Research
New Insights into Financial Sector Development and Economic Growth Nexus in Nigeria
This paper investigated the nexus between financial sector development and economic growth in Nigeria. The paper used the Principal Component Analysis (PCA), Autoregressive Distributed Lag Model (ARDL), Structural Break Test and the Pairwise Granger Causality Test (PGC) to examine the effect of financial development on economic growth in Nigeria and to establish which theory holds for Nigeria between the demand-following and the supply-leading theory. Annual time series data between 1981 and 2016 is used for the study. Data on real gross domestic product, broad money supply/GDP, inflation, credit to the private sector/GDP, total liquid liabilities, total stocks/shares traded and total stock market capitalization are obtained from the yearly publication of the Central Bank of Nigeria (CBN) statistical bulletin. The structural break unit root test revealed that all the variables are stationary at their first difference except for inflation that was stationary in its level form; the bound test cointegration analysis established the existence of long run relationship among the variables. The ARDL revealed that financial development negatively and insignificantly affected economic growth in Nigeria during the period of study. Furthermore, the pairwise Granger causality found evidence in support of the supply-leading theory. Therefore, the paper recommends that more attention should be paid to growth-driven policies because it will bring about financial sector stability in Nigeria.
Business Cycle, Macroeconomic Variables and Economic Growth in Nigeria (1986-2014); A Time Series Econometric Approach
This paper examined the dynamic interaction among business cycle, macroeconomic variables and economic growth in Nigeria between 1986 and 2014. The paper employed the vector autoregression technique (VAR) with a view to investigate the effect of business cycle on economic growth and its interaction with government expenditure and money supply in Nigeria during the study period. Quarterly time series data between 1986 and 2014 is used for the study. Data on real gross domestic product (RGDP), nominal gross domestic product (NGDP), broad money supply (M2) and government expenditure (gexp) were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin. The Impulse Response and Variance Decomposition analysis from the VAR model showed that there is a dynamic relationship among business cycle, macroeconomic variables and economic growth in Nigeria i.e. shocks to any of the variables affected all other variables used in the study. Particularly, business cycle affects growth and the performance of macroeconomic variables in the study period although its effect lacked persistence throughout the study period. Therefore, the paper concludes that business cycle and growth affects each other as against the view of earlier macroeconomists who posits that they are unrelated. Thus, the paper proffers the use of stabilization policies for macroeconomic variables as well as ensuring that the effect of business cycle is not trivialized in Nigeria.
Analysis of Macroeconomic Fluctuations and Economic Growth in Nigeria (1986-2014)
This paper analyzed macroeconomic fluctuations and economic growth in Nigeria between 1986 and 2014. The paper employed the Atheoretical Statistical Method of Analysis using cross correlations to examine the co-movement between key macroeconomic variables such as broad money supply, oil price, government expenditure, inflation, interest rate, exchange rate and general household consumption and real gross domestic product in Nigeria. Quarterly time series data between 1986 and 2014 was used for the study and were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin. The stationary component of the variables was extracted using the Hodrick-Prescott (HP) and Band-Pass (BP) filter and then analyzed. The paper found out that all the macroeconomic variables were countercyclical and contemporaneously related to real gross domestic product, except for oil price and inflation where the filters produced mixed results of countercyclical and procyclical relationship with economic growth in Nigeria. The paper suggests effective and better management of macroeconomic variables if the desired level of growth is to be achieved.
