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ABSTRACT The effects of exchange rate and oil price on inflation have been fundamental issues in the macroeconomic literature. As a result, a number of studies have been devoted to [...]

ABSTRACT There is an increasing interest towards the relationship between executive compensation and bank performance in Nigeria in recent years following the profligate lifestyle of some bank executives. This raises [...]

Nigerian government embarked on various banking reforms over a period of three decades with the aim of enhancing competitiveness in financial services, promoting investment, and ensuring efficiency in resource allocation to the real sector and other sectors of the Nigerian economy. One sector of the Nigerian economy that has remained of paramount interest to the government is the agricultural sector. Since the country attained political independence in 1960, the agricultural sector has remained the mainstay of the Nigerian economy contribution significant to GDP and employment generation. Despite the increased role of the agricultural sector in providing the much- needed inputs and raw materials needed for improved productivity in other sectors of the economy, not much has been done in the area of tracking and evaluating the success of discretional credit allocation and commercial bank lending to the agricultural sector. This study examined the impact of the increased discretionary allocation of credit to the private sector due to the banking sector reforms and the various directed funding programs by the regulatory authority on agricultural output in Nigeria over the period of 1986-2013. The study used time series data sourced from World Bank and the Central Bank of Nigeria Statistical Bulletin. The method applied to test the impact of banking sector reforms and agricultural sector credit supply on agricultural sector output in Nigeria was the impulse response functions and the variance decomposition of Vector Error Correction Model (VECM). Impulse response function explains the reaction of an endogenous variable to one of the innovations while the variance decomposition gives information on the relative importance of each random innovation. The results revealed that both the banking sector reforms and credit supply to agricultural sector have positively affected agricultural output in Nigeria. However, the impact of agricultural credit supply on agricultural output proved to be very weak and insignificant. This study suggests that the discretionary allocation of credit particularly by the monetary authorities or the banking sector, may not necessarily achieve the goal of massive growth in the agricultural sector. There is an urgent need for the Federal Government to embark on institutional and infrastructural reform to remove the various credit supply bottlenecks and make the financing of the agricultural sector more productive. JEL Classifications: E5, G28, Q1 Keywords: Banking Sector Reforms, Credit Supply, Agricultural Sector, Nigeria Corresponding Author's Email Address: losa-afiana@lbs.edu.ng, INTRODUCTION The period of 1986-2005 in Nigeria was characterized by a series of progressive banking sector reforms. The aim of the reforms include liberalizing the interest rates, enhancing competitiveness in [...]

The efficient market hypothesis (EMH) assumes the absence of asymmetric information in trading activities in a typical stock market. The EMH has been tested extensively in the developed market economy with mixed results, but very little contribution has been made on the subject matter in developing market economy because of the presence of asymmetric information, institutional constraints and poor data collection method. Validating the hypotheses for the African economy has remained of great interest to researchers and investors given the repeated emphasis on the African economy as the next frontier of economic growth. Issues surrounding the EMH in developing economy rest on the possibility of exploiting the stock market to make quick returns. The validity of this statement remains to be tested empirically for the developing market economy. This paper investigates the EMH for a major developing African economy-Nigeria being the most populous country in Africa and the second financial hob in Africa, next only to South Africa. The study seeks to test the efficiency of the Nigerian stock market, using a wavelet unit root test with different lags and other traditional random walk testing procedure. The use of the wavelet unit root test entails the decomposition of the variance of the time series stochastic process into the variance in its high and low-frequency series. The study made use of monthly average stock price index of the Nigeria Stock Market over the sample period 1985 to 2015 to carry out the test. The result obtained from the wavelet-based unit root tests showed clear and conclusive evidence that the Nigerian Stock Market follows the random walk behavior during the period of the study and that the Nigerian Stock Market is efficient. In other words, stock prices fully reflect all the available information existing in the market and investors, armed with the trading rules, cannot exploit the market to earn extraordinary returns. This has vital implications for speculators, investors and rent-seekers hoping to capitalize on the unstructured nature of a typical developing market economy to make quick wins. Since the Nigerian Stock Market is efficient, investors should desist from futile attempts to forecast long-run share prices with the hope of making a quick, sustained win in the market. JEL Classifications: G10, C22, G14, G12, G17 Keywords: efficient market hypothesis, random walk hypothesis, wavelet unit root test, INTRODUCTION The stock market in Nigeria has witnessed significant volatility since the 2007-2008 global financial crisis that had its root in the U.S Subprime mortgage crisis. The trend analysis in [...]

The 2007-2008 global economic crisis and the recent effects of declining global oil prices has led most countries in sub-Saharan Africa to respond by borrowing massively from both domestic and international market to fund the day to day running of the home country. The effects of borrowing and increased deficit financing raises the age old question of the linkage between government deficits financing, rising domestic interest rates and contracting investment. Notable amongst the issue raised by increasing deficit financing is the issue of government borrowing crowding out private sector investment which manifest in the form of a short fall in private sector's purchase of government bond below the anticipated raise in government deficit financing resulting in more borrowing on the part of government and less money available for financing private projects. Theories abound in the literature that tried to establish the linkage between budget deficit and interest rate, however, there is no consensus on the relationship between them and on the magnitude of the deficit financing that will ultimately trigger a rise in domestic interest rates. This study, therefore, examines the effect of government deficit financing on interest rates. The study applied panel Vector Auto regression techniques (PVAR) on dataset collected from 18 countries across Sub-Saharan Africa (SSA) over the period 2000 to 2014. The result obtained analyzing the impulse function (IRF), the variance decomposition (VDC) and the VAR causality show the response of interest rate to rising government fiscal deficits to be slow initially negating the conventional Keynesian proposition which states that rising government deficit reduces the stock of loanable funds and consequently crowds out private sector investment. Subsequently, the result shows interest rate response to government fiscal deficit to be neutral or insensitive. These findings lend credence to the Ricardian Equivalence theory, which emphasizes the neutrality of budget deficit on interest rate. In addition, interest rate responded positively to exchange rate, inflation, and money supply. The empirical evidence suggest that Sub-Saharan African economies need not bother about the effects of rising government borrowing on interest rates provided they stay within the accepted limit of debt sustainability ratio. JEL Classifications: E4, H6 Keywords: Budget Deficit, Interest Rate, Panel VAR, SSA, INTRODUCTION Budget deficit occurs when the government spending exceed its tax revenue. There have been cases of large government budget deficit since the late 1970s and this has generated controversial [...]