Foreign Direct Investment and Economic Growth in ECOWAS: A System-GMM Approach

Alege, Philip O.; Ogundipe, Adeyemi A.

doi:10.2139/ssrn.2476365

Cited by 21 publications

(33 citation statements)

References 11 publications

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“…Given the absence of excessive correlational pattern among the variables, the results become reliable. This is buttressed by the findings of Alege and Ogundipe (2013).…”

Section: Correlation Analysismentioning

confidence: 95%

Does Capital Adequacy Influence the Financial Performance of Listed Banks in Nigeria?

Ukinamemen

Ozekhome

2019

OJBE

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Capital adequacy is important for the effective operation of any institution, particularly, its sustenance, viability and future growth. Banks as core financial institutions require sufficient capital base for its fund requirement and needs. Against this premise, banks and other financial institutions must keep balance between capital and available risk in its assets in order to reduce the likelihood of systemic crises, financial fragility and thus guarantee stability. This study empirically examines the impact of capital adequacy on the financial performance of banks in Nigeria. A sample of ten (10) listed banks on the basis of size and availability of data were examined over the period 2010 to 2017, using descriptive statistics, and multivariate panel data estimation technique, after conducting the Hausman, test of correlated random samples, wherein the fixed effect model was selected as the appropriate model. The empirical results revealed that banks’ capital adequacy ratio has a positive and significant impact on the financial performance of banks in Nigeria. Other variables found to be significant in the determination of the financial performance of banks in Nigeria are; bank size, bank loans and advances, debt ratio and growth rate of output. Against the backdrop of these findings, we recommend amongst others; sufficient capital base for banks, increased bank size through economies of scale measures, efficient deployment of bank resources, increased economic output (economic productive capacity) that will stimulate bank performance. These, will, in no doubt, reduce banks’ vulnerability to systemic crises and consequently enhance their stability for national growth through efficient financial intermediation.

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“…Given the absence of excessive correlational pattern among the variables, the results become reliable. This is buttressed by the findings of Alege and Ogundipe (2013).…”

Section: Correlation Analysismentioning

confidence: 95%

Does Capital Adequacy Influence the Financial Performance of Listed Banks in Nigeria?

Ukinamemen

Ozekhome

2019

OJBE

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“…The low impact of FDI on economic growth is explained by the fact that FDI displaces domestic investment in the Pacific region. Alege and Ogundipe (2014) investigate the relationship between FDI and economic growth in the Economic Community of West African States (ECOWAS) in the period between 1970 and 2011 to show that the positive effect of FDI on economic development depends on the absorptive capacity in the host country capability of the available human stock, extent of openness, the political and economic stability of ECOWAS countries, when they use pooled OLS, fixed effects and random effects. However, considering the System-GMM panel estimation technique they find that the contributions of FDI appear insignificant in the dynamism of GDP per capita despite the significant contributions of the control variables.…”

Section: Generalized Methods Of Moments (Gmm)mentioning

confidence: 99%

FDI and Growth in the MENA Countries: Are the GCC Countries Different?

Gammoudi¹,

Cherif

Asongu

2016

SSRN Journal

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This paper examines the relationship between Foreign Direct Investment (FDI) and per capita Gross Domestic Product (GDP) in the Middle East and North Africa (MENA) region for the period 1985-2009. The empirical evidence is based on an endoeneity-robust Generalised Method of Moments. Results show that the effect of FDI on per capita income in the Gulf Cooperation Council (GCC) countries is positive but negative in Non-GCC countries. Results also reveal that in contrast to the GCC countries, the financial openness policy in the Non-GCC countries have reduced the benefits of FDI on growth, this finding is explained by the fact that most of the Non-GCC countries that have engaged in the process of financial reforms have poor quality of institutions. These results are confirmed with both annual data and five year average data.

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“…Alege and Ogundipe, [5] examined the relationship between foreign direct investment and economic growth on Economic Community of West African States from 1970-2011, they adopted the System-GMM panel estimation procedure. The results revealed an insignificant negative relationship of foreign direct investment on economic growth.…”

Section: Empirical Reviewmentioning

confidence: 99%

Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate

Batat¹,

Ahmadu²

2021

JIM

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Having reviewed previous empirical studies on the relationship between foreign direct investment and economic growth, limited attention was given on the role of exchange rate on the relationship between foreign direct investment and economic growth. Therefore this study investigates the role of exchange rate on the relationship between foreign direct investment and economic growth over the period 1986 to 2018 using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. Augmented Dicker-fuller Unit Root Test and ARDL model were used for the analyses. The ARDL Bounds test to cointegration revealed that economic growth, foreign direct investment, export, import and exchange rate do not have long run relationship over the period under study. The results showed that foreign direct investment has positive relationship with economic growth at maximum, average and minimum level of exchange rate but the relationship is only significant at maximum level over the period under study. This means that at maximum level of exchange rate, an increase in foreign direct investment will lead to a risein economic growth. The results also showed that export has significant positive relationship with economic growth meaning that an increase in export will lead to a rise in economic growth while import showed insignificant negative relationship with economic growth. Based on the results, the study recommended that further depreciation of Nigeria's currency should be encourage so as to allow more inflow of foreign direct investment considering its positive impact on economic growth while the Nigerian Government is encouraged to design and implement policies that will spur export by eliminating stringent excise duties and discouraging import which exerts negative influence on economic growth.

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Foreign Direct Investment and Economic Growth in ECOWAS: A System-GMM Approach

Cited by 21 publications

References 11 publications

Does Capital Adequacy Influence the Financial Performance of Listed Banks in Nigeria?

Does Capital Adequacy Influence the Financial Performance of Listed Banks in Nigeria?

FDI and Growth in the MENA Countries: Are the GCC Countries Different?

Nexus Between Foreign Direct Investment and Economic Growth in Nigeria: The Role of Exchange Rate

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