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The Nexus between Exchange Rate Variation and Economic Growth in Nigeria

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... Even though various changes have been occasioned especially the implementation of urgent exchange rate policies, foreign exchange have remained unstable and unfavorable; the case becomes more critical when it concerns naira. In fact, the existing exchange rate policies have on a steady increased the gap between the official and parallel markets which has made worse the disequilibrium in the foreign exchange market (Amassoma & Odeniyi, 2016). The ineffectuality of these policies further exacerbated foreign exchange thus decimating Nigeria external reserve, aggravating capital flight which has threatened sectoral performance and consequently cascaded national output which evidences poor economic growth (Amassoma & Odeniyi, 2016). ...
... In fact, the existing exchange rate policies have on a steady increased the gap between the official and parallel markets which has made worse the disequilibrium in the foreign exchange market (Amassoma & Odeniyi, 2016). The ineffectuality of these policies further exacerbated foreign exchange thus decimating Nigeria external reserve, aggravating capital flight which has threatened sectoral performance and consequently cascaded national output which evidences poor economic growth (Amassoma & Odeniyi, 2016). ...
... Considering this challenge, Nigeria has per time lost support and promotion in terms of international trade; this explains her relatively low participation and contribution in global trade, the consequence which is declining foreign reserve holds no positive pros pect for the prosperity of the country (Kanu & Nwadiubu, 2020). This has also contributed to Nigeria's failure to effectively explore participation in international trade for improved economic productivity and prosperity; this challenge caused by foreign exchange fluctuation has impeded Nigeria from participating fully in international economic activities, thus causing the very low flow of funds from such trades coupled with the adversities that exchange rate fluctuation creates for local business in the country which have multiplied the occurrence of inconsistent economic growth (Amassoma & Odeniyi, 2016). This has therefore exposed policy makers, macroeconomists and academics to the huge role of determining adequate management of foreign exchange fluctuation which has clearly marred the performance of the economy of Nigeria (Uche, Anne & Chekwube, 2015). ...
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The study examined the effect of foreign exchange fluctuations on economic growth in Nigeria. Specifically, examined the relationship between exchange rate and economic growth in Nigeria; investigated the effect of ef fect of balance of payment on economic growth in Nigeria and evaluated the effect of trade openness on economic growth in Nigeria. The quantitative and qualitative research design was adopted in the study. Secondary time series data spanning thirty-one years (1989-2020) was gathered in the study. Data gathered in the study was estimated using descriptive statistics, unit root analysis, Autoregress ive Distributed Lag (ARDL) analysis, parsimonious error correction model and other post estimation tests. Findin gs from the study established that Balance of payment exerts negative insignificant effect on economic growth in Nigeria both in the long and s hort run with coefficient estimate of-1.163405 (p=0.8400<0.05) and-3.223405 (p=0.0535>0.05) respectively; exchange rate affects economic growth in Nigeria positively and significantly both in the short and long run with coefficient estimate of 76.64195 (p=0.0000<0.05) and-57.92612 (p=0.0000>0.05) respectively; trade openness exerts negative significant effect on e conomic growth in Nigeria in the short and long run with coefficient estimate of-110.2135 (p=0.0086<0.05) and-32.10217 (p=0.0087<0.05) respectively and inflation rate exerts positive significant effect on economic growth in Nigeria in the long run and po sitive insignificant effect in the short run with coefficient estimate of 84.76427 (p=0.0350<0.05) and 19.95149 (p=0.0858>0.05) respectively. Premised on these findings, Central Bank of Nigeria should create satisfactory exchange rate management towards regulating exchange rate and moderates its volatility for sustainable economic growth; monetary authorities should deploy satisfactory policies towards changing permanent inflation trend in the economy and ensures that it remains at a level suitable for sectoral output and ultimately boost economic growth and government and other monetary agencies should seek sound measures to reduce import and promote exports.
... During the last few decades, there have been lots of views among economic analysts, financial analysts, policy makers, as well as free thinkers about the significance of exchange rate for the achievement of sustainable economic growth and development of an economy. According to [5] there is a positive relationship between exchange rate and economic growth in Nigeria in both the short and the long run [18] . Asserts that one of the best ways to achieve economic prosperity is to pursue a robust and welldesigned exchange rate policy. ...
... Using VECM technique in Nigeria, Aliyu SUR (2009) finds a positive impact of exchange rate fluctuation policies on economic growth of Nigeria. Similarly, Amassoma (2016) [5] also confirms the long run positive relationship of exchange rate with economic growth of Nigeria. In all, Ajekwe (2013) [4] finds that both fixed and ~ 47 ~ flexible exchange rates management policies positively affect economic growth in Nigeria. ...
... Using VECM technique in Nigeria, Aliyu SUR (2009) finds a positive impact of exchange rate fluctuation policies on economic growth of Nigeria. Similarly, Amassoma (2016) [5] also confirms the long run positive relationship of exchange rate with economic growth of Nigeria. In all, Ajekwe (2013) [4] finds that both fixed and ~ 47 ~ flexible exchange rates management policies positively affect economic growth in Nigeria. ...
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Impact of fixed and flexible exchange rate on economic growth in Nigeria: A VECM approach AUTHOR(S) Ishaq Saad IdrisABSTRACT The stability of exchange rate in Nigeria is a significant monetary policy target. The fact that monetary authorities in Nigeria have over the years made various efforts to minimize the huge divergence between the official, interbank/autonomous and parallel/ Bureau De change rates in Nigerian foreign exchange market through different exchange rates regimes such as the overall fixed and flexible exchange rates regimes overtime. Accordingly, this paper investigates the comparative analysis of the impact of fixed and flexible exchange rates management policies on economic growth of Nigeria for the period of 1980A-2016A: using vector error correction model (VECM). The empirical results indicated evidence of long run relationship among the variable of interest in the study and in all there is a positive impact of exchange rates management policies on economic growth of Nigeria. Another finding from the Granger causality test confirms a unidirectional short run causality that runs from real effective exchange rate (REER) to economic growth (RGDP). In addition, unidirectional causality that runs from oil price (OPR) to real interest rate (RIR) in Nigeria also exists. However, the need for policy intervention to review and correct the foreign exchange market segments distortions is highly recommended. Again, the Nigerian economy needs a standard set of export base diversification from its mono cultural oil export in order to boost the foreign exchange earnings of the Nigerian economy.
... On the other hand, some studies found that exchange rate volatility has negative effects on output and the aftermath is often devastating (Adelowokan et al., 2015;Basirat, Nasirpour, & Jorjorzadeh, 2014;Danladi & Uba, URL: www.onlinesciencepublishing.com | March, 2020 2016; Dlamini, 2014;Javed & Farooq, 2009;Munthali, Simwaka, & Mwale, 2010;Sanginabadi & Heidari, 2012;Schnabl, 2007) while other studies found no relationship whatsoever between exchange rate variance and output (Akpan & Atan, 2011;Amassoma & Odeniyi, 2016). In addition, Uddin, Rahman, and Quaosar (2014) found a bidirectional causality running from exchange rate to GDP and vice versa in Bangladesh. ...
... From the foregoing, it is apparent that there exist different studies in the extant literature examining the effects of exchange rate movement on output (sectoral or aggregate) in different countries of the world (Alagidede & Ibrahim, 2017;Ebaidalla, 2013;Munthali et al., 2010;Sanginabadi & Heidari, 2012;Uddin et al., 2014) however, only a few studies on this subject matter are available for Nigeria (Adelowokan et al., 2015;Ajayi et al., 2016;Amassoma & Odeniyi, 2016;Danladi & Uba, 2016). Disaggregating the Nigerian economy into agricultural, industrial and service sector, it was found that majority of the studies on the impact of exchange rate movement on sectoral output are done for the manufacturing sector (David et al., 2010;Ehinomen & Oladipo, 2012;Enekwe et al., 2013;Ilechukwu & Nwokoye, 2015;Jongbo, 2014;Lawal, 2016) while studies on the agricultural and services sector (Adekunle & Ndukwe, 2018;Obayelu & Salau, 2010) are particularly rare. ...
... Vector ErrorCorrection Model(Adelowokan et al., 2015;Amassoma & Odeniyi, 2016;Munthali et al., 2010;Obayelu & Salau, 2010;Sani et al., 2016) Generalised Methods of Moment(Ajayi et al., 2016) Ordinary Least Square(Ehinomen & Oladipo, 2012;Ilechukwu & Nwokoye, 2015;Jongbo, 2014) Autoregressive Distributed Lag(Abdul-Mumuni, 2016;Javed & Farooq, 2009;Lawal, 2016;Sanginabadi & Heidari, 2012) Generalised Autoregressive Conditional ...
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This study examined the symmetric and asymmetric effects of exchange rate dynamics on the performance of the agricultural, industrial and services sector of Nigeria using the ARDL and NARDL frameworks as well annual time-series data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin over the period of 1981-2016. The results of the short-run linear ARDL model reveal that exchange rate dynamics stimulates the performance of the agricultural and services sector of Nigeria while those of the nonlinear ARDL depict that exchange rate dynamics (depreciation and appreciation) is positively related to agricultural and services sector output but inversely related to industrial output. The result also showed that exchange rate dynamics has no asymmetric impact on sectoral performance which implies that positive and negative exchange rate movement have the same impacts on sectoral output both in the short-run and long-run. Therefore, this study recommended that the Nigerian government ensure adequate exchange rate management to encourage domestic investors and attract foreign investors to the various sectors of the Nigerian economy. Highlights of this paper  This study evaluated the symmetric and asymmetric effects exchange rate dynamics on the performance of the agricultural, industrial and service sectors of Nigeria.  The findings revealed that exchange rate dynamics stimulates the performance of the agricultural and services sector but dampens the performance of the industrial sector.  Exchange rate dynamics has no asymmetric impact on sectoral performance
... Exchange rate (broadly define, narrowly define and quasi money) were all found to have significant effects on the Economics Growth. Amassoma (2016) studied the Impact of Exchange Rate Fluctuation on the Nigerian Economic Growth using an annual data of fortythree (43) years covering the period (1970 -2013). The standard deviation method was employed to capture and estimate the fluctuation inherent in the model as regards the research's objective. ...
... The empirical studies of Uddin, Rahman and Quaosar (2014), Opaluwa, Umeh and Ameh (2010), Owolabi and Adegbite (2012) and Amassoma (2016) show that gross domestic product as the only gauge for economic growth measurement. This study improved on existing literature by including manufacturing capacity utilization as a measure of economic growth. ...
... This is an indication that the value of local currency of a balance of payment surplus country would rise relative to balance of deficit due to the accumulation of foreign exchange from exports. This findings is in agreement with the works of Uddin, Rahman and Quaosar (2014), Danladi and Uba (2016), Jakob (2016), Onuorah and Osuji (2014) and Amassoma (2016). However, it would not validate the result of Imoisi, Uzomba and Olatunji (2010) and Adelowokan, Adesoye and Balogun (2015) on the negative relationship between real exchange rate and economic growth. ...
... Ajinaja, Popoola and Ogunlade (2017) empirically examine the relationship between fluctuation in relation to exchange rate and how it affects key variable in Nigeria economy, fluctuation in international trade (which was captured by Naira exchange rate) and investment from abroad affects performance in the export sector of the country positively, after the research made use of OLS statistical analysis, it was also discovered that goods produced in the country also have substantial association with export performance. Amassoma and Odeniyi (2016) reciprocate a similar research that Clement (2015) investigated but this time emphasis is placed more on the average Nigeria purchasing power. The fluctuation in exchange rate have posed to be a major barrier to business tycoons in Nigeria because it affects how decision will be made in relation to purchase of capital products, it also affect foreign investment, this were the major reasons that lead Amassoma and Odeniyi (2016) to examine the effect of exchange rate fluctuation on policy making institutions and monetary authorities, the study made use of standard deviation method to analyse forty-three annual data span on the variables under investigation. ...
... Amassoma and Odeniyi (2016) reciprocate a similar research that Clement (2015) investigated but this time emphasis is placed more on the average Nigeria purchasing power. The fluctuation in exchange rate have posed to be a major barrier to business tycoons in Nigeria because it affects how decision will be made in relation to purchase of capital products, it also affect foreign investment, this were the major reasons that lead Amassoma and Odeniyi (2016) to examine the effect of exchange rate fluctuation on policy making institutions and monetary authorities, the study made use of standard deviation method to analyse forty-three annual data span on the variables under investigation. The result of the ECM showed that a substantial relationship is seen between nominal Naira exchange rate and economic output in Nigeria. ...
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This paper examined the relationship between exchange rate fluctuation and sectorial output in Nigeria, the study made use of exchange rate as endogenous variable while agricultural sector contribution to gross domestic product, industrial sector contribution to gross domestic product, construction sector contribution to gross domestic product, trade sector contribution to gross domestic product and service sector contribution to gross domestic product was use as exogenous variable in the study. Time series data was gotten from Central Bank of Nigeria Statistical Bulleting between the period 1985-2020, the study made use of Descriptive Statistics, Short-run Static Multiple Regression, Phillips-Perron Unit Root Test, Johansen Cointegration, Error Correction Estimates and Granger Causality Tests. The error correction estimates result showed that the five sectors have a positive and significant relationship with exchange rate. The study therefore recommends that the Nigerian government should explores the increased competitiveness of the sector in its economic diversification efforts by sourcing of raw materials locally so that the positive spill-over effects of sourcing for this product will be reduced. In other words, the agricultural sector could provide an avenue to expand the revenue base of the government.
... It is, therefore, suggested that Nigeria improve its competitive capacity in the international market through export diversification. Amassoma and Odeniyi (2016) examined the relationship between exchange rate volatility and economic growth in Nigeria, focusing on the ordinary Nigerian's purchasing power and the level of international transaction. The findings of this study revealed that exchange rate fluctuations had a beneficial but minor impact on Nigerian economic growth in the long and short run. ...
... This result is in-line with the study of Uddin et al. (2014); Shaik and Gona (2020); Nwafor (2018); Okorontah and Odoemena (2016); Okoro and Charles (2019) who all observed a positive and significant impact of exchange rate on economic growth. However, some studies such as Patel and Mah (2018;Amassoma and Odeniyi (2016) had contrary views. ...
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The study interrogates the impact of exchange rate on the economic growth of Nigeria from 1981 to 2020 using quarterly time-series data from the Central Bank of Nigeria and the World Bank National Account. The dependent variable in the model was Real Gross Domestic Product (RGDP), and the independent variables were Exchange Rate (EXCHR), inflation (INFL), Interest Rate (INTR), Foreign Direct Investment (FDI), Broad Money Supply (M2) and Current Account Balance of Payment (CAB). The methodology employed was the Auto-Regressive Distributed Lag (ARDL) model which incorporates the Cointegration Bond test and Error-Correction Mechanism. The finding indicates that in the short run, EXCHR, CAB, M2 and FDI, had a positive impact on economic growth. The impact of EXCHR and CAB were significant on growth while that of M2 and FDI were insignificant to growth. However, INTR and INFL had a negative impact on economic growth with both variables being statistically significant. The bound test showed that there was a long-run relationship among the study variables, and the results from the long run reveal that the exchange rate has a positive and significant impact on economic growth. Inflation, Interest rate, FDI, Current Account Balance of Payment (CAB) and Broad Money Supply all have a positive and significant impact on economic growth. Based on the findings the study recommended that monetary authority should strictly monitor the operations of banks and other forex dealers with a view of ensuring unethical practices are adequately sanctioned to serve as a deterrent to others.
... In the years just after the Second World War, it was widely acknowledged by governments that achieving realistic and stable exchange rate brings along lots of economic benefits such as improvement of allocative efficiency, enhancement of industrial competitiveness, productivity growth, promotion of domestic price stability and internal balance (Jimoh, 2014). This phenomenon also engenders appreciable growth of foreign exchange earnings, as well as, substantial net capital inflow and balance of payments equilibrium (Mordi, 2014 andAmassoma andOdeniyi, 2016). The experience of the inter-war years had been of severe cycles in real activity and it seems obvious that devaluations and exchange rate instability had contributed to decrease in industrial growth (Oshikoya, 2014). ...
... In the years just after the Second World War, it was widely acknowledged by governments that achieving realistic and stable exchange rate brings along lots of economic benefits such as improvement of allocative efficiency, enhancement of industrial competitiveness, productivity growth, promotion of domestic price stability and internal balance (Jimoh, 2014). This phenomenon also engenders appreciable growth of foreign exchange earnings, as well as, substantial net capital inflow and balance of payments equilibrium (Mordi, 2014 andAmassoma andOdeniyi, 2016). The experience of the inter-war years had been of severe cycles in real activity and it seems obvious that devaluations and exchange rate instability had contributed to decrease in industrial growth (Oshikoya, 2014). ...
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Journal of Economics and Allied Research (JEAR) is a peer-reviewed open access journal published by the Center for Contemporary Economics and Allied Research, Department of Economics in collaboration with the University Press, University of Nigeria. The journal accepts state of the art research in the following areas: All areas of mainstream economics as well as other areas such as environment, health, economics geography, social and cultural issues, petroleum and energy economics, political economy and public policy. The journal publishes articles quarterly. Articles involving cross sectional, cross country, time series and panel studies are welcome. In selecting articles for publication (from articles that have passed the review process) the journal will try to strike a balance among the subject areas and methodological approaches. In order to facilitate the speed of acceptance, articles addressing current economic problems or challenges with specific policy relevance will be given priority. Articles can be submitted online or as attachment to the email of the journal editor (Email: jeareconunn@gmail.com)
... Some researchers used Johansen cointegration and error correction model to determine a long-term relationship between exchange rate and other macroeconomic variables. One such researcher is Amassoma and Odeniyi [40] who used multiple regression, cointegration and error correction techniques to investigate the connection in both the long run and short run, between exchange rate variation and economic growth in Nigeria and found insignificant and positive relationship between the exchange rate variation and economic growth. The explanation for this is that interest rate variation is as a result of underlying fundamentals factors that influence the exchange rate which the government has been able to effectively control. ...
... Based on the aforementioned results, the null hypothesis of no cointegration is rejected in the entire four specifications. Using data from Bangladesh; Uddin, Rahman, and Quaosar [40] employed cointegration technique and found output, macroeconomic variables and exchange rate have long run relationship. Ibrahim and Yusoff [41], Ellahi [43] Amassoma and Odeniyi [38], Bada, et al. [39], found similar relationship among common macroeconomic variable. ...
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This study examines the interactions between among exchange rate, output and four other macroeconomic variables in Nigeria from 1981 to 2014. Using principal component analysis for the construction of financial sector development indices, Autoregressive Distributed Lag (ARDL) Bounds test technique, Johansen cointegration and TYDL causality approach, this study finds that effective exchange rate, output and the four selected macroeconomic variables are cointegrated in the long-run. We find that exchange rate has a positive impact on output in the long-run which coexist with the short-run lagged impact. Taking exchange rate movement as the dependent variable, the selected macroeconomic variables have significant long-run interaction effect on the exchange rate. Even though we control for the influence of financial sector development index, real income per capita, trade openness, interest rate, and government expenditure still show much significant impact on exchange rate. Also, unidirectional causality runs from macroeconomic variables to exchange rate movement. There is unidirectional granger causality running from trade openness to national output. The findings of this study offer some important policy implications. Great attention must be given to real exchange rate. This is because when exchange rate is targeted at too high, the risk in terms of output might be enormous. Therefore, there should be less risk associated policies that maintain the real exchange rate at equilibrium or stable state by encouraging a sufficiently rapid depreciation of nominal exchange rate and prevent further real appreciation. Hence, attempt to keep the real exchange rate at too low might have some adverse effect on output.
... In the years, just after the Second World War, it was widely acknowledged by governments that achieving realistic and stable exchange rate brings along lots of economic benefits such as improvement of allocative efficiency, enhancement of industrial competitiveness, productivity growth, promotion of domestic price stability and internal balance (Jimoh, 2014). This phenomenon also engenders appreciable growth of foreign exchange earnings, as well as, substantial net capital inflow and balance of payments equilibrium (Mordi, 2014 andAmassoma andOdeniyi, 2016). The experience of the inter-war years had been of severe cycles in real activity and it seems obvious that devaluations and exchange rate instability had contributed to decrease in industrial growth (Oshikoya, 2014). ...
... In the years, just after the Second World War, it was widely acknowledged by governments that achieving realistic and stable exchange rate brings along lots of economic benefits such as improvement of allocative efficiency, enhancement of industrial competitiveness, productivity growth, promotion of domestic price stability and internal balance (Jimoh, 2014). This phenomenon also engenders appreciable growth of foreign exchange earnings, as well as, substantial net capital inflow and balance of payments equilibrium (Mordi, 2014 andAmassoma andOdeniyi, 2016). The experience of the inter-war years had been of severe cycles in real activity and it seems obvious that devaluations and exchange rate instability had contributed to decrease in industrial growth (Oshikoya, 2014). ...
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This paper looks at the impact of foreign exchange rate policies on industrial growth in Nigeria between 1981 and 2016. The study employed the Vector Error Correction Model (VECM) techniques, following the results of Johansen Cointegration techniques that shows the existence of long run relationship among the variables considered. While, VECM estimates showed that money supply (monetary policy) impacted positively effects, evidence on, TAX (fiscal policy) impacted negative on industrial growth. Besides, the Exchange rate and Inflation impacted negatively on industrial growth., suggesting that the issue of stability remained a challenge unresolved by the Apex bank. The emanating policy antidotes are that there is urgent need to use proactive monetary policy through money supply to speed up the rate of industrial growth on one hand, while providing tax incentive to various industrial good that can further have enhanced the contribution of the sector to industrial growth on the other. In all, the need to align the objective of exchange rate policy with broader macroeconomic goals is necessary for effective policy transmission mechanism to speed up the rate of industrial progress in the country.
... In the years, just after the Second World War, it was widely acknowledged by governments that achieving realistic and stable exchange rate brings along lots of economic benefits such as improvement of allocative efficiency, enhancement of industrial competitiveness, productivity growth, promotion of domestic price stability and internal balance (Jimoh, 2014). This phenomenon also engenders appreciable growth of foreign exchange earnings, as well as, substantial net capital inflow and balance of payments equilibrium (Mordi, 2014 andAmassoma andOdeniyi, 2016). The experience of the inter-war years had been of severe cycles in real activity and it seems obvious that devaluations and exchange rate instability had contributed to decrease in industrial growth (Oshikoya, 2014). ...
... In the years, just after the Second World War, it was widely acknowledged by governments that achieving realistic and stable exchange rate brings along lots of economic benefits such as improvement of allocative efficiency, enhancement of industrial competitiveness, productivity growth, promotion of domestic price stability and internal balance (Jimoh, 2014). This phenomenon also engenders appreciable growth of foreign exchange earnings, as well as, substantial net capital inflow and balance of payments equilibrium (Mordi, 2014 andAmassoma andOdeniyi, 2016). The experience of the inter-war years had been of severe cycles in real activity and it seems obvious that devaluations and exchange rate instability had contributed to decrease in industrial growth (Oshikoya, 2014). ...
... However, although only a few studies have been carried out on this issue, some authors combined the oil price shock and exchange rate fluctuations on economic growth in Nigeria (Matthew & Adegboye, 2014;Augustine 2015;Shehu 2009), oil revenue and economic growth (Ibeh, 2013;Ogbonna, 2012;Christian & Teymur, 2014, etc.), exchange rate fluctuations and economic growth (Amassoma & Odeniyi, 2016;Ismaila, 2016;Adeniran, Yusuf, & Adeyemi, 2014, etc.), while to the best knowledge of the researcher, no existing study has successfully combined the oil revenue and exchange rate fluctuations. Rather, they made use of the oil price shock and exchange rate fluctuations. ...
... An immense number of researchers have conducted (both foreign and indigenous) research studies on the oil price shock and exchange rate fluctuations on economic growth (Matthew & Adegboye, 2014;Augustine 2015;Shehu 2009), oil revenue and economic growth (Ibeh, 2013;Ogbonna, 2012;Christian & Teymur, 2014), exchange rate fluctuations and economic growth (Amassoma & Odeniyi, 2016;Ismaila, 2016;Adeniran, Yusuf, & Adeyemi, 2014). Some of these authors and their researchers are reviewed in this study. ...
Article
Small business contractors in the construction industry in Zimbabwe are being criticised by clients and stakeholders for having limited knowledge in construction management and business techniques, resulting in projects that are not completed on time and within budget. The lack of available literature and studies on this subject from a Zimbabwean context emphasised the gap and the necessity of the study. The purpose of this study was to determine the critical success factors (CSFs) for the contractors in the industry. The critical incident technique (CIT) was used as the research method in the Zimbabwean context. CIT is a qualitative interview procedure in which respondents were asked to provide verbatim stories about their business encounters. The population of the study was limited to small contractors registered with the Construction Industry Federation of Zimbabwe (CIFOZ). Using content analysis, data was classified into twelve themes and a score card was used to determine the frequencies of CSFs identified. The results revealed that procurement, project management, financial factors, manpower, client factors, quality work, and workmanship, were the most important factors for business success. On the scoring card, procurement and project management were perceived as the most important areas that must be performed well to attain the goals of the business and ensure competitive performance. However, technical, health and safety factors were not critical as they were ranked low. The implication of the study was that CIT is a sound technique that should be used in Zimbabwe, especially in the construction industry, to gauge the small business contractors’ experiences and opinions about the industry.
... However it was just a conceptual paper, no statistical analysis was carryout to support his evidence. Amassoma (2017) examined the nexus between exchange rate variation and economic growth in Nigeria, employed data from 1970 to 2013 using econometric techniques such as; Multiple Regression Model, Augmented Dickey Fuller (ADF) test, Johansen Co-integration test and the Error Correction Model (ECM), and revealed a positive but insignificant impact of exchange rate fluctuation on Nigerian economic growth in both the long run and short run. He therefore opined that in order to maintain a stable exchange rate, domestic production should be encourage. ...
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Nigeria exchange rate has undergone a lot of different policy and reform, in 2016 we adopted the floating exchange, has this different reform thus impacted on our economy positively?Thereforewe analyzed the implication of adopting a floating exchange rate: a pre and post analysis of Nigeria economic growth, therefore we used a paired sample t-statistic which is one of the best statistical analysis used in considering a post and pre adoption of policy with more recent data from 2013 to 2015 and 2017 to 2019. Our findings revealed that Nigeria economy did better during the pre-adoption of the policy than the post adoption of the floating exchange rate policy in 2016 therefore we recommended that: proper parameters and policies need to be set in place to boost our exchange rate and will result in economic growth; good economic policy should be put in place to reduce inflation because in the long run will affect our economic growth if not properly handled; and an enabling economic policy that will encourage local production and encourage export should be encourage because this will help our currency to appreciate in value in the global market
... However, as Amassoma (2016) and Mwinlaaru and Ofori (2017) highlight, empirical studies on the connection between the exchange rate and economic growth produce contradictory findings. Given the complex and multifaceted nature of the relationship between these variables, alongside inflation, unemployment, and other factors, it is important to comprehensively understand their interplay and provide valuable insights for policymakers to formulate effective economic policies. ...
Article
The purpose of this study is to examine the relationship between economic growth, inflation, and unemployment. One notable feature of empirical research is the rarity of studies that examine the effects of unemployment and inflation on economic growth in different economic environments, despite the large number of studies that look into these two variables. The study also incorporates interest rates and exchange rates as control variables. This study employs time series data spanning from 1994 to 2020 for selected 5 countries of the Association of Southeast Asian Nations (ASEAN), namely Indonesia, Malaysia, Singapore, Thailand, and the Philippines, under diverse economic conditions. The analysis utilises the autoregressive distributed lag (ARDL) method to examine the relationships between economic growth and its determinants. The empirical results of the study reveal: (1) Economic growth benefits from reducing inflation, interest rates, and exchange rates, underscoring their positive impact on development; and (2) Elevated unemployment rates hinder economic growth. These findings provide policy implications for policymakers in managing inflation, unemployment, interest rates, and exchange rates to foster sustained economic development.
... Individual and corporate entrepreneurs can now access funds for their business operations which can lead to productivity and sustainable financial and economic growth (Dana, 2018). All of these will lead to accumulation of foreign reserves which can help in reducing volatility and preventing financial/stock market crises as funds can be available for bailout (Nwosa, 2017), and as well ensure stable exchange rate for financial sustainability and economic growth (Amassoma, 2016). ...
Article
This study evaluates the co-movement and volatility transmission between the two leading stock exchanges in Africa-the JSE and the NSE. The study is motivated by the need to establish the linkage between the two leading stock markets in Africa for the imperatives of sustainable development and provision of funding for diverse entrepreneurial endeavours in the studied economies. The study used weekly return series from January 2006 (week 1) to December 2020 (week 3) of the Johannesburg Stock Market (JSE) and the Nigerian Stock Exchange (NSE) and adopted the BEKK variant of the multivariate Generalised Autoregressive Conditional Heteroscedasticity (GARCH) family model. The study majorly discovered that sustained co-movement between the two markets happen more at periods of economic stability than what obtains during crises periods. It is recommended that greater interconnectedness between the JSE and NSE should be created while building safety net for adverse news or shock transfers. This is for the imperatives of entrepreneurial development by sustained funding through deliberate stock market based intermediation not just for the benefits of the investigated stock markets but for the whole of the African region. 236 E.U. Kalu et al.
... This implies that the cost of imports will continue to increase and there will be further inflationary pressures in the economy. Moreover, the exchange rate has continued to be volatile in recent years which have made it difficult for the government to control the rate of inflation in the country (Amassoma, 2016). The government has therefore adopted several measures in an attempt to reduce the rate of inflation (Jibir & Aluthge, 2019). ...
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The research aims to explore how monetary policy impacts the growth of the financial sector in Nigeria. Financial data spanning from 1981 to 2021 was collected from both the Central Bank of Nigeria and the National Bureau of Statistics. Analytical tools including unit root tests, co-integration tests, regression techniques, and Granger causality tests were employed for analysis. The outcomes of the regression analysis demonstrated that both the monetary policy rate and Treasury bill rates have a detrimental effect on the development of Nigeria's financial sector. Conversely, the exchange rate and inflation rate were found to have a positive influence on the growth of the financial sector. As a result, the study concluded that elements such as money supply, treasury bill rates, monetary policy rate, and exchange rate play a significant role in shaping the development of the financial sector during the study period. In light of these findings, the study suggests that maintaining exchange rate stability is vital for fostering economic growth. Consequently, the study recommends that both governmental authorities and monetary institutions should prioritize exchange rate stability by adopting effective exchange rate policies to ensure a steady and reliable exchange rate.
... In addition, the rise of external reserves has the potential to increase the government's externally produced revenue by almost 95%. Likewise, the productivity per head increases by 3.5, on average, in Nigeria with increase in refining activities, and gradual withdrawal from oil subsidy payment in Nigeria [40][41][42][43][44][45][46][47][48][49][50][51][52][53][54][55]. ...
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The continuous gulp of scarce Federal Government resources in Nigeria is worrisome, as significant proportion of NNPC oil generated revenue is absorbed in the form of oil subsidy payments while, abandoning a 450 thousand refining capacity project for importation of refined petroleum products. Hence the study into Subsidy Management: The Role of Government Refineries’ Commercialization using The NLNG model. Techniques of Autoregressive Distributed Lag was deployed to examine Oil price subsidy payment(OPSP) on corporate governance quality(CGQ), economic value added proxy of NLNG dividend payment to NNPC (Dv-NLNG); while controlling for institutional quality(ISQ),external reserves (ER) and output per capita (GDPPC).The estimate result revealed that lagged value of OPSP showed that continued disbursement of subsidy payments from Nigerian Federation Account results in promotion of subsidy regime without recourse to refineries rehabilitation. Corporate governance quality exhibited an inverse relationship with oil price subsidy payments. The weak corporate governance of NNPC pave way for harsh consequences of subsidy payments and unattended issues of moribund refineries in Nigeria. Dividend received from NLNG accounts for 53 per cent, on average, to subsidy payments and empowering refinery rehabilitation. Controlling for stochastic effects of Institutional quality on subsidy management as well as capacity to revamp refineries. The finding result revealed that, weak regulatory power and lack of policy transparency hampers refineries rehabilitation, and encourages continuation of subsidy regime in spite of the allegation of corruptions. It was recommended that, the PIA should be revisited with clauses with respect to the Board of the NNPC Limited, limiting the power and discretion of the President to appoint members of the board. In this way, the firm may be completely separate from any outside influence or financial ties, allowing it to follow the guidelines of good corporate governance
... Individual and corporate entrepreneurs can now access funds for their business operations which can lead to productivity and sustainable financial and economic growth (Dana, 2018). All of these will lead to accumulation of foreign reserves which can help in reducing volatility and preventing financial/stock market crises as funds can be available for bailout (Nwosa, 2017), and as well ensure stable exchange rate for financial sustainability and economic growth (Amassoma, 2016). ...
Article
This study evaluates the comovement and volatility transmission between the two leading stock exchanges in Africa-the JSE and the NSE. The study is motivated by the need to establish the linkage between the two leading stock markets in Africa for the imperatives of sustainable development and provision of funding for diverse entrepreneurial endeavours in the studied economies. The study used weekly return series from January 2006 (Week 1) to December 2020 (Week 3) of the Johannesburg Stock Market (JSE) and the Nigerian Stock Exchange (NSE) and adopted the BEKK variant of the multivariate Generalised Autoregressive Conditional Heteroscedasticity (GARCH) family model. The study majorly discovered that sustained comovement between the two markets happen more at periods of economic stability than what obtains during crises periods. It is recommended that greater interconnectedness between the JSE and NSE should be created while building safety net for adverse news or shock transfers. This is for the imperatives of entrepreneurial development by sustained funding through deliberate stock market based intermediation not just for the benefits of the investigated stock markets but for the whole of the African region. E.U. Kalu et al.
... The results of the regression studies showed that exchange rate and external reserves have significant relationship with economic growth of Nigeria while exchange rate, external debt and trade integration have significant relationship with economic growth in GDP of South Africa in the period under review. The result of this study is supported by the study of Danson-Musyoki (2012), Musyoki, Pokhariyal and Pundo (2012), Brown (2012), Mewadi (2013), Akpan and Atan (2012) and Amassoma and Odeniyi (2016) in Nigeria, while the results in Akpan (2009) The result of the granger causality study also showed that external sector components were grossly unable to address the effective improvement of the economic growth of both countries in Nigeria and South Africa. The result of this study on Nigeria is consistent with the findings of Adjaye (2009), Oyatoye, Arogundade, Adebisi and Oluwakayode (2011), Umoh, Jacob, and Chuku (2012), Khathlan (2012), Ikechi and Anayochukwu (2013), Ekwe and Inyiama (2014), Agrawal (2015) and Malikane and Chitambara (2017)who also found a statistically significant effect of FDI on economic growth, however grossly insignificant which was same position with the South Africa. ...
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This study is a comparative evaluation of external sector and economic growth of contemporary Sub-Saharan African economies. The study used secondary data obtained from World Bank Data base and subjected them to ADF stationarity test, co-integration test, Multiple regression analysis and Granger Causality technique to analyse the study over the period between 1986 to 2018. The findings from the study show what all the external sector variables except exchange rate, external debt and trade integration had insignificant relationship with the economic growth of South Africa; however, both exchange rate and external reserves contributed significantly on economic growth of Nigeria, while external debt, FDI and trade integration have insignificant implication on Nigerian economic growth but had significant implication and relationship with South African economic growth. The granger result prove that external sector does not affect the position of economic growth across Nigeria and South Africa. The study therefore concludes that external sector variables improve the economic growth of South Africa significantly and have no significant implication on Nigerian economic growth. Therefore, the study recommends among others, the building up of external reserves and reduction of external debt so as to manage exchange rate instabilities while improving FDI to facilitate economic growth of Nigeria and South Africa economies.
... The impact of currency changes on Nigeria's economic progress was studied by Amassoma and Odeniyi (2016) using annual data spanning 43 years (1970 -2013). We employed a standard deviation technique to measure the amount of uncertainty introduced into the model and its effect on the results of the research. ...
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This study examined the effect of exchange rate fluctuation economic factors on financial performance of multinational companies in Nigeria, It specifically examined the effect of nominal exchange rate, real exchange rate, interest rate as well as exchange rate fluctuations on the financial performance of listed multinational oil and gas firms in Nigeria performance of deposit money banks in Nigeria. Secondary sources of data was employed to extract useful information from the Audited Annual Reports of the eight (8) oil and gas firms sampled were selected through purposive sampling technique for the investigation for the periods 2006-2020. The measures of exchange rate fluctuation economic factors comprise of foreign exchange rate fluctuation (FXRF), real exchange rate (REER), nominal exchange rate (NOER interest rate spread (INSR), firm's size (FSIZE), financial leverage (FLV) and business risk (BSR) with financial performance, being dependent variable measured by return on asset (ROA). Both descriptive and inferential statistics. Correlation and regression analysis were used to test the hypothesis. Findings revealed that nominal exchange rate and interest spread rate have positive and statistically significant relationships with return on asset (β=1.395,pvalue 0,000 and 0.017;p-value 0.000) at the level of 5% level of significant while foreign exchange rate fluctuation, real exchange rate ,firm size and financial leverage has a negative and statistically significant association with return on asset (β=-0.0021,p-value=0.000,-8.01;p-value 0.049,-0.00031;p-value 0.038, and-0.00867;p-value|=0.002) respectively at 5% level of significant. The study concluded that exchange rate fluctuation economic factors have strong statistical relationship with the financial performance of listed oil and gas companies in Nigeria. Based on the findings, the researchers recommends that micro-economic factors such as financial leverage, company size, and business risk should be taken into consideration by the management of Nigerian listed oil and gas businesses when mediating on fluctuations in the country's foreign currency rate. To lessen the severity of exchange rate fluctuations, the appropriate authorities should take proper steps to protect the value of the native currency. Furthermore, oil and gas companies should constantly assess the impact of fluctuations in the OECONOMICA 161 nominal exchange rate on their income from upstream and downstream oil exploration activities, and implement strategies to mitigate the negative impact of these fluctuations.
... In view of this, it has been recognized in previous studies that maintaining a relatively stable exchange rate is important in boosting economic growth. On the other hand, Adeniyi and Olasunkanmi (2019); Amassoma and Odeniyi (2016) found that exchange rate fluctuation negatively and insignificantly influence economic growth. The existence of these inconsistencies in the finding of the previous studies establishes a gap in knowledge that needed to be filled. ...
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The study examines the influence of exchange rate fluctuation on economic growth in Nigeria for a period of 38 years (1983 to 2020). The E-GARCH model was employed to generate the volatility while the ordinary least square (OLS) was used in the analysis. The results from the empirical analysis showed that the trend in exchange rate movement have been more rapid since around 1985 when marked movements in the market began to be noticed. The volatility increased after 2000 and culminated in the deep sections seen between 2016 and 2019. Apparently, exchange rate fluctuation in the Nigerian economy has continued since then, although with a lower amplitude. Generally, the results from the OLS indicate that all the variables such as INTR, EXRT and INFL in the model do not have any significant impact on economic growth in Nigeria. The study recommends among others that, the government should control and regulate the exchange rate in the country in order to boost trading activities and returns in the Nigerian stock market. Also, the importance of exchange rate volatility should be taken into account. Hence, the Nigerian government and regulators should try to either prevent or reduce the level of volatility in the market. They should also try to prevent a currency crisis by expanding the stock market and putting all necessary legal and regulatory framework in place to attract capital inflow from outside the country either in form of foreign direct investment or foreign portfolio investment in order to deepen and broadening the market and thus stimulating the growth and development of the Nigerian industrial sector.
... They observed that exchange rate regimes matter in the performance of Nigeria. Employing Augmented Dickey Fuller (ADF) test, standard deviation method, Error Correction Model (ECM), Multiple Regression Model and Johansen Co-integration test, Amassom and Odeniyi (2016) investigated the rate of exchange fluctuation impact on Nigeria's economic growth from 1970-2013. Rate of inflation, trade openness, rate of exchange fluctuation, oil price and real GDP are the variables used in the study. ...
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Stable exchange rate is one of the various objectives meant to be attained by the government of a country. Therefore, this study looks at the effect exchange rate fluctuation has on Nigeria’s economic growth. The study employs Autoregressive Distributed Lag (ARDL) model on selected variables from 1981–2020. Using Augmented Dickey Fuller (ADF) test, stationarity test was conducted and the result revealed that growth rate (GR), inflation rate (INFR) and gross capital formation (GCF) is stationary at levels while exchange rate (EXR) and trade openness (TO) are stationary at first difference. Results from ARDL model show that in the short run, EXR and INFR are both statistically significant and have negative effects on the economy, while TO and GCF are both statistically insignificant only GCF has a positive effect on the economy. In the long run EXR and GCF are statistically insignificant and both have a negative effect on the economy, while INFR is statistically significant and has a negative effect on the economy.TO is statistically insignificant and has a positive effect on the economy. The study,therefore,recommends thatpolicy makers should ensure diversification of the economy in order to reduce the focus on oil sector and encourage domestic production which will aid export and make us less import dependent resulting in a more stable exchange rate.
... The study used the Vector Auto Regression (VAR) modeling technique to regress exchange rate on both imports and exports, revealing that imports and exports are unaffected by the exchange rate. Between 1970 and 2013, Amassoma (2017) investigated the impact of exchange rate fluctuations on Nigerian economic growth. Using econometric tools such as Multiple Regression and Error Correction Model, the author discovered that exchange rate fluctuation had a beneficial but minor impact on Nigerian economic growth. ...
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This study investigates the sensitivity of macroeconomic variables to exchange rate shocks in Nigeria and South Africa between 1982 and 2018. Specifically, the study investigated the response of Foreign Direct Investment (FDI), Gross Domestic Product growth rate (GDPGR), Import rate (IMPORTR), Export rate (EXPORTR) and Inflation rate (INFR) to exchange rate shock in these Countries. The data used for analysis is secondary by nature and was obtained from the World Development Bank Indicators. The estimation technique employed was structural Vector autoregression (SVAR), impulse response function (IRF), and variance decomposition function (VDF). The Structural Var result revealed that exchange rate shock had negative effect on FDI in the countries but insignificant. The result on GDPGR revealed that the effect is only positive in South Africa but insignificant in both economies. For IMPORTR and EXPORTR, the effect is positive in all the zones but significant only in Nigeria. For INFR, the effect is significantly positive in South Africa at 5% significant level but insignificantly negative in Nigeria. Impulse response result revealed that in Nigeria and South Africa, all the variables were negatively sensitive to exchange rate shock but temporal except INFR that was positive and permanent in South Africa. However, the variance decomposition function for the zones revealed that apart from own shock, exchange rate shock had relatively high contributions to variations in IMPORTR, EXPORTR, and INFR in Nigeria. Also, in South Africa, exchange rate shock contributed the largest variations in EXPORTR and INFR. Based on the findings, this study concludes that the macroeconomic variables of the countries are sensitive to exchange rate shock more in the short run but undecided in the long run. Moreover, the permanent response of INFR to exchange rate shock in South Africa calls for serious attention by the regulatory authorities in this economy. Therefore, this study recommends that conscientious effort be made by policy makers in ensuring exchange rate management in the zones for better performance of the macroeconomic variables. JEL: F31, F41, N1, N10, N17 Article visualizations: </p
... The variance decomposition outcome depicts a principal basis of the economic growth of Nigeria and that deviation is mainly as a result of indigenous shocks and foreign trade improvements. Amassoma and Odeniyi (2016) determined the relationship between exchange rate volatility and the Nigerian economic growth, highlighting the purchasing power of the typical Nigerian and the intensity of international trade activities. Yearly data of forty-three (43) years spanning the period from 1970 till 2013 was utilized. ...
... The variance decomposition outcome depicts a principal basis of the economic growth of Nigeria and that deviation is mainly as a result of indigenous shocks and foreign trade improvements. Amassoma and Odeniyi (2016) determined the relationship between exchange rate volatility and the Nigerian economic growth, highlighting the purchasing power of the typical Nigerian and the intensity of international trade activities. Yearly data of forty-three (43) years spanning the period from 1970 till 2013 was utilized. ...
... They concluded that improvements in exchange rate management are necessary but not adequate to revive the Nigerian economy. Amassoma and Odeniyi (2016) examined the Impact of Exchange Rate Fluctuation on the Nigerian Economic Growth using an annual data of forty-three (43) years covering the period (1970 -2013). The standard deviation method was employed to capture and estimate the fluctuation inherent in the model as regards the research's objective. ...
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The main objective of the study was to assess the impact of some exchange rate determinants on the performance of Nigeria's economy. Annual time series obtained from the Central Bank of Nigeria Statistical Bulletin, covering the period 1981 and 2018 were used in the study. Autoregressive Distributed Lag (ARDL) methodology and Error Correction Mechanism were adopted in the study. The variables used in the study were Balance of Trade (BoT)as dependent variable, and Growth rate of RGDP (GRGDP), External reserve (EXR), Exchange Rate (XR), prime lending rate (PLR) and inflation rate (IFR) as independent variables. Augmented Dickey-Fuller Unit Root test revealed that all the variables were integrated at level and first difference. The existence of long run relationship among the variables was confirmed through ARDL Bounds testing. ARDL long run coefficients showed that GRGDP and EXR relate positively with BoT while XR, PLR and IFR exhibited negative relationship with BoT. Only EXR has significant impact on BoT both in the long and short runs. The ECM revealed that the speed of 59.3 per cent was required to correct the short disequilibrium among the variables. It is recommended that government should work out modalities to attain exchange rate, lending rate and inflation rate that would impact balance of trade significantly and also continue to increase the country's external reserves.
... The variance decomposition outcome depicts a principal basis of the economic growth of Nigeria and that deviation is mainly as a result of indigenous shocks and foreign trade improvements. Amassoma and Odeniyi (2016) determined the relationship between exchange rate volatility and the Nigerian economic growth, highlighting the purchasing power of the typical Nigerian and the intensity of international trade activities. Yearly data of forty-three (43) years spanning the period from 1970 till 2013 was utilized. ...
... The variance decomposition outcome depicts a principal basis of the economic growth of Nigeria and that deviation is mainly as a result of indigenous shocks and foreign trade improvements. Amassoma and Odeniyi (2016) determined the relationship between exchange rate volatility and the Nigerian economic growth, highlighting the purchasing power of the typical Nigerian and the intensity of international trade activities. Yearly data of forty-three (43) years spanning the period from 1970 till 2013 was utilized. ...
... The nexus between exchange rate variation and economic growth in Nigeria was the subject of the work of Amassoma and Odeniyi (2016) with main focus on purchasing power of average Nigerians and level of international transactions. The study which used econometric techniques including, Multiple Regression Analysis, Augmented Dickey Fuller (ADF) test, Johansen Co-integration test and the Error Correction Model (ECM) supported the findings of Adelowokan, Adesoye and Balogun (2015) on the same topic. ...
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Nigeria's dwindling external reserves and exchange rate fluctuations have been major sources of concern to major stakeholders in recent times. Adopting a longitudinal research design, this study examines the influence of exchange rate movements on economic growth in Nigeria, using annual time series data from 1981-2014 obtained from the Central Bank of Nigeria Statistical Bulletins. Economic growth is the dependent variable proxied by Real Gross Domestic Product (RGDP) while the explanatory variables are nominal exchange rate, inflation rate as well as growth in money supply. The unit root test indicates that all variables are I(1) while Johansen cointegration test reveals a long run relationship between economic growth and the explanatory variables. The Error Correction Model indicates a negative short run causality running from nominal exchange rate to RGDP, and from growth in money supply to RGDP in Nigeria. The error correction term indicates that departure from long run equilibrium gets corrected at the rate 93.55 percent. The paper also reveals that long run Granger causality runs from growth in money supply to RGDP, and from growth in money supply to inflation rate. Also, long run Granger causality runs from exchange rate to inflation. All results are tested at 5% level of significance. The paper, therefore, recommends that Government should design export-oriented policies that would accelerate accretion to foreign reserves in order to reverse or, at least, minimize exchange rate depreciation. Finally, the Central Bank of Nigeria should ensure sound exchange rate, and inflation rate management with a view to promoting economic growth in Nigeria.
... He therefore concluded that proper management of exchange rate should be put in place as it is a major determinant of exchange rate. Amassona and Odeniyi (2016) examined the relationship between exchange rate variation and economic growth in Nigeria emphasizing on the level of international transaction and the purchasing power of the average Nigerian. The Standard Deviation method was used to estimate fluctuation inherent in the model over a period of 43 years ...
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The goal of every economy is to have a stable exchange rate with the countries it trades with; therefore exchange rate is very vital to the economy of every country. Nigeria has adopted both fixed and fluctuating exchange rate regimes in order to achieve the goal of a realistic exchange rate but this has proven futile as the economy has continued to perform poorly over the years. This study is therefore aimed at examining the effect exchange rate management has on the output performance of both the agricultural sector and the manufacturing sector. Secondary data from 1981 - 2015 were analyzed using the Ordinary Least Square technique. The results showed that exchange rate has a positive and significant effect on only the agriculture sector. The study recommends amongst others that efforts should be made to increase the exportation of agricultural products in order to boost exchange rate.
... He therefore concluded that proper management of exchange rate should be put in place as it is a major determinant of exchange rate. Amassona and Odeniyi (2016) looked into the relationship between exchange rate variation and economic development in Nigeria emphasizing on level of international transaction and the purchasing power of the average Nigerian. The Standard Deviation method was used to estimate fluctuation inherent in the model over a period of 43 years . ...
Conference Paper
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The aim of all national economies is to stabilize its exchange rate with the countries it trades with; therefore exchange rate is very vital to the economy of every country. Nigeria has adopted both fixed and fluctuating exchange rate regimes in order to realize the goal of a stable exchange rate but this has proven futile as the economy has continued to perform poorly over the years. This study is therefore aimed at examining the effect exchange rate management has on output performance of both the agricultural and the manufacturing sector. Secondary data from 1981-2015 were analyzed using the Ordinary Least Square technique. The findings revealed that exchange rate have a positive and significant effect on only the agriculture sector. The study recommends amongst others that efforts should be made to increase the exportation of agricultural products in order to boost exchange rate.
... Estimating real exchange rate misalignment through computing deviations of the actual real exchange rate from a sustainable equilibrium path that is determined using the Behavioural Equilibrium Exchange Rate (BEER) approach of Edwards (1989), [34] found empirical support for a negative impact of exchange rate depreciation on economic growth of Nigeria. Though the monetary authority has initiated policies aimed at absorbing the influences of exchange rate fluctuation, [35] proved the existence of a positive but insignificant impact of exchange rate fluctuation on Nigerian economic growth in both long and short run. In the lieu of the empirical findings from studies between 2015 and 2016, stability of the exchange rate and reduced interest rate are suggested by scholars to cause upsurge in real GDP of Nigeria. ...
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The Common Monetary Area (CMA) presents an interesting case study because its economies employ two types of exchange rates: flexible (as in South Africa) and fixed (as in Lesotho, Eswatini, and Namibia). South Africa’s flexible rate is plagued by an unstable exchange rate, which affects other CMA member countries and significantly impacts economic growth. Therefore, this study explores the asymmetric effects of exchange rate shocks on economic growth by employing the panel non-linear autoregressive distributed lag (PNARDL) technique. The research utilizes panel annual data ranging from 1992 to 2022. The PNARDL estimates reveal that both negative and positive changes in the exchange rate significantly impede economic growth in the CMA in both the short and long run. Moreover, it is noted that there is an asymmetric impact of the exchange rate in the long run. The implication of this study is that the significant impact of exchange rate asymmetry is notable in the CMA region. This study suggests that policymakers should implement policies that actively support exports, such as offering export incentives or reducing trade barriers. The findings of the research also reveal that appreciation hurts economic growth. Therefore, this study further recommends that policymakers may explore enacting policies to expand the economy by reducing import dependence and addressing structural factors that impede export competitiveness.
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This study examined how changes in macroeconomic variables impact financial performance of Nigerian banks from 2010 till 2021 using panel data and estimated utilising panel regression analysis and descriptive analysis. The multiple regression model used Real GDP Growth (RGDPG), lagged Real GDP Growth (RGDPG (-1), Inflation (INF), Exchange Rate (EXR), Interest Rate (PLR), Money Supply Growth (GMS), and Liquidity Ratio (LIQ) as proxies of macroeconomic variables and as independent variables while financial performance, captured by both asset and equity returns (ROA) and (ROE) were dependent variables. With the exception of INF plus RGDPG, the panel regression analysis results showed that changes in most of the macroeconomic variables have negative and significant impacts on the financial performance of Nigerian banks. RoA and RoE are negatively and negligibly impacted by real GDP, whereas both RoA and RoE are positively and negligibly impacted by inflation. The research recommended that when creating and putting into practice strategic plans, Nigerian banks should consider how macroeconomic conditions may affect their operations and financial performance. Furthermore, banks are encouraged to be involved in the development of any policies that may affect their operations.
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This study investigates the impact of macroeconomic variables on economic growth in Nigeria. Employing a time series data from 1986Q1 – 2022Q4 and GMM as well as dynamic GMM models, the results show a significant contribution of all the macroeconomic variables to economic growth. Also, the short and long run equilibrium relationship were established among the variables. It was observed that the variables are stationary at different levels of integration leading to the fitted generalized method of moment models. Thus, it was revealed that previous economic growth, internal debt, interest rate, exchange rate and trade openness significantly contributed to economic growth to the turn of 76.21%, 3.79%, 7.01%, 4.45% and 40.12% respectively. It was further revealed that external debt led to a 0.3% decline in economic growth. As a policy implication and recommendation, both internal and external borrowing must be properly monitored and channeled to productive investment as well as the needed infrastructure that would improve economic growth. An enabling environment should be provided for foreign investors to attract better investment that could enhance economic growth. Trade openness barriers must be removed to engender free entry and exist of goods and services required to grow the economy.
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This work examines the effect of exchange rate on the performance of manufacturing sector. Yearly data were used from 1996 to 2020. The Auto Regressive Distributed Lag (ARDL) was used to analyze the data, and the yearly data were sourced from Word Development indicator (WDI) and Nigeria Bureau of Statistics. This research work considers exchange rate and some selected product classification to account for the rate of performance of manufacturing sector. Based on ARDL approach, test was carried out on each dependent variable and the independent variable to check the long and short run regression findings for the coefficient of the lagged values of the dependent and independent variables. Some diagnostic test like the serial correlation test, heteroskedasticity test, and stability test were also carried out on the variables. From the results obtained, export values of clothing and textiles was negatively statistically significant, import inputs of food and beverages was also negatively statistically significant, total manufacturing output was negatively statistically significant, while value added of medium and high-tech products was positively significant in explaining manufacturing performance. This means that exchange rate has both negative and positive effect on manufacturing performance.
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Currency fluctuations and inflation are the natural norm for most major economies. Numerous factors influenceeconomic growth, including a country’s exchange rate system performance, the outlook for inflation, and interestrate differentials. These are the most significant factors that hinder the economic growth of every nation. As aresult, this analysis investigates the impact of exchange rate and inflation on Nigeria’s growth performance from1986 to 2021. Impulse response and variance decomposition were estimated. The real gross domestic product(RGDP) was used as a proxy for growth performance, while the inflation rate (IFNR), real exchange rate (REXR),and interest rate (INTR) were also used as proxies. The results of impulse response and variance decompositionestimates in the short-run (third quarter) and long-run (tenth quarter) show that real exchange rate D(REXR), INTR,and IFNR all have a positive impact on RGDP variation, with values of 13.38, 31.88, and 22.40%, respectively,in the third quarter. In the long run (the 10th quarter), REXR contributed approximately 28.76% of the variationin RGDP. The interest rate contributed 24.14%, while the IFNR has contributed about 28.27% of the variation inRGDP in the long run. Therefore, summing the contributions of REXR, INTR, and INFR to RGDP, these variablescontributed about 81.17% of the variation in RGDP in the long run. Hence, the research concluded that REXR,INTR, and IFNR have a positive effect on growth performance as proxied by RGDP in Nigeria within the periodof the research. The research recommended that the government should provide a policy that will reduce theexcess growth of aggregate demand (AD) in the economy, which will reduce inflationary pressure, in order toachieve the sustainable development goals (SDGs) of 2030 in Nigeria, which include restoring economic growthand macroeconomic stability through macroeconomic variables such as the exchange rate, inflation, and othersignificant variables.
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In the last few decades, the continuous depreciation in the value of the naira occasioned by the dwindling external reserves affected the exchange rate resulting in several macroeconomic fundamentals in Nigeria. The objective of the study is to examine the impact of external reserves on economic growth in Nigeria. The study utilizes the descriptive approach for the trend analysis, while the autoregressive distributed lag (ARDL) model was relied upon in scrutinizing the contemporaneous dynamics for the unrestricted ECM. The data that were culled from several issues of the Central Bank of Nigeria’s annual report and statement of account covered the period 1986–2020. Descriptively, the study finds that economic growth rate and external reserves witnessed fluctuations with the latter being relatively more pronounced. Accordingly, the study finds that in the long run, all the explanatory variables were key determinants of economic growth in Nigeria. Specifically, economic growth is significantly and positively responsive to changes in external reserves by 0.22%, inflation rate by 0.08%, and a one period lag of GDP of 0.21% contrary to its negative response to changes in exchange rate of 0.10% in the short run. The paper recommended that the government may consider providing conducive environment for increased productivity, thereby increasing foreign reserves. Likewise, the situation that may encourage exchange rate misalignment should be avoided. Finally, inflation rate must be controlled within a single digit. AcknowledgmentThe support from Landmark University, Omu-Aran, Kwara State, Nigeria, to publish this article is appreciated.
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The influence of trade balance and exchange rate movement on economic growth in Nigeria, as well as the determinants of the exchange rate, is examined in this study for the period 1981 to 2020. The study follows the autoregressive distributed lag approach to estimate the four models specified in the study. In Model I, total trade is observed to have a positive and significant effect on economic growth, while the exchange rate exerts a negative and significant effect. A unit percent increase in total trade balance leads to a 0.0039% increase in economic growth, while a unit percent increase in exchange rate leads to a 0.0510% decrease in economic growth. In the second model, both oil trade balance and exchange rate exert a negative and significant effect on economic growth. A unit percent increase in oil trade balance and exchange rate leads to a 0.0113% and 0.0758% decrease in economic growth, respectively. In the third model, the non-oil trade balance exerts a negative and significant effect on economic growth, while the exchange rate exerts a negative but insignificant effect on economic growth. Finally, Model IV, which captures the determinants of the exchange rate in Nigeria, reveals that economic growth, external reserves, inflation, and total trade balance are the major drivers of the exchange rate in Nigeria since they exert a significant effect. It follows from the findings that stimulating domestic production to boost non-oil exports will help to ensure exchange rate stability that will promote growth within the Nigerian economy.
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In this study, magnetic signatures together with the geological settings of the area were employed in estimating the depth to structures that may host gold mineral over southern part of Kebbi State and its environs. Acquired aeromagnetic grids data covering the study area was processed, analyzed and interpreted using the following techniques; IGRF computation, Reduction to Equator (RTE), First Vertical Derivatives (FVD) and Euler Deconvolution. Results from these techniques have revealed the alteration zones and depth to the structures that could be host to gold mineralisation. These regions were corresponded to the following areas; Fakai, SE parts of Yauri and Shanga, Ngaski, Zuru, Magama, Rijau, Eastern part of Wasagu/Danko and Bukkuyum. FVD technique revealed the spatial and structural resolution in imagery thereby showing major structures which normally play an important role in determining the gold mineral. The structures found within the aforementioned areas are the architecture of a mineralized body as compared with the geology of the area, which falls under the following earth materials; quarzt-mica schist, granite, biotite, gneiss, diorite, medium coarse grained and biotite homblende granite. Estimated depth to magnetic sources (anomalies)/ or structures that could be host to gold mineralisation was found to be from 81.616 m to 181.171 m using algorithms Euler Deconvolution.
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This study examines the effect of Exchange Rate Fluctuation and Foreign Reserves on Macroeconomics Performance in Nigeria from 1980-2019. The variables of interest include External Debt, Reserves, Exchange Rate, External Debt Servicing and Government Expenditure were analyzed using co-integration, auto-redistribution lag model (ARDL) and Granger Causality test to understand the long and short run relationship between the variables. Result revealed that there is a unidirectional relationship between foreign reserves and the exchange rate. Exchange rate Granger causes foreign reserves in Nigeria, while foreign reserves do not granger cause exchange rate Granger. This means that as the exchange rate depreciates or appreciates, it always has an impact on Nigeria's foreign reserves. The study recommends among other thing that the government should ensure that the country's foreign reserves are used and managed efficiently. This is because it has been established that foreign reserves have a beneficial impact on macroeconomic performance and stimulate economic growth both of which help to enhance the Nigerian economy.
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The study empirically investigated the effect of the Coronavirus (COVID-19) outbreak on the performance and effectiveness of the Nigerian money market, capital market, and foreign exchange market. The study used time-series data for 120 working days after the first COVID-19 confirmed case in Nigeria and used both exploratory and multiple regression analysis to evaluate the effect of COVID-19 outbreak on the Nigerian financial market. Open buy back rate (OBRR), All Share Index Volume (ASIV) and Parallel Foreign Exchange Rate (PFXR) were used as variables for money market, capital market and foreign exchange market, respectively. The data representing these variables were subjected to econometric analysis, including the ADF-Fisher unit root test, Johansen co-integration test and Ordinary Least squares (OLS) regression technique. Results from the analysis show that the number of COVID-19 cases is inversely related to the interbank money market rate and the All Share Index Volume of the capital market but directly related to the foreign exchange rate. The study concludes that COVID-19 pandemic significantly affects the Nigerian financial market. Therefore, it was recommended that the government should take preventive steps against financial challenges resulting from health risk in order to ensure stability in the financial market. In addition, business owners should provide motivations that will allow their staff to work remotely, wherever they are. Furthermore, the government should, by way of policies, encourage domestic production of goods and services.
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This study looks at the macroeconomic determinants of industrial output in relation to exchange rate and employment in Nigeria. It employs the Autoregressive Distribution Lag (ARDL) econometric approach to co-integration using time series data for the period of 30 years (1986-2016) to examine the long-run relationship between industrial performance and some macroeconomic variables in Nigeria to gain insights into the industrial paradox of high inflation and low employment rate alongsiderising interest rate, incessant power outage and political treat in the economy. Results obtained from the ARDL econometric approach shows that in the long-run increase in employment rate and political stability has the potential of enhancing industrial output by 83.07% and 15.2% respectively; while ineffective exchange rate, high inflationrate andincessant power outage in Nigeria reduces industrial performance by 8.15%, 19.0%. Based on the results obtained, thestudy therefore recommends that monetary and fiscal policies should be geared towards combating unavailability of jobs in the countryand increase investment directed toward improving the solid mineral sector. There is also need for the government to maintainsecured monetary and fiscal policies in order to fight inflation which has a negative effect on investment and exchange rate, thereby dwindle performance of the economy.
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