Abstract
The study employed the autoregressive distributed lag (ARDL) approach to co-integration to estimate a set of four models with a view to examining the impact of ECOWAS integration on financial intermediation in Nigeria, which was differentiated by type of financial development indicators (FD) used as dependent variable in the different models. The dependent variables were the proxies for financial intermediation in Nigeria, namely; ratio of credit to private sector provided by commercial banks to national GDP (CPS_GDP); ratio of broad money supply (M2) to GDP (M2_GDP); and ratio of commercial bank’s assets to the combination of commercial banks’ and central bank’s assets (COMB_ASSETS). A composite measure of the three financial intermediation indicator was also used in the fourth model. The study data ranged from 1960 to 2018, and comprised Nigerian and ECOWAS macroeconomic variables obtained from different sources. ADF test was conducted to test for unit root and the result showed that the variables have a unit root. Across the four models, the results of the study showed that ECOWAS regional economic integration does not significantly influence the degree of financial intermediation in Nigeria, and may not be promoting development of the Nigerian financial sector. On the contrary, domestic macroeconomic developments are, however, more supportive of financial intermediation in Nigeria, and suggest the need to improve monetary conditions and credit access and availability. It has become imperative, therefore, to carry out a cost-benefit and impact analyses of the region’s integration to help reposition the country for its benefits. Keywords: economic integration, financial intermediation, autoregressive distributed lag (ARDL), co-integration, ECOWAS, Nigeria JEL Classification: E44, F36, G2, G32, G21. DOI: 10.7176/JESD/11-4-06 Publication date: February 29 th 2020
Highlights
Economic integration among West African States, popularly known as Economic Community of West African States (ECOWAS), comprising 15 countries in that region, aims to foster and accelerate the economic and social development of member states
The first measure is the ratio of credit to private sector provided by commercial banks to national GDP (CPS_GDP), indicating the critical role played by the financial sector, especially commercial banks in the financing of the Nigerian real economy
6.0 Conclusion and Policy Implications The study employed the autoregressive distributed lag (ARDL) approach to co-integration which is known for its uniqueness in capturing the dynamics and peculiarities of an economy, and estimated four different models with a view to capturing the impact of ECOWAS integration on financial intermediation in Nigeria
Summary
Economic integration among West African States, popularly known as ECOWAS, comprising 15 countries in that region, aims to foster and accelerate the economic and social development of member states. The Community’s original purpose was to establish an economic cooperation, allowing adoption of common financial, economic, social, and cultural policies, leading to creating a monetary union. The overall goal was to stimulate economic activities and trade between member states, thereby helping to build economically viable region that guarantees prosperity for all. Since its establishment in 1975, the Community has struggled to offer some benefits to Member States, and these benefits range from free mobility of labour, increased trade among members and some levels of financial integration in the region. While most members of ECOWAS have signed on to WTO market access commitments, they have placed restrictions on capital account transfers, with little or no capital flow among them
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
