Economics Commons^™

Finance For Growth And Policy Options For Emerging And Developing Economies: Nigeria, Wumi Olayiwola, Henry Okoduwa, Evans Osabuohien

Economic and Financial Review

This paper attempts to address the issues of the major impediments to mobilising investment funds, and the appropriate policies for achieving and guaranteeing finance for growth, by assessing the performance of financial policies of selected EMEs in mobilising financial resources for economic growth, and identifying policy options necessary for achieving finance for growth. The rest of the paper is organised as follows. Section 2 discusses the basic characteristics of emerging economies (EMEs), and Section 3 positions Nigeria among the EMEs within the context of finance for growth. Section 4 deals with challenges and constraints of Nigeria in achieving finance for …

Good Governance, Transparency And Regulatory Issues In Financial Sector Development And Stability, Bolaji Owasanoye

Economic and Financial Review

This paper dwells on good governance, transparency and regulatory issues in financial sector development and stability. It starts off by defining the concepts of good governance and transparency. It goes further to discuss the financial services sector as well as regulation and development. It also discusses the relationship between transparency and accountability and further highlights the regulatory powers of the CBN relative to a developing economy.

Building Dynamic Stochastic General Equilibrium Models For Monetary Policy Analysis, Charles N. O. Mordi, Michael A. Adebiyi

Economic and Financial Review

Dynamic Stochastic General Equilibrium (DSGE) models are powerful tools that provide a coherent framework for policy discussion and analysis. In principle, they can help to identify sources of fluctuations, answer questions about structural changes, help to forecast and predict the effect of policy changes, and perform counterfactual experiments. Against this background, this paper aims at providing an insightful discussion on DSGE models by developing a simplified version of the models to explain the behavior of key macroeconomic variables in Nigeria namely: the growth rate of gross domestic product (GDP), headline inflation, exchange rate and the monetary policy rate. The estimated …

How Much Do Trading Partners Matter For Economic Growth? By Vivek Arora And Athanasios Vamvakidis: A Review, D. J. Yilkudi

Economic and Financial Review

The paper is a review of the paper "How much do trading partners matter for economic growth? by Vivek Arora and Athanasios Vamvakidis". The paper empirically examined the extent to which a country's long-term economic growth was influenced by the economic fortune of its trading partners. The study used panel data for over 100 countries to see if trading partners' growth had a strong effect on domestic growth. A strong relationship was found between the economic growth of a country and the economic conditions of its trading partners.

Determinants Of Demand Pressure In Nigeria's Foreign Exchange Market: An Empirical Analysis, A. Englama,, H. T. Sanni, O.O. Duke, T.S. Ogunleye, F.U. Isma'il

Economic and Financial Review

This study investigates factors that influenced the demand pressure in the foreign exchange market prior to the recent reforms. We examined the theoretical issues and empirically measured the determinants of the demand pressure in Nigeria’s foreign exchange market. We adopted a simple ordinary least square (OLS) to estimate the impact of exogenous variable on the dependable variable. We found from the empirical results that brand pressure was prevalent during the past period. From the literature, demand pressure m s attributed to a number of factors which include, among others, the high incidence of currency substitution arising from speculative trading, liquidity …

Determinants Of Capital Flows In Nigeria And Challenges For Macroeconomic Stability, A. Englama, N. C. Oputa, G. K. Sanni, M. U. Yakub, O. Adesanya, Z. Sanni

Economic and Financial Review

Capital flows into developing countries in the 1960s through the 1980s were mainly in the form of overseas development assistant (ODS) to governments as well as private capital through domestic multinational bank. Nigeria, like unit developing countries, is characterized by a low' level of domestic savings and in order to attain a desirable level of investment that would guarantee sustainable development, the economy needs some foreign sayings to bridge the savings investment gap. These savings come in the form of 'new money’ or capital inflows which are expected to provide financial capital for economic activities. Foreign participation is directed associated …

Determination Of Interest Rate Saharan African Countries: A Analysis., A. O. Folawewo, E. A. Udeaja

Economic and Financial Review

A major indicator of banking sector efficiency is interest rate spreads (IRS), which have been found to be very high in African countries. This paper analysed the determinants of interest rate spreads in Sub-Saharan African (SSA) from a macro perspective, that is, using aggregate banking sector data, and focusing macroeconomic and market determinants. The study used ex-ante measure of spreads, that is, differences between interest rates on lending and deposit. Using annual data covering 33 countries, the result to obtained from the paper suggested that different market and macroeconomic policy variables played significant role in explaining variation in IRS in …

Effects Of Poverty On Risk Attitudes Of Farmers In Benue State Nigeria, G. C. Aye, O. Oji

Economic and Financial Review

The Nigerian agriculture is characterised by low productivity low fam incomes and low levels of

technological adoption and we inefficient production technique. This poor state of Nigerian agriculture is related to farmers' attitude towards risk in the adoption of production techniques, as well as risk in the production and socioeconomic environment, this study therefore sought to specifically to: determine the extent of poverty among farmers in the area; assess the risk attitude of the farmers and determine the effect of poverty variables on risk attitude of farmers. A multi-stage random sampling technique was used for selection of respondent. Data were …

The Dominant Channels Of Monetary Policy Transmission In Nigeria: An Empirical Investigation., Mbutor O. Mbutor

Economic and Financial Review

The paper aims at identifying the dominant channels of monetary policy transmission in Nigeria. The standard vector autoregressive methodology was adopted. The inferences from the study shows that the lending rate provides the strongest nexus for the propagation of monetary policy impulses in Nigeria.

Economic Liberalization And Job Creation In Nigeria, Olayinka Idowu Kareem

Economic and Financial Review

This study examines the concept of liberalization and effects of economic liberalization on job creation in Nigeria. It narrows globalization to economic liberalization and looks at its effect on job opportunities in Nigeria. It recommends that the government should undertake regulated/guided liberalization policies such that the dictate of the economy will not be left in the hands of oligopolists.

Corporate Governance Of Banks In Nigeria: Determinants Of Board Of Directors' Effectiveness., Ukpai Kama, Chuku Chuku

Economic and Financial Review

The paper seek to ascertain the characteristics that determine the effectiveness of the bank boards in carrying out its roles of monitoring and advisory. It suggests that empowering boards through incentive packages and enlarged responsibilities to monitor, sanction, reprimand would be a way forward for the Nigerian banking sector.

Risk Exposure And Management In Cross-Border Banking., Sheriffdeen A. Tella

Economic and Financial Review

The title of this paper connotes the fact that risk-based supervision and inflation targeting are mutually inclusive policies that have to be carried out simultaneously. This is not true. The two frameworks can be adopted at the same time but they do not need to go pari passu. To that extent the paper can be regarded as two-in-one. In this connection, the two frameworks are treated separately but within the context of a single paper. We looked at their challenges and prospects in monetary policy formulation and implementation in the Nigerian economy. The rest of this paper is divided into …

Asset Price Movement And Derivatives: Implications For Risk-Based Supervision And Effective Monetary Policy., Biodun Adedipe

Economic and Financial Review

The consideration of asset price movements and monetary policy has attracted a lot of attention in the last few decades, as asset prices moved upwards significantly and there arose the general perception that there are bubbles in those prices. The argument revolves around the role that monetary policy can play in this whether it can be used to prick the bubble before it is due for natural burst, or it can be designed and implemented in such manner as to prevent bubbles to grow in the first place.

Special Remarks At The Seminar On: "Financial Sector Developments: Challenges For Risk Based Supervision And Effective Monetary Policy Implementation, C. N. Mordi O.

Economic and Financial Review

This is the Special remarks.at the opening ceremony of the 16th edition of the annual in-house Executive Policy Seminar organized by the Research Department, in collaboration with the Human Resources Department. As usual, the seminar is aimed at availing the Executives of the Bank the opportunity of brainstorming on contemporary economic issues in the economy and the globe at large. In this respect, the theme of this year's Seminar "Financial Sector Development: Challenges for Risk-Based Supervision and Effectiveness of Monetary Policy Implementation" could not have come at a more opportune time, given the current financial meltdown ravaging global markets. This …

The Concepts And Practice Of Risk-Based Supervision., J. A. Afolabi

Economic and Financial Review

This paper seeks to examine the concept and practice of Risk-Based Supervision (RBS). For ease of discussion, the paper has been segmented into five sections. After the introduction, sections 2 and 3 examine the Conceptual Issues in Risk-Based Supervision and Country Experiences. Section 4 looks at the framework of RBS in Nigeria while section 5 concludes the paper.

Supervising Cross-Border Banks: Matters Arising., Kim Norris

Economic and Financial Review

An essential element of banking supervision is that supervisors supervise their banking groups on a consolidated basis, adequately monitoring and, as appropriate, applying prudential norms to all aspects of the business conducted by each group worldwide. This paper examines supervision of banking groups on a consolidated basis which goes beyond accounting consolidation. It simply implies that there is a group-wide approach to supervision whereby all risks taken on by each banking group are taken into account wherever they are booked (i.e. in the bank or in a subsidiary; in Nigeria or elsewhere).

Implementation Of Basel Ii: Any Role For International Financial Institutions?, C. E. Nwandikom

Economic and Financial Review

This paper examines the three pillars of Basel II which provide a broad and coherent framework for linking regulatory capital to risk, for improving internal risk measurement and management and for enhancing supervisory and market discipline at large, complex and internationally-active banks.

How Relevant Is Risk-Based Supervision For Pension Funds: The Regulators Perspective., Musa A. Ibrahim

Economic and Financial Review

Over the past two decades, privately managed pension systems have expanded greatly to play a central role in the provision of retirement income worldwide. The design and operation of these systems vary extensively, but the basic reason for their adoption remains unique across the board: countries need to provide affordable and sustainable income for their retired citizens. Achieving this objective becomes a challenging task in the face of the uncertainties created by globalization and rapid integration of financial markets. The utilization of risk-based methods originates primarily in the supervision of banks. In recent years, it has increasingly been extended to …

Overview Of Financial Sector Developments In Nigeria., S. N. Ibeabuchi

Economic and Financial Review

The objective of this paper is to review the various developments (reforms) in the Nigerian financial sector since 1986, including the recent banking industry consolidation.

The Challenges Of Good Corporate Governance For Effective Risk-Based Banking Supervision., Chris C. Itsede

Economic and Financial Review

Corporate governance has changed tremendously over the past two decades. These changes have been driven by new laws, regulations, guidelines and rising investor and public expectations. In the past, many boards were under the thumb of their chief executive officers (CEOs); this is no longer the case. Today, boards generally strive to govern their companies by benchmarking a set of best practices which have emerged and codified in corporate governance laws, stock exchange listing rules and company annual reports. Many individual directors are willing to accept these additional responsibilities. In this paper, the importance and principles of Corporate Governance is …

Monetary Policy, Risk-Based Supervision And Financial Sector Developments: International Experience., Ayodele Odusola

Economic and Financial Review

This paper describes an efficient banking supervision as essential to a virile and stable financial system and also fostering the linkage between the financial sector and the aggregate economy as well as to reduce the likelihood and magnitude of a financial crisis. Recent development across the globe has shown that dynamic diagnostic instruments are required for identifying and managing risks, vulnerabilities and development priorities in the financial sector. The need to address the unfolding complexity of supervising the banking system in the context of a globalized world underscores the introduction of the joint IMF-World Bank Financial Sector Assessment Program (FSAP) …

The Implementation Of Basie Ii: Issues, Challenges And Implications For Nigeria., O. K. Ibedu

Economic and Financial Review

The significant development of Basle II throughout the world has meant that financial institutions and insurance companies must manage and measure risk in new ways. This paper is intended to provide the participants at the Executive Seminar with a firm foundation of the state of Basle II Accord principles and provide the tools and techniques to grapple with its implementation. This paper is divided into eight parts. Following this introduction, Part 2 discusses the necessity for a capital accord, the emergence of Basle I and the Basle II Accord. Part 3 discusses in brief the concept of Risk Management and …

The Imperatives Of Developing Risk Management Framework For Individual Risk Elements In Nigerian Banks., Emmanuel M. Abolo

Economic and Financial Review

This paper states that for a bank to be successful over the long term, it has to effectively manage its opportunities, threats and uncertainties. The point of risk management is not to eliminate it. That would eliminate reward. The point is to manage it. That is, choose where to place bets and where to avoid betting altogether.

Keynote Address At The Seminar On: "Financial Sector Developments: Challenges For Risk Based Supervision And Effective Monetary Policy Implementation, Sarah O. Alade

Economic and Financial Review

This is the sixteenth in the series (Executive Seminar) jointly organized by the Research and Human Resources Departments of the Bank. The forum represents one in which the Executives of the Bank brainstorm on contemporary economic issues to stir the banking and financial sector in particular and, the economy at large, on the path of sustainable growth and development. The forum also provides an avenue for capacity building and human resource improvement through intense dialogue with economic and financial experts on current developments.

Monetary Policy Implementation And Financial Sector Developments In Nigeria: The Journey So Far., M. A. Ajayi

Economic and Financial Review

The paper examined the implementation of monetary policy in recent years following the successes recorded in the banking sector reforms and noted the achievement of most of the objectives of monetary policy. In addition, in terms of financial sector development, Nigeria has achieved greater institutional and regulatory capacity as well as products varieties that have improved development in the financial sector. The quantitative assessment of the financial sector indicates a healthy state of the banking industry.

Appropriate Mix Of Energy Resources For Economic Development In Nigeria., Ngozi T. I. Agboegbulem*

Economic and Financial Review

The article identifies the various forms of energy resources available in Nigeria and proposed how best these energy resources could be into efficient use. It observed that Nigeria sis blessed with abundant renewal energy and non-renewable energy resources and appreciated the fact that, while renewables will continue to play a granting role, “they are not expected to overtake fossiI fuels in the near future in meeting both Nigerian and global energy demand. The paper concludes that most of the energy consumed in the country come from oil and gas and viewed this to be a move in the right direction …

An Empirical Investigation On The Effectiveness Of Open Market Operations (Omo) In Nigeria, Phebian N. Omanukwue, Magnus O. Abeng

Economic and Financial Review

This article attempts to investigate the effectiveness of the open market operations in Nigeria adopting an error correction methodology. The study showed that in the conduct of defensive open market operations, inflationary expectations, treasury bill rate, income and fiscal balances exert significant influences on the volume of bank reserves. The persistent effect of fiscal balances on the volume of bank reverses in the short run shows that consideration of government activities remains important in developments in the financial sector. Findings from the study revealed that the system adjusts itself to equilibrium within three quarters in the event of a shock. …

Appraising Nigeria's Tax Effort: A Comparative Econometric Analysis, Peter D. Golit

Economic and Financial Review

The article employs the conventional model of tax effort to appraise Nigeria’s tax performance in comparison to other counties of the West African Monetary Zone (WAMZ). The key objective of the study is to determine whether Nigeria is limited it its revenue collections by a low capacity to generate tax revenue by non-commitment-towards using the available tax capacity to fund public services. If the country has the capacity to increase tax revenue, what are the appropriate channels through which tax revenue can be increased. Empirical evidence suggests that Nigeria is not making the optimal of her taxable capacity as the …

A Framework For Financial Stability, Rafiu O. Olaitan

Economic and Financial Review

This is a review of the article “a framework for financial stability” by Andrew Haldane, Central Banking Quarterly Journal, Vol XV, No. 3, February 2005.

Managing Oil Price Risks In Developing Countries: A Review, Chioma P. Nwosu

Economic and Financial Review

This is a review of the article “managing oil price risks in developing countries” by-Julia Devin and Sheridan Titman, World Bank Research Observer 2004, Vol 19, No 1