The study investigated the performance of Commercial Banks in Nigeria after Banking Sector Reforms. In order to be thorough, the performance of Commercial banks before the Reforms was also investigated. Here we analyze the relationship using Error Correction Mechanism and Chow test over the period 1970-2012. The Variables used were obtained from the banking system. The study found out that the reforms brought about some important changes in Commercial Banks Performance in Nigeria. Specifically, the level of profit (measured by NIM) continues to improve above single digit of 9.17 in 1996 to 16.18 in 2004 and a peak of 20.96 in 2011. This translates into a mean profit of 2.40 recorded in the deregulated period as against 1.54 recorded in the regulated period. Commercial Banks may improve in performance in terms of profitability, but may not really impact on the real economy at least on the short run. The study also shows that much of the benefits to commercial banks in credit creation in the economy will be derived at a price of time. A number of possible policy menu capable of bringing about a sustained Commercial Banks Performance in Nigeria in years following the study have been prescribed in the study.
PurposeThis study aims to empirically investigate the effect of digital currency development (digital finance) on financial inclusion in Nigeria for the period. Nigeria undertook her digital currency development to rip the benefits of financial inclusion, safer remittances and exchange rate regularization among others.Design/methodology/approachThe researchers developed high-frequency quarterly data for the analysis from 2006:1 to 2020:4 in a weighted stepwise forward regression. A model similar to the one used by Demir et al. (2020) and Altunbas and Thornton (2019) with some modifications was developed.FindingsFindings suggest that (1) a unit rise in the usage of automated teller machines by citizens spontaneously raised financial inclusion in a quarter in Nigeria by 0.012 units and were statistically significant; (2) a percentage rise in the use of point of sales transaction by citizens in the country also raised financial inclusion in Nigeria by approximately 1%; (3) a percentage increase by mobile payment users in Nigeria will spontaneously increase financial inclusion by at least 0.4%; (4) a percentage rise in web payment services reduces financial inclusion by 22% in Nigeria; (5) Cumulative positive effect of digital finances on financial inclusion in Nigeria was approximately 7%.Practical implicationsThe researches show, using in-sample forecast, that while financial inclusion will grow in Nigeria, it will not be without systemic fluctuations. Based on the outcome, it is proposed that if the present digital currency penetration for the country is sustained at the present growth rate, the country may be more financially inclusive by 2% additionally by 2025 and 4% more by 2030.Originality/valueOriginally, it is found that digital currency development are positive derivatives for financial inclusion in Nigeria. Cumulatively, the effect of digital finances on financial inclusion in Nigeria is approximately 7% positive.
Abstract:The study investigated the Consumption-Interest rate Euler relationship for Nigeria in the periods 1980 to 2015. Applying commonly used vector autoregression (VAR) techniques on annual data obtained for the country, the study found that there exist the ConsumptionInterest rate Euler relationship for Nigeria. However, our finding refutes the general assertion of theorist that the substitution effect is always larger (and more workable) in the Euler relationship than the income effect. Our results shows that the consumption Euler equation for Nigeria is consumption-driven, an indication that income effect may be more workable in Nigeria thus crowding out the substitution effect. This was further supported by a unidirectional causality that runs through consumption to interest rate. We recommend, among other things, interest rate policy framework that is flexible to economic needs of the region and motivates saving-dissaving culture of the people and consumptions patterns that is financed by cashless financial products. Key Words: Consumption, Real Interest rate, inflation, VAR, Nigeria.Resumo: O trabalho analçisa a Relação de Euler referente a consumo-taxa de juros para a Nigéria nos períodos de 1980 a 2015. Aplicando técnicas comumente utilizadas de Autoregresão Vectorial (VAR) com dados anuais obtidos para o país, o estudo encontrou que existe a relação Euler de Consumo-Taxa de Juros em Nigéria. Porem a analise realziada rejeitou a afirmação geral dos teoricistas de que o efeito de substituição é sempre maior (e mais viável) na relação de Euler do que o efeito de renda. Nossos resultados indicam que a equação de Euler de consumo para a Nigéria é impulsionada pelo consumo, uma indicação de que o efeito de renda pode ser mais viável na Nigéria assim eliminando o efeito de substituição. Isto foi ainda confirmado pela existencia de uma causalidade unidirecional que vai do consumo para a taxa de juros. Isso sugere, entre outras coisas, utilizar um framework na política de taxas de juros que seja flexível às necessidades econômicas da região, e motive a cultura dos padrões de consumo nas pessoas de poupança-gasto financiada por produtos financeiros sem dinheiro.
This paper investigated the dynamic relationship between energy consumption and inflation in Nigeria using time series data obtained for the period 1980 to 2017. Applying Autoregressive Distributed Lag (ADL) technique on the variables, the study found that Premium Motor Spirit (PMS), Dual Purpose Kerosene (DPK) and Natural gas were noninflationary in Nigeria both in consumption and prices over the period. Also, Automotive Gas Oil (AGO) consumption produces strong evidence of positive inflationary pressure but not in prices throughout the study period. Further, we found a strong causality link between natural gas consumption and inflation in Nigeria. We concluded that inflation in Nigeria is not majorly a demand-pull phenomenon, pulled by energy consumption. We provide both subjective and evidence-based reasons for the economic trend and recommend a bridge in the degrading systemic informality in the energy sector that will deliver real time effect of energy consumption-inflation proposition in Nigeria. Contribution/ Originality: This study documents that changes in Inflation in Nigeria is not necessarily a demand-pull phenomenon, pulled by energy consumption. Changes in inflation could be explained away from energy consumption, notably inflation expectation by the citizenry.
The study empirically investigates the impact of monetary policy shocks on the performance of the industrial sector in Nigeria, and how this affect the general growth performance of the economy in the periods 1980-2018. Monetary policy variables used were money supply (M2t), monetary policy rate (Mprt), Treasury bill rate (Tbrt) and Credit to the private real sector (Credt). We also gauged the system with other control variables like gross fixed capital formation (gcft), inflation (????t) and exchange rate (exr). Utilizing Vector Autoregression (VAR) and Generalized Method of Moments (GMM), we found that any unanticipated shock on monetary policy rate and money supply growth will produce falling impact on industrial sector output that is consistent with no sign of convergence throughout the period. However, shocks to credit supply and treasury bill rate produces positive growth outliers at different magnitudes in the industrial sector. We also found statistically significant pass-through effect of monetary policy from the industrial sector to the general economy of at least 30 percent growth effect. A number of possible policy menu capable of deepening monetary policy-industrial performance nexus in Nigeria in years following the study have been prescribed in the studyincluding improved stock market development, bond market development and other credit channels that easily linked policy to the private sector for seamless policy transmission.
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