Nigerian Economic Society
Hi Guest,
Home | Paper Submission | Signup |
Providing intellectual leadership in economic management in Nigeria



Abstract: Empirical studies in Europe, America and Asia have shown overwhelming evidence in support of the view that more volatile financial development raises industrial output volatility. The pertinent question is, does this evidence hold in the context of a mono economy such as Nigeria, driven by exogenous oil prices and high macroeconomic policy volatility? Accordingly, this paper investigates whether industrial growth volatility is principally caused by volatility of financial sector development in Nigeria. Total industrial output volatility was decomposed into the effects of financial development volatility, fiscal volatility, trade openness volatility, and oil price volatility using the vector auto-regressive (VAR) mechanism. All volatility measures are standard deviations of the various variables. Results suggest that about 24 per cent of the variations in industrial output volatility are caused by industrial output volatility itself, about 5 per cent and 38 per cent by financial institutions and financial markets volatilities respectively, representing a sum of 43 per cent attributed to financial sector development volatility, while 28 per cent are caused by volatility in openness to international trade, 2 per cent by fiscal policy (government expenditure) volatility and about 4 per cent by oil price volatility. The estimates also suggest that, on the whole, about 32 per cent of volatility in Nigeria’s industrial sector was associated with exposure to external shocks while 68 per cent was attributed to domestic factors (especially domestic capital market development). The implication of these results is that industrial output instability is relatively determined more by volatility in the domestic financial sector, and less by oil price and other external related volatility. Hence, volatility in the domestic capital market raised a major concern. The consequence of high output volatility is underdevelopment, as evident in low investment and widespread poverty in Nigeria.

JEL classification: C23; E32, G2; O43

Price: N500.00 | Add to cart




Forget password? | Signup for Free!
Note: You must signup your email and create a password before you can register as an NES member

Latest News

2020 NES PhD Thesis Prize Award Winners

The Executive Council of the NES is pleased to announce the winners of 2020 NES Thesis Prize Award. more

NES Webinar on Covid-19 and the Nigerian Economy - Press Release

The Nigerian Economic Society (NES) in its Monthly Webinar series on the Nigerian economy hosted more

NES PhD THESIS PRIZE AWARD: Call for Submissions

The Executive Council of the Nigerian Economic Society (NES) hereby announces the call for more

Policy Brief on The Nigerian Fuel Subsidy Puzzle: Facts, Fallacies and the Way Forward

Background The issue of the appropriate pricing of petroleum products in Nigeria, of which fuel more

2019 Election of New Council of the Nigerian Economic Society

The Executive Council of NES hereby informs its members that at the Business Session of 2019 Annual more

2019 Nigerian Economic Society Annual Public Lecture Announcement

The Executive Council of NES has the pleasure to announce it's 2019 Annual Public Lecture with the more

E-Mail Subscription