Balance Of Payments In Nigeria Research Articles

Exchange Rate and Balance of Payments in Nigeria

Exchange Rate and Balance of Payments in Nigeria

Effect of trade openness on economic growth in Nigeria

The study investigated the effect of trade openness on economic growth in Nigeria. Time series data were collected from the Central Bank of Nigeria Statistical Bulletin from 1990 - 2022. While balance of payment was the proxy for economic growth (the dependent variable); the proxies for the independent variable (trade openness) were import, export and broad money supply to act as control variable. The method of data analysis employed in this study includes descriptive statistics, correlation analysis and unit root test. Ordinary Least Square was used to estimate the model. The findings revealed that import has no significant effect on balance of payment; export has significant effect on balance of payment; while broad money supply has insignificant effect on balance of payment in Nigeria. The study recommends that government should encourage huge investment on infrastructure development in order generate more economic activities; reduce the cost of doing business and increase the factors that drive productivity in Nigeria; and ensure stability in the interest, exchange rate and other monetary policy tools.

Addressing Balance of Payment Disequilibrium Through Non-Oil Export and Exchange Rate Stability in Nigeria: An Empirical Investigation

Abstract This study investigates the impact of non-oil export on the Nigeria balance of payment between 1981 and 2020. To achieve the broad objective, two specific objectives were set out, viz: investigate the impact of non-oil export on the Nigeria balance of payment; and examine the level of impact of exchange rate volatility on balance of payment in Nigeria. Using the Autoregressive Distributed Lagged (ARDL) and Error Correction Model (ECM), the findings of the study show that non-oil exports have had a strong positive impact on Nigeria’s balance of payment within the period under study both in the short and long-run. It shows that a percentage increase in non-oil export increases the balance of payment (surplus) by 31.47 % in the long-run. However, exchange rate was shown to have had a negative blow on Nigeria’s balance of payment, though not statistically significant. The study therefore recommend among others that, for Nigeria to enjoy a surplus balance of payment, which is one of her major macroeconomic goals, there is the need to shift attention to the non-oil sector which has always been the main source of her foreign exchange earnings prior to the discovery of crude oil.

THE IMPACT OF EXCHANGE RATE ON BALANCE OF PAYMENTS

The purpose of this study is to look at the relationship between the exchange rate and the balance of payments. The article is divided into five chapters: chapter 1 offers a fundamental overview of the subject, chapter 2 gives a summary of the pertinent literature, and chapter 3 describes the technique in more detail. The ordinary least square regression (ols) technique will be used to assess the R-squared test (explanatory power of the variables), the economic apriori criteria, and the D.W test, which is the econometric criterion for testing for the presence of an auto-regressive scheme. The result the impacts of the exchange rate on the nation’s balance of payment can be described to be weak and negative (β = -0.0518 p = 0.041, where p < 0.05). The researcher hereby rejects the null hypothesis to accept the alternate hypothesis which states that there is a weak negative relationship between exchange rate and balance of payment in Nigeria.

Naira to Dollar Exchange Rate Fluctuations and Nigeria’s Balance of Payment

The authors analyze how changes in the value of the naira affect the country’s overall trade surplus or deficit. The 2020 edition of the Central Bank of Nigeria Statistical Bulletin was consulted for data on the country’s balance of payments, exchange rate, trade openness, and inflation rates. Exchange rate, exchange rate fluctuation, trade openness, and inflation rate are the independent variables, and the balance of payments (BOPs) is the dependent variable. The model’s variables’ stationary was determined using the ADF unit root test method. The results of the tests show that after the first difference, the balance of payment and the inflation rate stabilized, while the actual exchange rate, exchange rate fluctuation, and the degree of trade openness all remained stable at their respective levels. The study’s dependent and independent variables” long-term relationship was estimated using an autoregressive distributed lag bounds test. There is a long run link between the study’s dependent and independent variables, as evidenced by the estimates’ F-statistics value of 4.85, which is larger than the lower and upper critical bounds of 3.23 and 4.35. Estimates also reveal that in the long run, the balance of payment in Nigeria is positively impacted by exchange rate fluctuations and the real exchange rate, while it is negatively impacted by inflation and trade openness. As a result, the study suggests that government should subsidize farmers who produce export goods in order to reduce the volatility of naira to dollar exchange rate. The national government should put aside more funds to increase the nation’s foreign reserve in order to reduce the volatility of the currency exchange rate. Rigid taxes on imported goods are one way to prevent heavy reliance on them.

The Determinants of Balance of Payments in Nigeria

The Balance of Payments in Nigeria was studied using annual data from 1981 to 2019 in this article. The paper's major goal was to examine the long-term factors that influence Nigeria's Balance of Payments. The Autoregressive Distributed Lag Model (ARDL) was used in the investigation. Long-term results from the ARDL regression showed that the exchange rate coefficient was negative, whereas short-term results showed a positive value. Also, the coefficients of FDI, GDP growth, interest rates, and crude oil prices were positive and significant. There is a strong case can be made for governmental intervention to improve economic productivity, as evidenced by this study. To help the economy thrive, capital investments and expenditures should be made. The government should make incentives to prospective foreign investors in order to attract FDI inflows into the country. Government should also enhance safety and security and build a sense of belonging in the Niger Delta in order to promote peace and ease of doing business in the petroleum industry there.

Analysis of the Impact of Selected Macro-Economic Variables on Balance of Payments in Nigeria

Given that Nigerian economy has recorded unfavourable Balance of Payment (BOP) positive in recent years, it becomes imperative to study the impact of selected macroeconomic variables on BOP in Nigeria. This study therefore sought to determine the impact of exchange rate, inflation rate, interest rate and money supply on BOP in Nigeria. This study used secondary data sourced from Central Bank of Nigeria Statistical Bulletin (2021) in its analysis. The study employed ARDL to estimate the short run and long run impact of the selected macroeconomic variables on BOP in Nigeria. The ARDL bound co-integration showed a long run relationship between BOP and selected macroeconomic variables in the country. The study recommends that the policy makers should take keen interest on how best to improve the value of Nigeria’s export to the world; this will help bring to equilibrium the exchange rates and inflation that play a crucial part in determining the balance of payments. In addition, policies should be put in place to fund government plan of work for a period of time than public borrowing in the case of money supply and interest rate that has led to the increment on Balance of payment (BOP) deficit.

Analyzing the Effects of Food Imports on Food Production and Balance of Payments in Nigeria

Abstract Research background: Past measures to increase food production in Nigeria, were not effective enough to curb food imports and increase food production thus leading to a deficit balance of payment for the country and a total neglect of the agricultural sector. Purpose: This study analyzes the effects of food imports on food production and Balance of Payments (BOP) in Nigeria from 1960 to 2020. Research methodology: The Auto Regressive Distributed Lag (ARDL) bound cointegration test procedure is utilized. Results: The empirical results show that food imports adversely affect food production both in the long and the short run. While for the BOP equations, food importation positively affected the country’s balance of payments in the long run. The short run error-correction term coefficients are signed negatively for both the food production and BOP equations. The results show that the gap between the equilibrium values and the actual value of the dependent variables are corrected with speed of adjustment equal to 40% and 85% annually. The stability test result on the food production equation showed that the null hypothesis of no stable residuals in both the short and long run are rejected, while the estimated model is not effective with stable recursive residuals for the BOP equation. Novelty: The study therefore recommends that efforts should be geared towards boosting the country’s food production by encouraging foreign investors’ participation in the agricultural sector.

Impact of Exchange Rate on Balance of Payments in Nigeria

This study examined the impact of exchange rate on balance of payments in Nigeria. Data for the study which are balance of payments, exchange rate, interest rate, trade openness and crude oil price were extracted from the Central Bank of Nigeria (CBN) statistical bulletin covering the period 1981-2019. The method of data analysis is the Vector Error Correction Mechanism (VECM). The results reveal that there is a positive relationship between balance of payments and exchange rate in Nigeria, exchange rate has significant impact on balance of payments in Nigeria (t-stat = 2.47441) and there is causality relationship between exchange rate fluctuations and balance of payments in Nigeria (p-value = 0.0174 < 0.05). It is therefore the recommendation of this study that the government should encourage make political and industrial peace and stability a top macro-political policy priority.

Macroeconometric Assessment of Monetary Approach to Balance of Payments in a Small Open Economy: The Nigeria Experience

Monetary approach to balance of payment establishes a link between foreign reserve assets and money supply. This link is important for managing balance of payment disequilibrium through adjustment of monetary aggregates. This study relies on the (Polak, 1957;1997) monetary model with data from 2007:Q1 to 2018:Q4 to examine the link between monetary factors and balance of payment in Nigeria. To circumvent simultaneity, the reduced form coefficients of the structural form of the Polak model are estimated using Two Stage Least Squares (TSLS) technique, while the structural parameters are recovered from the estimated reduced form coefficients. The results are enriching and robust. The Johansen cointegration procedure suggests a long run relationship among the macroeconomic variables in the balance of payment function. The estimated balance of payment model reveals that domestic credit is statistically significant and negatively related to foreign reserve assets, implying that balance of payment is a monetary phenomenon in Nigeria. The velocity of money circulation and the marginal propensity to import are approximately 120 percent and 14 percent, respectively. The study therefore recommends that the monetary authority should consider the use of domestic credit for management of balance of payment disequilibrium. It is also pertinent to increase domestic credit to grow the economy since such action will marginally decrease external reserve assets through increase in import, however, the net effect will enhance the overall economy.

Fiscal Policy and Balance of Payments in Nigeria

This study investigated the effect of fiscal policy on balance of payments in Nigeria. The data for the study were obtained from the statistical bulletin of Nigeria’s apex bank spanning 1980 to 2017. The study employed Augmented Dickey-Fuller (ADF) and Autoregressive Distributed Lag (ARDL) Bounds techniques. The result of the ADF test revealed that the variables were stable at order one and zero. The ARDL results showed that in the long run, corporate income tax, government capital expenditure and external debt have positive and significant effect on Nigeria’s balance of payments. Meanwhile, exchange rate has a negative and significant effect on balance of payments in Nigeria. It also revealed that in the short run, corporate income tax and government capital expenditure have positive and significant effect on balance of payments in Nigeria. However, exchange rate and external debt have negative and significant effect on balance of payments in Nigeria. Therefore, this study concluded that fiscal policy has a meaningful effect on Nigeria’s balance of payments during the period of study. This means that fiscal policy is effective in achieving a satisfactory balance of payments in the country

Monetary Approach to Nigerian Balance of Payments

The study examined monetary approach to Nigerian balance of payments. Therefore, the broad objective of the study was to examine the impact of monetary policy on balance of payments in Nigeria from 1970 to 2015. The econometrics methods of Co-integration and Error Correction Mechanism were employed as the analytical techniques. The Co-integration result revealed the existence of a long-run relationship among the variables. The result of the parsimonious ECM revealed that exchange rate and credit to private sector have significant impact on balance of payments in Nigeria. While money supply and interest rate do not have significant impact on balance of payments in Nigeria. Moreover, the coefficient of ECM was rightly signed (that is negative) and statistically significant at conventional level. This means that, the short run dynamics adjust to long run equilibrium relationship. Based on these findings, the study recommended that monetary authority should make the financial sector to be viable in order to provide credit at lower interest rates and adopt a managed floating exchange rate policy to redress the problem of exchange rate variation in order to raise the BOPs position of Nigeria.

Fiscal Policy and Balance of Payments in Nigeria

The paper examined the impact of fiscal policy on balance of payments in Nigeria. The objectives of the study were to; examine the impact of government capital expenditure, corporate tax and external debt on BOPs. Time series data from 1980 to 2015 was collected from CBN statistical bulletin. The applied the techniques of ADF unit root test, co-integration and vector error correction model. The results of the estimated model showed that all the time series were stationary at order one. Also, the dynamic model depicted by the co-integration result showed that there is a long run equilibrium relationship among the variables. Similarly, the vector error correction result showed that the coefficient of ECM has the hypothesized negative sign and statistically significant at 5% level. The current year’s value of government capital expenditure showed that a percentage increase in government capital expenditure causes a favorable balance in BOPs by 65.5%. Moreover, the current year’s value of corporate tax showed that a percentage increase in corporate tax decreases the balance in BOPs by 164.4%. The estimated VECM result further showed that a percentage increase in government external debt causes an increase in BOPs by 77.1%. From the discussion so far, it is obvious that fiscal policy measures are effective in achieving a favorable balance of payments in Nigeria. Based on these findings, the following recommendations amongst others were made; Expansionary policies on fiscal policy measures especially in government capital spending and corporate tax policy should be encouraged as they play vital role in the growth of industrial production and help to improve the BOPs in Nigeria. Also, government should avoid superfluous and uncreative borrowing that will serve as a leakage to the economy.

An empirical analysis of the impact of floating exchange rate on balance of payment in Nigeria (1986 - 2016)

Abstract. This paper empirically investigates the impact of floating exchange rate on balance of payment in Nigeria during 1986 – 2016. Unit root test, cointegration test, VEC Granger causality/Exogeneity Wald test and Vector Error Correction Model (VECM) were econometric tools used to establish the relationship between exchange rate and balance of payment. The results showed a positive and statistically significant relationship in both short-run and long-run between balance of payment and exchange rate of the Nigerian Economy during the period under review. The VEC Granger Causality/Block Exogeneity further revealed that the major determinants of exchange rate are real GDP and money supply. It further reveals that the nexus among the variables runs from government expenditure to real GDP and money supply to exchange rate, and then to Balance of Payment. Therefore it was recommended amongst other things that the policy of exchange rate depreciation should be maintained but with government intervention guide. Government through Central Bank of Nigeria (CBN) should apply expenditure reducing monetary policies through money supply and domestic credit to promote favourable BOT which invariably stabilizes BOP. Keywords. Floating exchange rate, Balance of payments, VECM. JEL. F10, F30, F31.

Macroeconomic Forces and Balance of Payment in Nigeria: The Triple Helix of Elasticity- Absorption- Monetary Approaches

Macroeconomic Forces and Balance of Payment in Nigeria: The Triple Helix of Elasticity- Absorption- Monetary Approaches

Monetary Policy and its Implication for Balance of Payment Stability in Nigeria Between 1986-2015

An assessment of the impact of monetary policy on balance of payments in Nigeria from 1986-2015 was investigated. The data used for this study is mainly secondary data and was analyzed using ARDL co integration technique. The results showed the net trade (NT), money supply (M2) and bank credit to private sector (BCP) all have long run effect on the balance of payment while the differenced money supply (DM2), net trade and bank credit all showed the short run relationship with the balance of payment. From the overall analyses done on the variables, it was concluded that all variables exhibited relationships both in the long and short run respectively i.e are jointly significant. It?s therefore recommended that government through the monetary authority should ensure that the domestic money stock is consistent with macroeconomic objectives, put adequate policies in place that will stabilize money circulation in order to avoid excess liquidity in the economy which may lead to inflation. Export diversification and non-oil sector exports should be encouraged as this will enhance BOP position in Nigeria.

Monetary Policy and Balance of Payments Stability in Nigeria

This study examines the monetary policy phenomenon to Balance of Payment (BOP) in Nigeria. The study uses time-series data which spanned between 1986 and 2013.The effects of stochastic shocks of each of the endogenous variables are explored using Error Correction Model (ECM). The study shows that Long run relationship exists among the monetary policy variables and BOP. The core finding of this study shows that monetary policy variables of Exchange rate, Broad money supply and credit to the private sectors are the major monetary factors that determine BOP in Nigeria. The study concluded that monetary policies and implementation capacity is important in the Nigerian economy, because it is very special for determining the provision of interest rate to private sector which produce for export which will have a spill over effect on BOP and economic growth. Also, Balance of Payment is a monetary phenomenon and monetary policy can be used by monetary authority to improve and stabilised the foreign sector performance in Nigeria. Key Word: Monetary Policy, Exchange Rate, Broad Money Supply, Balance of Payment,

Monetary Policy and Balance of Payment in Nigeria ( 1981 - 2012 )

Monetary Policy and Balance of Payment in Nigeria ( 1981 - 2012 )

Fiscal Policy Measures and Balance of Payments in Nigeria

The paper investigates fiscal policy measures and balance of payments in Nigeria. The main objective of this study is to examine the extent to which fiscal policy measures have influenced the BOP position in Nigeria during the period under study. The study utilized aggregate annual data from 1980 to 2012. The data was analyzed with the co-integration/ ECM method. The major findings are: the test for stationary using Augmented Dickey Fuller (ADF) showed that all the variables were not stationary in levels but were stationary in first difference. The Johansen-Juselius co-integration techniques were employed in testing for long run equilibrium relationship among the variables and the results indicated that co-integrating relationship was found among the variables. The parsimonious ECM result reveals that about 80% of the systematic variation in the dependent variable (BOP) is explained by the three independent variables which are Government Expenditure (GXP) and Government Tax Revenue (GTR) and Government Debt (GTD). Furthermore, the result revealed that government tax revenue has positive and significant effect on BOP in Nigeria, while government expenditure and debt have negative and significant impact on BOP in Nigeria based on the magnitude and the level of significance of the coefficient and p-value. The result also reveals that there is long run relationship between fiscal policy and BOP, as evidenced by the ECM. From the result so far, it is obvious that fiscal policy measures are effective in achieving a favorable balance of payments in Nigeria. The paper concluded that the success of fiscal policy in promoting favorable BOP depends on the level of public revenue available, the direction of public expenditure and its implementation. On the basis of the findings, we recommend amongst others that expansionary fiscal policy measures should be encouraged as they play vital role for the growth of the BOP in Nigeria. Also export promotion and import substitution strategies to increase the non-oil exports in order to achieve a favorable BOP in order to achieve a favorable BOP.

Taxation and Balance of Payments in Nigeria (1970 – 2008)

This paper examines the implication of using taxation to manage the Nigerian Economy and the influence of such measure on macroeconomic aggregates, especially balance of payments over the period 1970 - 2008. The analysis was carried out using both descriptive and inferential statistical techniques. The Ordinary Least Square (OLS) method was used for the estimations. Our findings indicate that the historical trends in balance of payments showed no significant response to tax policy. A positive relationship between tax policy and balance of payments was obtained, which is in line with the theory, but with insignificant coefficient. Further, we found that taxation was not effective in tackling balance of payments problems in the economy during the period of study largely because of inconsistency in the use of tax measures. Among other recommendations, the paper submits that Nigeria should apply tax measures much more carefully than was observed over the period studied.