Exchange In Nigeria Research Articles

Effect of exchange rate volatility on financial reporting of consumer goods firms in Nigeria (2019 – 2023)

This study examines the effect of exchange rate volatility (ERV) on financial reporting of consumer goods firms in Nigeria. Ex-post facto research design was adopted for this study. Data were sourced from the published annual reports of fourteen consumer goods firms listed on the Nigeria Exchange (NGX) and the Central Bank of Nigeria (CBN) Statistical Bulletin for the period 2019-2023. The analysis employed the Panel Error Correction-Generated Least Squares (EGLS) method, focusing on three key financial metrics: Earnings Per Share (EPS), Current Ratio, and Debt-to-Equity Ratio. The findings reveal that ERV has a significant positive effect on EPS. Conversely, a significant negative effect is observed on the current ratio. However, the effect on the debt-to-equity ratio is found to be insignificant, suggesting that ERV does not substantially influence capital structure decisions. The study recommends that firms should continue to develop and implement robust strategies to manage the impacts of ERV, such as hedging, strategic pricing, and cost control measures, to safeguard and potentially enhance their financial performance during periods of exchange rate fluctuations. Keywords: Exchange Rate Volatility, Financial Reporting, Earnings Per Share, Current Ratio, Debt-to-Equity Ratio, Consumer Goods Firms.

Consensus Analysts Target Price and Stock Price Returns in Nigeria

This study focuses on the effect of an Investment Valuation technique (Consensus Analysts Target Price) on Stock Price Return of listed companies in the Nigerian Exchange between the period of 2011 and 2023. The ex-post facto research design was employed in this research due to the use of historic (secondary) data from the selected fifteen (15) companies across 3 major sectors on the Nigeria Exchange (NGX). Panel autoregressive distribution lag model was the estimation techniques and inference made on 5% significance level. Prior to the data analysis, a number or pre-estimation test were carried out such as co-integration, homogeneity, and cross-sectional dependence in addition to basis correlation and descriptive analysis. Findings from the short run reveals a significant negative coefficient (-0.273) for lagged Stock Price Return (L.STR), indicating a substantial short-term correction effect. Conversely, the lagged Consensus Analyst Target Price (L.CATP) shows a positive coefficient (0.141) without statistical significance, suggesting a modest positive relationship without an immediate impact on Stock Price Return. Transitioning to the long run, the highly significant negative coefficient (-1.273) for long-run Stock Price Return (lr_STR) emphasizes a robust and persistent negative adjustment effect. Over an extended period, Consensus Analyst Target Price (lr_CATP) introduces a marginally significant positive coefficient (0.077), implying a modest positive impact on Stock Price Return. Based on the results, one recommendation concerning Consensus Analyst Target Price (CATP) and Stock Price Return is to exercise caution in relying solely on CATP for short-term decision-making. Investors should be aware that, in the short term, deviations from the lagged return may not be significantly influenced by CATP. Therefore, considering additional factors or indicators alongside CATP could enhance the accuracy of short-term decision-making in understanding stock price movements.

Restoring Nigeria’s Exchange Rate to the Goodluck Jonathan’s Era for Economic Recovery and Growth

This paper analyzes the factors contributing to Nigeria's current exchange rate challenges, particularly comparing the economic performance during the administrations of Presidents Goodluck Jonathan, Muhammadu Buhari, and Bola Ahmed Tinubu. It also looks into the overall state of the economy and strategies to restore Nigeria’s exchange rate to pre-Buhari levels. Key issues discussed include the decline in the Naira's value, rising inflation, and the challenges faced by different sectors. The research underscores the adverse effects on citizens, especially the poor, and emphasizes the need for urgent government intervention. The recommendations suggested encompasses measures to boost foreign exchange supply, manage demand, and enhance economic stability. Some of them includes promoting non-oil exports, addressing political stability concerns, managing inflation, and implementing policies to discourage currency speculation. Keywords: Balance of payments, Exchange rate, Fiscal policy

Exchange Rate Management Reforms and Restoring the Dignity of the Naira

This article provides comprehensive advice to the Federal Government of Nigeria (FGN) on exchange rate management in order to restore exchange rates to pre-President Buhari administration levels. Nigeria's exchange rate dynamics have witnessed significant changes in recent years, and this article presents a multifaceted approach to address the challenges faced by the FGN. By examining the historical context and global economic trends, this article offers policy recommendations encompassing fiscal, monetary, and structural reforms. It aims to guide the FGN in achieving stability and competitiveness in the international foreign exchange market. Keywords: Fiscal policy, Monetary policy, Exchange rate management, Structural reform

Oligopoly and exchange rate dynamics in Nigeria

We examine the short-run and long-run oligopoly - exchange rate nexus, with a focus on access to forex in Nigeria, using the Autoregressive Distributed Lag (ARDL) model; controlling for other macroeconomic fundamentals (inflation rate, interest rate, oil price, and net trade balance). Oligopoly is defined using the Herfindahl-Hirshman Index (HHI) on the sectoral utilization of foreign exchange in Nigeria. While the concentration in forex allocation to firms and industries became oligopolistic between 2014 and 2015, the Naira/USD exchange rate also recorded a jump from N164.8/US$ to N195.5/US$; indicating possible association. Oligopoly in forex allocation in Nigeria caused a weakly (strongly) significant appreciation (depreciation) in the exchange rate in the short-run (long-run). Imperatively, the exchange rate benefits of forex allocation to selected big firms are not sustainable. Net trade balance and oil price also reduced the pressure on Nigeria's forex market and stimulated potential Naira appreciation, but only in the short run; suggesting the need to diversify the economy from reliance on oil-based trade and embrace a more sustainable trade path.

Impact of Neighbouring Currencies on Nigeria’s Currency Instability

This study examines the effect of the exchange rate volatility of currencies of countries bordering Nigeria, namely the Benin Republic, Niger, Chad and the Cameroon Republic on Nigeria's exchange rate volatility using monthly observations for 1st January 2001 to 31st December 2021. The study employed the Generalised Auto-Regressive Conditional Heteroscedasticity method to analyse the dataset. The study found that fluctuations in the currencies of these countries have a significant impact on the volatility of Nigeria's currency naira. As a result, it is recommended that policymakers and government agencies strengthen security along the Nigeria-Cameroon, Nigeria-Benin, Nigeria-Chad, and Nigeria-Niger borders to more strictly regulate imports and support the stability of Nigeria's currency. The Nigerian government should encourage less importation from these countries through import-substitute production and higher exportation from Nigeria as such could lead to the appreciation of the naira.

The Effect of Regulatory Risk Management Strategies on the Financial Performance of Listed Deposit Money Banks in Nigeria

Studies on risk management have gained increasing focus as several regulators and other related bodies such as the Basel accord, International financial reporting standard authorities and various country’s central banks had formulated several frameworks for effective regulation and management of risks by financial institutions across the world with the expectation of improvement in the performance of the financial institutions. This study focuses on the effect that regulatory risk management strategies, measured with independent variables of strategic, reputational, legal/regulatory and operational risk has on the financial performance of the Nigerian deposit money banks. This study used a population of fourteen (14) banks listed on the Nigeria exchange from which a sample of twelve (12)banks to extract data for a period of ten years and conducted a multivariate regression analysis using capital adequacy and market values as financial performance measurement in which it was observed that the regulatory risk management strategies have an overall positive and significant effect on both capital adequacy and market values of the banks and thus concludes that the adoption of effective regulatory risk management strategies would further lead to maintenance of stable and improved financial performance of the banks. Consequently, the study recommends the need for executive management of deposit money banks to pay attention to the level of compliance with these regulatory risk management codes to ensure the optimum financial performance of the banks.

Employee Benefits and Firm Value of Listed Nigerian Consumer Goods Manufacturing Firms

The practice of rejigging the firm value of manufacturing companies by considering employee benefits after the adverse effect of the global lockdown of COVID-19 formed the crux of this study. The study investigated the influence of employee benefits on the firm value of listed manufacturing firms in Nigeria. Specifically, it examined the influence of incentives, health, safety, life insurance, and retirement benefits on firm value. The study adopted ex-post facto and longitudinal research designs. 22 consumer goods manufacturing firms listed on the Nigeria Exchange (NGX) formed the study population as of December 31, 2021. A census sampling technique was used, automatically making the 22 listed firms the study’s sample size. Data were obtained from published annual reports of the firms covering ten years, starting from 2012 to 2021 financial year. The data were analysed using descriptive statistics and panel regression. Findings revealed that incentives, health, safety, life insurance, and retirement benefits negatively and significantly affect Tobin’s list of consumer goods manufacturing firms in Nigeria. The study concluded that re-strategising incentives, health, safety, life insurance, and retirement benefits as policies would make firms perform better and increase their value. The study recommends that employee benefit policy and system be reviewed to reduce cost, staff population be cut down, and the firms adopt more non-monetary benefits to improve their wealth.

Oil Price Fluctuation And Exchange Rate In Nigeria: Is There A Volatility Transmission Effect

Over the period 1980-2022, we examined the transmission effect of oil prices on Nigeria's exchange rate. E-GARCH (Exponential GARCH) model is employed in this study. We used Augmented Dickey Fuller to determine a unit root, integrating exchange rates, crude oil prices, external reserves, GDP, inflation, and interest rates to one I(1) and zero I(0). We used Johansen Co-integration to determine long-term relationships. Interest rates, inflation, and crude oil prices all correlated positively with each other. A statistically insignificant result is shown by the variance equation, indicating there is no correlation between crude oil prices and exchange rates. The Nigerian exchange rate is not affected by volatility transmission or leverage due to fluctuations in crude oil prices. According to the study, governments should take monetary policy measures to stabilize exchange rates during unpredictable oil price fluctuations. It is necessary to adjust the naira exchange rate when oil prices fluctuate.

Challenges of circular design adoption in the Nigerian built environment: An empirical study

The architecture, engineering, construction, and operation (AECO) sector significantly contributes to natural resource depletion, pollution, and climate change impacts. The design stage is crucial in the circular economy (CE) approach in the AECO sector. Adopting CE in design faces various challenges, including sociocultural, technical, economic, regulatory, organizational, and technological aspects, among other. Despite increasing research in this area, there is a scarcity of studies addressing these barriers in the Nigerian built environment (NBE), especially at the design firm (DF) level. The study investigated the challenges of CD adoption in the NBE. Through a survey of 307 architectural and engineering DFs in Lagos, Nigeria, data collected were analysed using descriptive and inferential statistical methods. Economic and knowledge-related challenges emerged as the most significant. The findings were attributed to the newness of CD in the NBE, lack of technical CD knowledge, and short-term mindset of the client, influenced by high resource and construction costs due to the current volatile economy and the issues of high foreign exchange in Nigeria. The study recommended promoting public awareness, training of DFs, establishing voluntary stewardships, regulatory frameworks, and incentives, developing pilot projects and forming international collaborations to expedite CD adoption. The outcomes have the potential to facilitate the development of a CD implementation framework in the NBE. By offering new and valuable insights into CD challenges in developing countries’ AECO sector, and proposing practical enablers for overcoming the unique barriers in the NBE during the implementation process, the study contributed to the global discourse on CD adoption.

Symmetry and Asymmetry Multivariate Garch Modeling of Consumer Prices Index, Crude Oil Price, Inflation Rate and Exchange Rate

The study looked at changes in Nigeria's exchange rate, inflation rate, consumer price index, and price of crude oil. Monthly data from January 2004 to December 2020 were utilized in this analysis, and they were taken from the statistical bulletin of the Central Bank of Nigeria (CBN). The data's time graphic showed the trend series' present state. For the analysis, E-view 12 statistical software was employed. Modeling employed both symmetric and asymmetric processes. Using both symmetric and asymmetric modeling techniques, the Multivariate Generalized Autoregressive Conditional Heteroscedasticity (M-GARCH) model was developed. To estimate three models for multivariate GARCH, a constant conditional correlation, a diagonal VECH, and a diagonal BEKK. The conditional variance and conditional covariance were estimated using these models. Every variance and covariance model had a significance level of 5%.

Transient Credit Facility and Returns on Assets and Equity of Corporate Organizations Quoted At the Exchange in Nigeria

Several articles attribute the inefficient financial performance of corporate organizations listed at the Exchange (NSE) in Nigeria to efficient long-term facilities. However, apart from the long-term facilities, most companies spend considerable time in decision-making regarding short-term and transient credit financing. Ineffective credit financing is instrumental to an unproductive operation of a company. Therefore, this study researched the impact of the credits on the returns on assets and equity of manufacturing firms quoted on the Stock Exchange in Nigeria. The study uses scientific materials from Google scholar and Scopus search mechanisms for qualitative framework development and secondary data from published financial statements of firms on the stock exchange. The research also captured the effects of financial leverage and opportunities on the connectivity between productivity and financing decisions of quoted companies, engaging explanatory research design and adopting an aggregate of 11 corporate organizations for evaluation. The study deployed data from online resources and company websites from 2015 and 2022. Recommendations included upgrading the accounts receivable and inventory holding period to a productive limit and keeping a sufficient cash ratio considering growth opportunities. It pointed to the leverage possibilities and the size structure in financing decisions, as credit financing decisions influence organizational performance.

Effect of Oil Price Fluctuations on Nigeria's Exchange Rate Movements

Effect of Oil Price Fluctuations on Nigeria's Exchange Rate Movements

Volatility spill over effect of cryptocurrency prices and foreign exchange in Nigeria

The study analyzes the volatility spillover effects of cryptocurrencies and foreign exchange market in Nigeria, covering a two-year period from September 19th, 2019, to September 19th, 2021. It captures a period where the domestic and foreign economy experienced a series of challenges, reflecting on its financial markets and cryptocurrency. The study adopts the Vector Autoregressive - Multivariate Generalized Conditional Heteroskedastic methodological framework, with the Baba, Engle, Kraft, and Kroner transformation (VAR-MGARCH-BEKK), to determine the volatility spillover effect between Nigeria’s Foreign exchange returns and the price returns of four of the largest cryptocurrencies traded in Nigeria. Findings indicate foreign exchange have positive effect on the mean spillovers on cryptocurrencies, and an overall market influence over cryptocurrencies, due to a high GARCH and low ARCH estimate. However, the ARCH parameters show that past errors of foreign exchange market are observed to be vulnerable to external volatilities. Therefore, the study is able to conclude that cryptocurrencies serve as a viable hedging, safe haven and an effective diversification instrument against financial uncertainties, and therefore, recommends optimal diversification strategies and low leverage contracts to avoid the high risks cryptocurrencies present, as they are highly volatile, hence, susceptible to speculative attacks.

Corporate Governance and Audit Quality; Evidence from Nigeria Breweries

This study analyzed the effect of corporate governance on audit quality of selected brewery firms in Nigeria for a period of ten years spanning 2011-2020. The study employed ex-post facto and longitudinal research design. The secondary sources of data were collected from annual reports of the selected brewery firms quoted in their Nigeria Exchange Group and four (4) specific objectives and hypotheses were subjected to some preliminary data tests such as descriptive statistic, and Pearson correlation analysis and were analyzed using binary logistic regression analysis. Audit quality was used as the dependent variable, while board financial expertise, board size, board independence, and board meeting were used as the independent variables. Utilizing data from a sample of 40 firm year observations, we found that the proportion of non-executive directors and board size has positive and significant effect on audit quality. Based on the findings from the study, we therefore recommend that board size should be increased to a maximum number of six members for improved audit quality and quick decision making in relation to audited financial report. Also, Nigeria breweries should ensure that their board is composed of independent persons, with high level of integrity that can match words with action to improve their audit quality.

Determinants of Accounts Receivable of Listed Consumer Goods Companies in Nigeria

The management of accounts receivable is usually done not just to reduce inventory, improve sales and profitability, but also to improve liquidity and short-term solvency. These and other factors affect the level of accounts receivable in different ways depending on the industry's nature. This study examines the determinants of accounts receivable in consumer goods manufacturing companies listed on the stock exchange in Nigeria. The study population consists of 14 consumer goods companies listed on the Nigerian stock exchange as of November, 2020. It is a longitudinal study using expost facto research design. Census sampling method was used to consider all listed consumer goods manufacturing companies. Data were collected from 2014 to 2019 annual reports of the 14 companies. Accounts for these years were prepared to comply with the International Financial Reporting Standards (IFRS). The dependent variable is accounts receivable represented by the Receivables Collection Period. Firm size, profitability, inventory, liquidity, leverage and age of companies are independent variables. The study used panel data analysis with its various elements of Pool, Fixed and Random effects. Robustness tests conducted include Variance Inflation Factor (VIF) Test, Hausman test, Lagrange Multiplier test. The result shows profitability and age has significant impact on accounts receivable. Firm size, inventory, liquidity and leverage have no significant impact on Receivable Collection Period. This suggests that profitability and age of companies have significant impact on receivables of consumer goods manufacturing companies in Nigeria. This implies that key determinants of account receivable in these companies are the quest to make profit. It also suggests that older firms know their customers better and might have vast experience in handling accounts receivable.

Governance Structure and Quality of Accounting Reports in Covid 19 Era

This article investigated the impact of governance structure on the quality of accounting reports produced by firms operating in Nigeria during the pandemic. The study was carried out using the ex-post facto research design. The information was derived from the annual reports and accounts of firms listed on the Nigeria Exchange Group between 2011 and 2020. The correlation between corporate governance indicators of board structure (size-BRDSZ and independence-BRDID), audit quality (audit committee size (ADCMZ), the quality of external audit (EADTQ as measured by the presence of an auditor among the big-4), board experience (i.e. experience-BRDEX), and financial reporting quality is 93.47 percent, according to econometric analysis. The independent variables can explain 54.29 percent of the variance in the FRQDA. There is general relevance among the metrics assessing financial reporting quality, such as corporate discretionary accruals (FRQDA). The COVID-19 pandemic has a beneficial influence on board structure (BRDSZ), board experience (BRDEX), and external audit quality (EADTQ). Furthermore, as a consequence of the COVID-19 epidemic, independent directors on the board of company (independence-BRDID) and audit quality (audit committee size (ADCMZ) have a detrimental impact on financial reporting quality as evaluated by the firm's discretionary accruals (FRQDA). As a result, the research advised that a higher emphasis be placed on corporate governance indicators in order to achieve global standard financial reporting in the Nigerian growing market for investment opportunities.

Assessment of Impact of International Financial Reporting Standards (IFRS) Adoption on Financial Institutions in Nigeria

This study examines the impact of adopting IFRS on the financial statements of Nigerian depositary banks. The data used was taken from the annual report of selected banks listed on the Nigeria Stock Exchange in Nigeria from a period of 2013 to 2017. To achieve this, the panel's Ordinary least squares regression procedure was used. The results show that R-squared is 78%. This means that the overall QFS variation is 78%, which can be explained by the explanatory variables following the independent variable, which is sufficient to explain the dependent variable (quality of accounting information). The F-Statistic is 2.07870 and the probability value is 0.026393 with p <0.05. This is statistically significant and means that the goodness of fit of the model is high and significant. Therefore, the model is well specified and can be estimated. A Durbin-Watson statistic of 2 was obtained. This means that the results are free of continuous autocorrelation issues. In particular, the IFRS correlation coefficient is 0.74458 and the probability value is 0.0105 with p <0.05. This is positive and statistically significant. This shows that there is a direct and significant correlation between the adoption of IFRS and the quality of financial statements. The results revealed a positive and significant association between ROA, growth, size, age and quality of accounting information.

Time-Gap effects of crude oil prices on the foreign exchange rates: Evidence from Nigeria

There is a pool of techniques and methods in addressing dynamics behaviors in higher frequency data, prominent among them is the ARCH/GARCH techniques. In this paper, the various types and assumptions of the ARCH/GARCH models were tried in examining the dynamism of exchange rate and international crude oil prices in Nigeria. And it was observed that the Nigerian foreign exchange rates behaviors did not conform with the assumptions of the ARCH/GARCH models, hence this paper adopted Lag Variables Autoregressive (LVAR) techniques originally developed by Agung and Heij multiplier to examine the dynamic response of the Nigerian foreign exchange rates to crude oil prices. The Heij coefficient was used to calculate the dynamic multipliers while the Engel &amp; Granger two-step technique was used for cointegration analysis. The results revealed an insignificant dynamic long-term response of the exchange rate to crude oil prices within the periods under review. The coefficient of dynamism was insignificantly in most cases of the sub-periods. The paper equally revealed that the significance of the dynamic multipliers depends greatly on external information about both market indicators which are two-way interactions. Thus, the paper recommends periodic intervention in the foreign exchange market by the monetary authorities to stabilize the market against any shocks in the international crude oil market, since crude oil is the main source of foreign exchange in Nigeria.

Comprehensive analysis of the effect of oil and non-oil revenues on economic growth in Nigeria

Revenue generation as the funding source for Nigeria's economic growth activities was challenging due to the government's mismanagement, tax avoidance, and corrupt practices due to the COVID-19 pandemic. The global crude oil prices declined. The challenges make Nigeria's federal government over-dependent on oil-generated revenues to experience several setbacks in achieving its economic growth goals. However, for the last decade, the Government has also diversified the economy and focus on the non-oil area. Thus, this study examined the effects of generating oil and non-oil revenues on Nigeria's economic growth from 1989 through 2018 using secondary data extracted in the Central Bank of Nigeria's statistical bulletin. The study employed the model for analytical co-integration and error correction. Similar analytical processes were applied to the multivariate data on components of oil and non-oil revenue, exchange rates, and real gross domestic products. Results generated indicated that the oil revenue harms real gross domestic products in Nigeria, but this is the same with effects reported from non-oil revenue. Nonetheless, Nigeria's exchange rate gives a positive sign and statistical significance for real gross domestic products. Consequently, the study opined that the continuing decline in global crude oil prices, resistance from insurgents in Nigeria's oil-producing area, the Nigerian Government's profligate expenditure, the global COVID-19 health pandemic, among other factors, are harming the economic growth of Nigeria.