Central Bank Of Nigeria Research Articles

The Interactive Effect of Resource Seeking Foreign Direct Investments (RS-FDI) and Economic Growth in Nigeria: Evidence from Niger Delta

The oil and gas sector, which is governed by the source of income, receives the majority of foreign direct investment (FDI) inflows in Nigeria. This study established that natural resources are the driving force behind MNEs' internalisation efforts in the country. As a result, the impact of resource-seeking foreign direct investments (RSFDIs) in the Niger Delta on Nigeria's economic growth was critically analysed in this study. To achieve the research goal, the study looked into how RSFDIs affect economic growth. The data for the study include RSFDI and GPD growth which was obtained from important stakeholders in the oil and gas industry in the Niger Delta. The Central Bank of Nigeria, the National Bureau of Statistics, and the World Bank provided additional important statistics. The research variables were estimated using Ordinary Least Square (multiple) regression approaches. The findings reveal that RSFDI, and GDP have a positive correlation. The connection, though, is negligible. The conclusion drawn in the research is that RSFDI has not been an effective contributor to economic growth in the Niger Delta due to profit repatriations. Keywords: Resource Seeking FDI, Economic growth, Niger Delta , Employment and trade Theory DOI: 10.7176/JESD/12-18-04 Publication date: September 30 th 2021

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.

Macroeconomic Variables and Foreign Portfolio Investment Volatility in Nigeria

The study aims to check the impact of macroeconomic variables on foreign portfolio investment (FPI) volatility in Nigeria using time series data from January, 2014 to December, 2019 obtained from the Central Bank of Nigeria. The test revealed that previous month’s volatility in FPI, inflation rate and all share indexes were significant determinants of FPI volatility in Nigeria. Based on the findings, it was recommended among other things that these factors that influence foreign portfolio investment oscillation should be regulated by the appropriate government agencies to ensure more serene investment clime.

EXECUTIVE COMPENSATION AND FINANCIAL REPORTING QUALITY OF NIGERIAN FINANCIAL SERVICE INDUSTRY

The study evaluated the effect of executive compensation on financial reporting quality in Nigerian financial service industry for the period covered. These were with a view to providing information on the effect of executive compensation and financial reporting quality in Nigeria. The study employed a secondary source of data collection. The population for the study consisted of 22 quoted deposit money banks listed and whose stocks are actively traded on the Nigerian Stock Exchange (NSE) market for the period 2006-2017.The sample size of 14 was determined using purposive sampling method. Secondary data were collected on variables executive compensation, non-performing loan, loan loss provision, total loan, residual term all obtained from the audited Annual reports of the selected deposit money banks, fact book published by Nigerian Stock Exchange, and the Central Bank of Nigeria. Data collected were analyzed using Robust Regression. The results showed executive compensation (coef. =-0.139, p˂0.004) has a negative significant relationship with financial reporting quality. This study concluded that executive compensation has a negative significant effect on financial reporting quality.

Regulation not Mere Legislation: The Issue of Enhancing Islamic Banking Performance Across Nigeria

The subsisting economic hardship underscores the promotion of financial stability through inclusive financial regulations. The low-performance of conventional policies warrants the striving for uniform regulation and protection of conventional and non-interest financial institutions. In Nigeria, financial regulations do not pay attention to inventive Islamic financial products and Islamic delivery mechanisms. This situation does not help to achieve a positive performance in Islamic banking services in the country. Via a review of previous literature, this paper aims to discuss the policies of the Central Bank of Nigeria (CBN) on conventional and Islamic banking systems. The review outcomes suggest that only restricted policies are available for non-interest financial institutions across Nigeria, and the existing protections are far from creating long-term welcoming results. According to the review outcomes, many studies are not conclusive about the particular aspects that need improvements between regulation and legislation of financial institutions in Nigeria. We argue that existing regulations do not treat all financial systems equitably, and thus, it becomes difficult for Islamic financial institutions to contribute efficaciously and positively to the country’s economic growth. A such, this paper recommends the re-composition of the regulatory framework on equitable protection basis for every financial institution across Nigeria. This review contributes to the existing literature on the heightening of the economic and financial system across Nigeria by proposing regulation and legislation amendments. Further research may explore how effective policies can be formulated to achieve a positive performance of Islamic banking in Nigeria.

Econometric Assessment of the Impact of Exchange Rate Depreciation on Inflation in Nigeria (1981-2017)

The present reality of the Nigerian economy is the fact that inflation has remained unabated in spite of all exchange rate measures that have been adopted by the monetary authority. This calls for investigation into the extent to which exchange rate impact on inflation in Nigeria. The research paper examined the impact of exchange rate depreciation on inflation in Nigeria for the period 1981–2017, using Auto Regressive Distributed Lag (ARDL) Bounds Test Cointegration Procedure. The research shows that inflation rate in Nigeria is highly susceptible to lagged inflation rate, exchange rate, lagged exchange rate, lagged broad money, and lagged gross domestic product at 5% level of significance. A long run relationship was also found to exist between inflation rate, gross domestic product and general government expenditure, indicating that the model has a self-adjusting mechanism for correcting any deviation of the variables from equilibrium. Therefore, this study concludes that exchange rate is an important tool to manage inflation in the country; thus, this paper recommends that policies that have direct influence on inflation as well as exchange rate policies that would checkmate inflation movement in the country, should be used by the Central Bank of Nigeria. Also, monetary growth and import management policies should be put in place to encourage domestic production of export commodities, which are currently short-supplied. In addition, policy makers should not rely on this instrument totally to control inflation, but should use it as a complement to other macro-economic policies.

SMEs Intervention Programmes in Nigeria: Evaluating Challenges Facing Implementation

To ensure price and economic stability, the central bank of Nigeria has adopted several unconventional monetary policy measure such as MSMEs credit intervention with the aim of boosting credit availability in specific sector of the economy. The intuition is that rise in productive activities/investment will indirectly promotes price stability the core mandate of the bank. Therefore, this study investigated the challenges facing implementation of real sector (MSMEs) intervention programmes of the CBN since year 2000 to 2020. The study employed mixed method using descriptive survey approach to sample 62 intervention programme implementers and 400 Micro, Small and Medium Sized Enterprises (MSMEs). The findings reveal among others that high loan default risks, politicization of programmes, and inadequate infrastructural development are the leading challenges facing programme implementers in Nigeria. Applicants' non-eligibility in programmes applied for, poor business plan or inadequate knowledge in proposed business topped the reasons for failures among applicant MSMEs. Consequently, a need for more public-private partnerships in programme design, monitoring, and evaluation to forestall political interference is advised.

Sectoral analysis of foreign direct investment and growth in Nigeria

The study conducted a sectoral analysis of the contribution of foreign direct investment on Nigeria economy between 1980-2019. Time series data from Central Bank of Nigeria and World Bank Development Indicators was used to estimate the relationship using Auto Distributed Lag Model (ARDL). It was revealed that foreign direct investment not only exert a direct positive effect on the aggregate growth rate of Nigeria economy but also exert a positive indirect effect through labour. It was also discovered that agriculture sector is the only sector that does not enjoy significant contribution of foreign direct investment in Nigeria while petroleum and Gas experience the greatest growth attributable to foreign direct investment in Nigeria. The study contributed to literature by not only examining the indirect effect of foreign direct investment on Nigeria aggregate growth rate through labour but also the effect of foreign direct investment on the sector-by-sector growth rate.

Evaluation of the Impacts of Non-Oil Exports on Economic Growth in Nigeria Between 1986-2018

Non-oil exports have been seen to be very vital in economic growth and development, especially for developing economics. Despite the poor contribution of non-oil exports to economic growth in Nigeria, this study is inspired by the inconsistencies in empirical findings regarding the connection and effect of non-oil exports on the economy. The objective of the study was to determine the effect of non-oil exports on economic growth in Nigeria. An ex-post facto research design was adopted. The time frame of thirty three (33) years, from 1986 to 2018 was adopted to allow for a large number of observations which will improve the robustness of the results. The data was obtained from the Central Bank of Nigeria (CBN) statistical bulletin of 2017. The Ordinary Least Square (OLS) estimation technique was applied in guesstimating the models. E – views 9.0 was the econometric software used for the analysis. The result revealed that non-oil exports have no significant effect on the growth rate of real gross domestic product, agricultural contribution to real gross domestic product is not significantly affected by exports of non-oil products even though there is evidence of a positive but insignificant correlation between them. Manufacturing capacity utilization is not significantly influenced by variation in Nigeria’s non-oil exports. Non-oil exports are positively associated with manufacturing capacity utilization. Economic growth in Nigeria has not been significantly affected by non-oil exports despite the various non-oil promotion strategies by the government. We recommend that cost and access to financial services for non-oil exporters be moderate or relaxed.

Effect of Monetary Policy on the Nigerian Stock Market: A Smooth Transition Autoregressive Approach

This paper examines the nonlinear effect of monetary policy decisions on the performance of the Nigerian Stock Exchange market, by employing the Smooth Transition Autoregressive (STAR) model on monthly data from 2013 M4 to 2019 M12 for All Share Index and monetary policy instrument. This study considers the two regimes characterizing the stock market, which are the lower regime (the bear market) and the upper regime (the bull market). The results show evidence of nonlinear effect of monetary policy on the stock exchange market. Monetary policy rate, money supply, lagged monetary policy rate and lagged treasury bill rate are found to have significant positive effects on the stock exchange market in the lower regime while current treasury bill rate shows a negative effect. In the upper regime, money supply and lagged treasury bill rate have significant negative effect on the stock market. The current treasury bill rate is found to have a positive effect on the stock exchange market. It is recommended that the Central Bank of Nigeria should maintain a stable money supply growth that is consistent with increased activities in the Nigerian stock market.

Central Bank of Nigeria’s Bank Verification Number Policy and its Effect on Deposit Money Banks’ Customers; Empirical Evidence from Nigeria

Central Bank of Nigeria’s Bank Verification Number Policy and its Effect on Deposit Money Banks’ Customers; Empirical Evidence from Nigeria

Multivariate Garch Analysis of Selected Nigerian Economic Data

Aims: The aim of this study is to examine multivariate GARCH modeling of selected Nigerian economic data.
 Study Design: The study used monthly data of Nigerian crude oil prices (dollar Per Barrel), consumer price Index rural, maximum lending rate and prime lending rate.
 Methodology: This work covers time series data on crude oil prices, consumer price Index rural, maximum lending rate and prime lending rate extracted from Central Bank of Nigeria (CBN) from 2000 to 2019. In attempt to achieve the aim of the study, quadrivariate VECH and DCC model were applied. 
 Results: The results confirmed that returns on economic data were correlated. Also, diagonal multivariate VECH model confirmed one of the properties that it must be ‘positive semi-definite’,
 And the DCC confirmed also the positive-definite conditional-variance.
 Conclusion: From the results obtained, it was confirmed that there exists a strong confirmation of a time-varying conditional covariance and interdependence among Nigeria economic data. As for cross-volatility effects, past innovations in crude oil price have utmost control on future volatility of returns on economic data. It was also confirmed that time varying covariance displays among these economic data and lower degree of persistence and based on Model selection criteria using the Akaike information criteria (AIC) has 17.485 for diagonal VECH while for DCC has 17.509 AIC which makes VECH model better fitted.

Tax Amnesty and Taxation Revenue: Nigeria’s Voluntary Assets and Income Declaration Scheme (Vaids) in Retrospect

This work adopted the ordinary least square (OLS) method to examine Voluntary Asset and Income Declaration Scheme (VAIDS) of the Nigerian government executive order six as a form of tax amnesty and its impact on tax revenue of Value Added Tax (VAT) and Personal Income Tax (PIT) in retrospect. The data of this study were obtained mainly from secondary sources from Federal Inland Revenue Service reports and Central Bank of Nigeria (CBN) statistical bulletin. Econometric models/packages were used in this work. The result of the findings reveal that Voluntary Assets and Income Declaration Scheme (VAIDS) had a significant impact on VAT while Voluntary Assets and Income Declaration Scheme (VAIDS) did not have any significant impact on personal income tax. This work recommends that the Voluntary Assets and Income Declaration Scheme should be modified to be a permanent programme as a separate body or a Department Federal Inland Revenue Service should be set up to inspect and ensure the smooth running of the programme and the regulatory bodies should ensure that it implement policies that will reduce the loop holes in tax laws which tax payers capitalized on to evade tax. Keywords: VAIDS, Tax, VAT, PIT, FIRS DOI: 10.7176/RJFA/12-16-08 Publication date: August 31 st 2021

Impact of Multinational Corporation on Economic Growth in Nigeria

The impact of the multinational corporation in oil sector has been observed through this study. The study employs secondary data attained from the Central Bank of Nigeria (CBN) Statistical Bulletin and National Office for Technology Acquisition and Promotion (NOTAP). It employs the unit root test and granger causality techniques as the econometric tools of analysis. The Augmented Dickey Fuller (ADF) unit root test results show that all the variables were stationary. The granger causality test results demonstrated that the MNCs in oil and agricultural sectors does have impact on economic growth in Nigeria. Based on these findings, the study recommends amongst others that there is the need for government to create a convenient environment for moremultinational firms to come in to both oil and agricultural sectors in order to gain the advantage of technology transfer to Nigeria. This will in turn enhancement the development process of the economy and also, the need to acclimatize and indigenize the technology that cannot be over emphasized.

Comparative Analysis of the Effect of Direct and Indirect Taxation Revenue on Economic Growth of Nigeria

The study was conducted to comparatively analyse the effects of direct and indirect taxation revenue on economic growth of Nigeria. This was necessitated by the revenue shortfall from Crude oil sales which has been the main revenue earner of the government and the latent potentials of taxation as the most reliable source of revenue. The study was designed to find out which of the tax category affect economic growth most in Nigeria. Ex post facto research design was the research design involving secondary data extracted from the Central Bank of Nigeria (CBN) and Federal Inland Revenue Service (FIRS) published reports. Data were analyzed using descriptive and inferential statically techniques using correlational and regressional statistics. Results reveal that direct taxation has more negative effect on the economy than indirect taxation as evidenced by the adjusted R2 (Direct taxes 80%; Indirect taxes 67%, case wise predictive residuals (maximum values: direct taxes 6.123, indirect taxes 5.893). It was therefore recommended that the government should review regulatory and operational guidelines at the oil and gas sector and tax reforms in the form of reliefs and other incentives to companies to encourage investors and boost productive activities to enhance economic growth of the country.

Inside Abuse: A Threat to Banks’ Stability

The study investigates the relationship between insider abuse and banks’ stability in Nigeria for a period of twenty-two (22) years (1997 to 2019). The rationale for this study is based on the fact that insider abuse is unanimously regarded as one of the major threats to banks’ stability across the globe. In order to provide a dynamic perspective for the study, four insider abuse related factors such as internal fraud (INSAB), automated machine fraud (ATMf), internet/Web fraud (ITWEB) and cheque fraud (Cf) were regressed against bank stability (BST). Employing the ordinary least square (OLS), the empirical results revealed that internal fraud (INSAB) and internet/Web fraud (ITWEB) have significant negative relationship with banks stability. Automated machine fraud (ATMf) significantly impacts banks stability, and while cheques fraud (Cf) does not have significant impact on banks stability in Nigeria within the period of investigation. The study recommends among others that, since, insider abuse internal fraud is a major factor affecting banks stability in the country, management should strengthen their internal control mechanism by way of ensuring that prospective and qualified workers with cognate integrity are employ to work in the banking industry. This would to a large extent reduce the huge amount of money involved in the incidences of banks’ related frauds and hence, assures continuous stability of the Nigerian banking sector. Also, appropriate policies aimed at devising measures for curbing or checkmating associated fraud in the use of internet/Web, and ensuring banks’ stability and performance must not be overlooked by the Central Bank of Nigeria (CBN) and other relevant regulatory agencies.

Insurance Sector Development and Economic Growth in Nigeria, 1980 –2014

This study was carried out to determine the effect of insurance sector development on the economic growth of Nigeria. Consequently, three hypotheses were designed to guide the researcher and data were drawn from the Central Bank of Nigeria (CBN) statistical bulletin which covered a thirty five (35) years period between 1980 to 2014. The hypotheses were tested using ordinary least square regression analysis and the econometrics co integration test and the result revealed that; there is a positive and significant relationship between insurance premium and economic growth in Nigeria; there is a positive and significant relationship between insurance claims and gross domestic product of Nigeria; there is a positive and significant relationship between insurance investments and economic growth in Nigeria. Based on the results, the researcher thus recommended the following amongst others; Government should Provide institutional improvements by making better laws and policies that will not only encourage fair play but also help to attract international players in the industry; Government should also provide information and education to the populace on the importance of acquiring insurance cover in order to be protected; Increasing efficiency, especially in risk management, and product development.

CO-INTEGRATION AND ERROR CORRECTION MODELING OF AGRICULTURAL OUTPUT: THE CASE OF CASSAVA IN ONDO STATE, NIGERIA

Cassava is an important food crop in Nigeria providing households food security and income. Cassava production has received government and stakeholders’ intervention dating back to the 1970s. Nevertheless, increased and sustainable production of the crop is under threat by exogenous factors of climate change and variability. This study investigates this concern by assessing the effects of climate change on cassava output in Ondo state, Nigerian using Co-integration and Error-Correction Modelling (ECM). Time series (1971-2010) data were sourced from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) Abuja, Nigerian Meteorological Agency Oshodi, Lagos. The results of the Augmented Dickey-Fuller (ADF) test revealed that all variables (cassava yield and climate variables; rainfall, temperature, and relative humidity) all have unit root problems (non-stationary) but become stationary after the first difference 1(1). The results confirmed a long-run equilibrium relationship between all identified variables as the absolute values of the variables are greater than their critical values at a 5% level of significance for both trace statistics and maximal-eigen values. The ECM result shows that rainfall exerts a positive effect, while temperature and relative humidity exert negative effects on cassava production. This indicates the sensitivity of cassava to climate change in the study area. Thus, increased and sustained production of cassava for household’s food security income would be attainable by designing programmes and policies geared toward reducing the effect of climate change. Keywords: Co-integration, Error-Correction Modeling, Cassava Output, Climate Variability, Nigeria.

Foreign Direct Investment and Economic Growth in Nigeria

This study examined the relationship between foreign direct investment and economic growth in Nigeria using secondary data sourced from the Central Bank of Nigeria (CBN) statistical bulletin between the periods of 1986 to 2017. The study employed Vector Error Correction Model (VECM) and Pairwise Granger Causality test to ascertain the direction of causality between variable employed. Findings revealed that of the six exogenous variables used as an indicator of foreign direct investment, only the non-oil related foreign direct investment, trade openness and market capitalization were able to pass test of hypothesis, which suggest that of the six employed independent variables, three established the fact that foreign direct investment is a vital stimuli in promoting economic performance in Nigeria with more emphasis on the non-oil related foreign direct investment. The study thus concluded that non-oil related foreign direct investment is more helpful to Nigeria’s economy compared to oil related foreign direct investment inflows. Consequently, it is recommended that both Nigeria’s private and public sectors should intensify efforts to attract further foreign direct investment inflows into the non-oil related sectors of the economy, while relatively de-emphasizing attraction of inflows into the oil related sector in the interest of the country.

Electronic Banking and Growth of Deposit Money Banks Operations: Nigeria Experience

The study examined the Nigeria experience of the influence of electronic banking on the growth of deposit money banks in Nigeria. The research design used for the study was the expost-facto research design. The data used in this study were obtained from the annual reports and statements of accounts of Nigeria deposit insurance corporation. CBN annual report and account, CBN statistical bulletin; various online journals and literature. In order to achieve the objective of this study, a linear regression was adopted on both functional and statistical models. The study found that internet banking has a negative impact on growth rate of total deposit of deposit money banks in Nigeria with a regression coefficient of -10.09143. Automated Teller Machine (ATM) operation has a positive impact on asset growth of deposit money banks in Nigeria with a regression coefficient 37.13510 and Point of Sale (POS) transaction has a positive impact on asset growth of deposit money banks in Nigeria with a regression coefficient 1.334829. The study therefore recommends among others that due to the insignificant relationship that exists between internet banking and deposit growth banks that are yet to fully adopt internet banking should do so as a matter of urgency if they must grow, remain relevant, competitive and profitable. Banks that seek to improve their deposit growth performance and offer numerous products / services in an effective, efficient and cost effective manner. There should be increased awareness creation about the use of smart cards for banking operations and banks should also improve the number of services that ATM can offer the banking public. The Central Bank of Nigeria should ensure that guidelines with respect to POS transactions are properly adhered to.