Appraisal of The Effect of The Global Financial Meltdown on The Nigerian Money Market

Abstract

This study looked at the effect of the global financial meltdown on the Nigerian money market. To start with, it identified the major problems associated with the Global financial crisis and its effects on the Nigeria economy. As the crisis affect trade and investment flows, the Nigerian money market have so far triggered a rebound and allayed panic about the systemic financial collapse. The Ordinary Least Square (OLS) technique of regression analysis was adopted in analyzing the empirical data for Non-crisis period from 2000-2005 and the crisis period from 2006-2009 after necessary adjustment were carried out on the relevant data. Money supply/Gross Domestic Product (which stands as proxy for the impact of the Global financial meltdown) serves as the dependent variable while other money market indicators (TBs, CPs, Bas, CDs, BLR and INF) serve as the explanatory variables in the first and second models. The findings from the empirical analysis showed that in the non-crisis era (2000)(2001)(2002)(2003)(2004)(2005) the explanatory variables all met apriori expectation. However, in the crisis era, only the coefficient of inflation retained its apriori sign. This implies that economic activities were adversely affected by the global financial meltdown as seen in the adverse effect on financial deepening. This in turn has a corresponding effect on the Nigerian money market, thus dis-stabilizing its indicators. This can be attributed to the failure of the Nigerian money market regulator to fulfill its primary responsibilities of supplying needed funds to critical sectors where such funds are needed during the period of financial crisis. This study therefore recommends that adequate procedures for handling systemic crisis should be drawn up promptly in preparation for contingencies. Monetary authorities should identify the vulnerabilities of the money market and safeguard its effectiveness as a means of reducing the further effects of the financial meltdown on Nigerian economy at large.

Money Market Instruments and Financial Deepening in the Nigeria Emerging Economy

“…Similarly, while the study establishes a long-run impact of money market instruments on financial deepening, granger causality also flows bi-directionally between money market instruments and financial deepening in the context of Nigeria. The finding is in consonance with Ajao and Festus (2011), Igbinosa and Orobator (2016), Ndugbu et al (2016). It is not in tandem with Ehigiamusoe (2013) and Etale and Ayunku (2017).…”

“…Another reason adduced for this inverse relationship may be the weak monetary policy by the apex bank over time and weak framework. The finding agrees with the research outcome by Ajao and Festus (2011); Igbinosa and Orobator (2016); Partar (2016); Etale and Ayunku (2017) and Karimo and Ogbonna (2017). It however disagrees with the researches of Iyiegbumiwe (2005); Agbada and Odejimi (2013); Ndugbu et al (2015); and Okoro et al (2017).…”

The Impact of the Global Financial Crisis on Business Development in Makurdi Metropolis, Benue State, Nigeria from 2007–2009

“…Coupled with the new CBN directive on loan disclosures, many big banks in the country were affected with many going bust. e) Research findings by Ajao and Festus (2011) on the absence of financial deepening supports the fact that the global financial crisis also had a severe negative effect on the Nigeria money market.…”

“…Nigeria's economic managers had argued that the global financial crisis would have a minimal effect on the country (Ajao & Festus, 2011). The champion of this line of argument was the then Central Bank of Nigeria's (CBN) Governor, Prof. Charles Soludo who argued that Nigeria was insulated from the global financial meltdown.…”

“…its exposure to the international oil market, limited raw materials), the overall quality of national economic management and an internally weak economy. The crisis had a significant impact on the country's economic system in virtually all sectors caused by the financial system "by virtue of their intermediation roles" in the economic system (Ajao & Festus, 2011). The global financial crisis impacted Nigeria's economy in the following areas: a) Decline in oil revenue: crude oil prices fell from about US$147 per barrel in July 2008 to as low as about US$37 early 2009, i.e.…”