http://hdl.handle.net/123456789/12 Economics 2026-04-04T10:29:16Z http://hdl.handle.net/123456789/1510 DOUBLE TRILEMMA AND CENTRAL BANK BEHAVIOUR IN NIGERIA AYINDE, TAOFEEK OLUSOLA Free capital flows, stable foreign exchange rate and independent control of money supply by the Central Bank are necessary for a robust economy. However, a combination of any two of these policies is possible at a time and often referred to as macroeconomic trilemma. Export growth through increased credit to the private sector could counteract this trilemma. This could lead to financial trilemma which is constraint faced when combining financial stability, national financial policy and free capital flows. Both trilemmas become double trilemma. The Central Bank, therefore, behaves carefully and in a forward-looking manner to use its policy variable of exchange rate. The literature is extensive on macroeconomic trilemma but little attention is paid to financial trilemma. Hence, this study was designed to investigate double trilemma and central bank behaviour in Nigeria in the presence of political risk. The study used an extended Mundell-Fleming Theory to examine how the Central Bank of Nigeria (CBN) stabilizes the exchange rate when faced with the double trilemma. Associated macroeconomic variables are real exchange rate policy (fixed and managed-float regimes), real gross domestic product, growth of broad money supply, net export, interest rate, consumer price index, growth of credit to the private sector and political risk variable (computed by the International Country Risk Guide). The statistical properties of the variables were examined using the Augmented Dickey Fuller, Ng-Perron, Kwiatkwoski-Phillips-Schmidt-Shin and Zivot-Andrew tests. The Markov Switching Dynamic Regression technique was employed to ascertain the number of regime switches and to further estimate the CBN behaviour when faced with the double trilemma. Also, the Structural Vector Autoregression technique was used to trace the shock transmission of the exchange rate policies of the CBN to the economy. The data were sourced from the CBN Statistical Bulletin, the International Country Risk Guide and the World Development Indicator. All estimates were validated at . The behaviour of the CBN was largely affected by shock from the political risk variable to the tune of 78.6%. Reduced political risk enhanced exchange rate appreciation in Nigeria; both with fixed and managed-float regimes . Political risk increased the transition of switching between exchange rate regimes (2.2%) but reduced the degree of persistence of exchange rate regimes (9.8%). Under fixed exchange rate regime with political risk, economic growth , foreign interest rate and credit to the private sector resulted in exchange rate appreciation, while growth of money supply and trade balance caused exchange rate depreciation. However, for fixed regime with no political risk, foreign interest rate insignificantly worsened exchange rate depreciation . For managed-float regimes with and without political risk, the variables were insignificant. The stability of the exchange rate was found crucial for Nigeria as the Central Bank of Nigeria switches between fixed and managed-float exchange rate regimes in trying to manage the double trilemma. However, the monetary authority traded-off its independence in trying to do so. Sound macroeconomic policies, stable financial sector and low political risk are factors capable of moderating the Central Bank Behaviour in Nigeria. 2020-01-01T00:00:00Z http://hdl.handle.net/123456789/1508 OIL PRICE DYNAMICS AND STOCK MARKET RETURNS IN NIGERIA AKACHUKWU, STANLEY UCHE Stock market is a major source of finance for investors and firms. However, its ability to perform this role may be hindered by risk from Oil Price Dynamics (OPD) which makes stock returns uncertain. This risk is pronounced in Nigeria because derivative markets are still underdeveloped. The OPD either undervalues or overvalues the actual stock price and results in liquidity challenges to portfolio investors and firms. Sectoral analysis tends to unmask and pin-down the exact relationship between each sectoral‟s stock return and OPD. While existing studies have investigated the impact of OPD on Firms‟ Stock Returns (FSR) at aggregate level, little attention has been devoted to sectoral analysis. This study was, therefore, designed to investigate the effects of OPD on FSR at sectoral and aggregate levels in Nigeria. The Arbitrage Pricing Theory provided the framework. A Nonlinear Auto-Regressive Distributed Lag econometric model that captures OPD (positive and negative oil price change) was explored. Eleven sectors on the Nigerian Stock Exchange (NSE) were considered: Agriculture, Consumer Goods (CG), Construction, Finance, Oil & Gas (OG), Information and Communication Technologies (ICT), Conglomerates, Health, Services, Industrial and Natural Resources (NR). The OPD and other determinants of FSR (Exchange Rate-ER, World Market Risk-WMR, Lag of Firms‟ Stock Return-LFSR and Domestic Market Liquidity-DML) were explored. The FSR was measured by logarithm difference of two successive closing periods of stock price. Sectoral and aggregate models were estimated both in the short-run (SR) and long-run (LR) using daily data from January 6th, 2007 to December 31st, 2017. Data were obtained from Central Bank of Nigeria statistical bulletin, NSE annual report and Energy Information Administration annual energy outlook. All estimates were validated at α≤0.05. The SR estimates showed that positive OPD increased returns of financial (0.19; Pe=0.02) and conglomerates (0.10; Pe=0.05) sectors, but reduced that of CG (-0.04; Pe=0.02). When negative OPD decreased by 1%, it reduced stock returns of financial (-0.14; Pe=0.05), CG (-0.08; Pe=0.02), health (-0.06; Pe=0.03) and industrial (-0.05; Pe=0.02) sectors, but improved that of OG (0.06; Pe=0.02) sector in the SR. In the LR, when OPD increased by 1%, stock returns of OG (2.38; Pe=0.01), conglomerates (5.97; Pe=0.05), financial (3.837; Pe=0.00), CG (1.309; Pe=0.01) sectors gained values but that of construction lost (-2.94; Pe=0.04). The estimates also showed that 1% decrease in negative OPD led to reduction in returns of CG (-39.59; Pe=0.03), financial (-18.81; Pe=0.02), OG (-1.73; Pe=0.01), health (-0.29; Pe=0.01) sectors, while construction (2.46; Pe=0.04) and conglomerates (9.39; Pe=0.01) sectoral returns gained. In the aggregate, an increase in positive and negative OPD by 1% results in (-0.11; Pe=0.01)% and (-0.10; Pe=0.02)% reduction respectively in the stock returns of the NSE in the SR. In the LR, positive OPD improved returns by (5.13; Pe=0.04), while stocks lost value (-25.4; Pe=0.02) due to a percentage drop in negative OPD. Oil price dynamics had differential impact on sectoral stock returns in Nigeria. Thus, managers need to design better strategies to protect respective sectoral‟s returns from oil price shocks. 2021-12-01T00:00:00Z http://hdl.handle.net/123456789/1506 DEFICIT FINANCING, INFLATION AND CAPITAL FORMATION IN NIGERIA, 1970-2017 ALADEJARE, SAMSON ADENIYI Deficit financing (DF) is the excess of government expenditure over its revenue. The DF occasioned by low domestic savings and low capital formation (CF), have characterised the Nigerian economy since the 1970s with attendant increase in inflation. Empirical studies on Nigeria have shown that DF directly affects inflation and CF when examined independently. But, little attention has been paid to a simultaneous investigation of the direct and indirect effects of DF on inflation and CF in Nigeria. Therefore, this study was designed to examine the direct and indirect effects of DF on inflation and CF. The DF was disaggregated into three components, and their direct and indirect effects on inflation and CF were examinedfor Nigeria from 1970 to 2017. The Keynes-Wicksell Three Asset Money Growth Theory provided the framework. A simultaneous model that shows the linkage among DF, inflation and CF was estimated. Aggregate DF and its three components: domestic financing (DMF), external financing (EF), and other sources of financing (OSF) were used for the estimation. Inflation and CF were proxied bythe consumer price index and gross fixed capital formation, respectively. DF’s direct and indirect effects on inflation and CF were estimated by a linear and chain rule equation, respectively. The indirect effect of DFon inflation was through the broad money supply channel, while the indirect effect of DF on CF was through the broad money supply and inflation channels. The Generalised Method of Moments and the Two Stage Least Squares were used for the estimation. Data were sourced from the Central Bank of Nigeria Statistical Bulletin,International Monetary Fund Investment and Capital Stock Dataset, World Development Indicators and Open Data for Africa.All estimates were validated at ∝≤0.05. Aggregate DFindirectly increased inflation by 0.01% (t= 3.41). The DMF and EF indirectly increased inflation by 0.01% (t= 9.21) and 0.001% (t= 5.22) respectively, while OSF indirectly decreased inflation by -0.02% (t= -3.79).Inflation deteriorated CF by -0.2%(t= -4.88) with aggregate DF and by -0.2% (t= -6.07), -0.18% (t= -4.55) and -0.22% (t= -6.29) with DMF, EF and OSF, respectively. Aggregate DF, DMF and EF indirectly reduced CF by -0.002% (t= -2.12), -0.001% (t= -7.26) and -0.0002% (t= -5.84) respectively, OSF directly increased CF by 0.03% (t= 2.12) and indirectly by 0.004% (t= 5.89). The aggregate DF affected inflation indirectly through the money supply channel. Inflation impacted on capital formation through reduced real returns on savings and investments. The DF indirectly influenced CF through money supply and inflation channels to reducecapital formation. Deficit financing in the aggregate and its components indirectly impacted on inflation and capital formation in Nigeria from 1970 to 2017. Therefore, there is a need for better synergy of fiscal and monetary policies for effective control of inflationand growth of capital formation. 2021-12-01T00:00:00Z http://hdl.handle.net/123456789/1504 ELECTRICITY MARKET LIBERALISATION AND THE SECTOR’S PERFORMANCE IN SUB-SAHARAN AFRICA OSAGU, FESTUS NDIDI Sub-Saharan Africa (SSA) countries suffer severe electricity crisis despite over two decades of on-going Electricity Market Liberalisation (EML). Electricity access has been consistently low, averaging 26.0%, 31.0% and 44.1% in year 2000, 2010 and 2017, respectively. While existing studies had investigated the determinants and magnitude of EML in SSA, little attention was devoted to estimating the effect of this reform on the sector’s outcomes. This study, therefore, was designed to investigate the effects of EML on Electricity Sector Performance (ESP) in 30 SSA countries between 1990 and 2017. The New Institutional Economic theory provided the framework. A model which captured the dynamic effects of EML and other determinants of ESP (population growth, corruption, political stability, government effectiveness, GDP per capita and net development assistance) was explored. Three measures of ESP namely, electricity generation per capita, installed capacity per capita and electricity consumption per capita were considered. The EML was measured by four indices namely, ownership structure index, vertical unbundling index, effectiveness of regulatory agency index and overall market liberalisation index. The aggregated and disaggregated models were estimated. Disaggregation was into moderate and low electricity liberalised countries, and middle and low income countries to account for heterogeneity in ESP. The System Generalised Method of Moments estimation technique that took cognisance of feedback mechanism and controlled for the joint endogeneity of EML and other determinants of ESP in the presence of country-specific effects was adopted. Diagnostic tests (Hansen and Serial Correlation tests) were used to determine robustness of parameter estimates. Data were sourced from the World Development Indicators, Worldwide Governance Indicators, World Bank Electricity Regulatory Database and country’s utilities reports. All estimates were validated at α0.05. The EML had diverse effects on ESP in all the model. In the aggregate, both electricity generation per capita (1.20%) and installed capacity per capita (0.06%) improved as a result of a unit increase in overall market liberalisation index. When private ownership increased by 1.0 unit, electricity generation per capita improved by 2.30% and worsened installed capacity per capita by 0.03%. The dynamic effect of a unit increase in vertical unbundling, increased both electricity generation per capita (0.34%) and consumption per capita (2.37%), while installed capacity per capita dropped by 0.05%. Similarly, population growth and corruption deteriorated electricity generation and consumption per capita by 2.04% and 0.12%, respectively. A unit increase in overall market liberalisation index had positive impact on electricity generation per capita in moderate electricity liberalised and middle income countries by 2.10% and 0.04%, respectively. The effect of a unit increase in private ownership, increased electricity consumption per capita in low income (0.02%) and moderate liberalised countries (2.31%). Similarly, a unit increase in vertical unbundling, improved installed capacity per capita in middle income (0.10%) and moderate liberalised countries (0.01%). The effects of electricity market liberalisation on the sector’s performance were generally positive but varied in Sub-Saharan Africa. Therefore, effective regulatory policies should be designed to further strengthen electricity market liberalisation in the region 2020-01-01T00:00:00Z