS
GDP /3.245753/ /2.963972/ 0.0270 1(0) S
INT /5.047070/ /2.957110/ 0.0003 1(1) S
INV /4.580447/ /2.957110/ 0.0009 1(1) S
GCF /4.364721/ /2.954021/ 0.0016 1(1) S
Sources: Researcher’s Computation, 2018
The table above revealed the summary of unit root test for the macroeconomic variables using Augmented
Dickey Fuller test. It was indicated that Gross Domestic Product was stationary at level 1(0) while Interest Rate,
Investment and Gross Capital Formation were free from unit root problem first difference at 1(1). However, since the
macroeconomic variables employed are mixture of I(0) and I(1) orders of integration thus the study employed the
Autoregressive Distributed Lag of short run and long run equilibrium.
Long Run Relationship
Table 3: Bound Test
Test Statistic Value K
F-statistic 5.789195 3
Significance I0 Bound I1 Bound
10% 2.72 3.77
5% 3.23 4.35
2.5% 3.69 4.89
1% 4.29 5.61
Sources: Researchers’ Computation, 2018
The result from Bound Test revealed that that the F-statistics value is 5.789195 which is greater than the lower
bound critical value of 3.23. Thus, the null hypothesis of no long association-ship is rejected for the model implying
Interest Rate, Investment and Gross Capital Formation are good determinants of gross domestic product in the long run.
Autoregressive Distributed Lag Result
Table: 4 Short Run Co-integrating Result
Variable Coefficient Std. Error t-Statistic Prob.
D(INT) -0.002084 0.003441 -0.605613 0.5510
DLOG(INV) 0.166496 0.047985 3.469739 0.0022
DLOG(INV(-1) -0.169324 0.072296 -2.342092 0.0286
DLOG(GCF) 0.113831 0.081091 1.403743 0.1744
DLOG(GCF(-1) -0.205877 0.183444 -1.122283 0.2738
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CointEq(-1) -0.027190 0.009314 -2.919152 0.0079
Sources: Researchers’ Computation, 2018
Table 4 revealed the short run result of regression model. The result of the short run co-integration result
revealed that there is speed of adjustment among the macroeconomic variables with a negative and significant value of -
0.027190. This implies that gross domestic product will adjust back to its equilibrium state at 2.7% in the short run.
Also, in the short run it was revealed that interest rate, first period lag of investment and gross capital
formation had negative and insignificant effect on gross domestic product with first period lag of investment being
significant while investment and gross capital formation had positive significant impact on gross domestic product.
Table 5: Long Run Result
Variable Coefficient Std. Error t-Statistic Prob.
D(INT) -0.464378 0.179966 -2.580365 0.0171
DLOG(INV) 12.961527 5.087086 2.547928 0.0183
DLOG(GCF) 15.778825 11.449878 1.378078 0.1820
C 9.511724 2.256061 4.216077 0.0004
Sources: Researcher’s Computation, 2018
The result of the long run relationship revealed that Interest Rate had negative and significant effect on gross
domestic product in Nigeria with a coefficient of -0.464378, implying that an increase in Interest Rate will lead to fall in
Gross Domestic Product which is in conformity with the theoretical expectation. However, it was revealed that
Investment had significant and positive effect on Gross Domestic Product with a coefficient value of 12.961527 which
means that an increase in Investment will lead rise in Gross Domestic Product and is line with the theoretical
expectation. Finally, the long run ARDL model revealed that there is a significant and direct relationship between Gross
Capital Formation and Gross Domestic Product With a coefficient value of 15.778825 which implies that a unit increase
in Gross Capital Formation will increase gross domestic product.
Table 6: Diagnostics Results
Diagnostics test Observed value P-value (Chi-
square)
Normality Test 1.462079 0.4813
Breusch-Godfrey LM test for autocorrelation 4.617411 0.0994
Heteroskedasticity Test: Breusch-Pagan-Godfrey 5.585248 0.7806
Ramsey RESET Test 4.074120 0.0565
Source: Researcher’s Computation, 2018
The table above shows the diagnostics test for the regression result. The Jarque-Bera normality test revealed
that the residuals of the model is normally distributed with a probalaity value of 0.4813. Also, Breusch-Godfrey
Lagranger Multiplier test (LM) revealed the absence of serial correlation with a p-value of 0.0994. The result of Breusch-
pegan test indicated that the model result was homosecedatic with a probability value of 0.7806 which is statistically
insignificant at 5% critical value thus leading to the acceptance of null hypotheses that the residual is. Finally, the result
revealed that Ramsey Reset Test indicated no misspecification in the regression model.
Table 7: Causality Test
Null Hypothesis: Obs F-Statistic Prob. Result
INT does not Granger Cause GDP 32 0.06311 0.9390 No Causality
GDP does not Granger Cause INT 32 0.50346 0.6100 No Causality
GCF does not Granger Cause GDP 32 5.74060 0.0084 Causality Exist
GDP does not Granger Cause GCF 32 11.6860 0.0002 Causality Exist
INV does not Granger Cause GDP 32 0.81081 0.4550 No Causality
GDP does not Granger Cause INV 32 6.99088 0.0036 Causality Exist
Source: Researcher’s Computation, 2018
The result of the causality test indicated that there independent relationship between interest rate and gross
domestic product which implies that there is no causality between interest rate and gross domestic product. Also, it was
indicated that there is a bi-directional relationship gross capital formation and gross domestic product which implies
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Interest Rate and Growth Nexus in Nigeria: The ARDL – Bound Test Approach
that there is causal relationship between gross capital formation and gross domestic while unidirectional relationship
was established between investment and gross domestic product.
V. Conclusion
Interest rate serves as one of the major macroeconomic tools used stimulating economic growth. The
connection of the association-ship between investment and economic growth is determined by interest rate. Stable
interest rate allocates resources effectively to engender investment and growth in the economy. Depending on the policy
thrust of the government, authority can either increase its interest rate to stimulate economic growth or reduce it to
contrast the economy. From the findings of the research it was established that interest rate and investment had
significant influence on the economic growth of Nigeria. However, gross capital formation was found to have
insignificant effect on economic growth. It was concluded that interest rate has a macroeconomic tool is not effective in
stimulating economic growth in Nigeria. It was recommended that the level of interest rate should be adequately
controlled for the purpose of stimulating economic growth without inflationary pressure. Interest rate should be
reduced to single digit so as to encourage investment through borrowing which will eventually stimulate economic
growth and development. Finally, robust macroeconomic policies aimed at ensuring economic stability should be
formulated in order to increase capital formation and attract investment in order to promote economic growth.
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