Nigerian Economic Society
Hi Guest,
Home | Paper Submission | Signup |
      
Providing intellectual leadership in economic management in Nigeria
FINANCIAL SECTOR DEVELOPMENT AND THE QUEST FOR INDUSTRIALIZATION IN NIGERIA: A Multivariate Analysis

FINANCIAL SECTOR DEVELOPMENT AND THE QUEST FOR INDUSTRIALIZATION IN NIGERIA: A Multivariate Analysis

 

Abstract: The performance of the industrial sector in relation to financial development is examined in this study using manufacturing index as a major industrial sector development indicator. A structural variance autoregressive (SVAR) model with structural breaks was formulated and applied to Nigerian data spanning 1970 to 2015. The results from the analysis revealed that with the continuous upward swings in the official lending interest rates as expected theoretically, shocked off investment and ultimately manufacturing output. This phenomenon was not restricted to the conventional deposit money banks (DMB), but also to the Bank of Industry (BOI) and allied financial institutions whose loan processes are fraught with bureaucratic bottlenecks and political intrigues. The level of financial deepening (M2/GDP) positively influenced manufacturing output though not statistically significant. This calls for more concerted efforts on the part of the monetary authorities to implement the recent cashless monetary policy to the letter in order to reduce the liquidity ratio in deposit money banks and make investible funds available for the manufacturing and allied subsectors in Nigeria. The radioactive decay syndrome exhibited by a lag of the manufacturing index is novel and a sine qua non for policymakers and executors and is a factor that must be considered by policymakers and executors. It implies that manufacturing output will continue to accentuate as long as industrialization policies and strategies are initiated, implemented and sustained in Nigeria. Exchange rates misalignment has the least influence on manufacturing output as shown in the analysis. The paper further recommends that for industrialization to be achieved and sustained, the yawning gap between interest rates on savings and lending — interest rates spread should be bridged to stimulate credit for the private sector for maximum manufacturing output and the exchange rates misalignment currently experienced in Nigeria will ultimately fizzle out.

JEL classification: E44, O16


Price: N500.00 | Add to cart
 

 

 

Login

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

60th Annual Conference of the Nigerian Economic Society: Call for Abstracts

The Executive Council of NES has the pleasure to announce 60th Annual Conference with the theme "ECO...read more


Winners of The Nigerian Economic Society PhD Thesis Prize Award in Economics for 2018

The Executive Council of the NES is pleased to announce the Winners of The Nigerian Economic Society...read more


Communique of the 59th Annual Conference of the Nigerian Economic Society, held at the NICON Luxury Hotel, Abuja from September 25-27, 2018

Theme: Optimizing Value Chain in the Agricultural Sector in Nigeria The Nigerian Economic Society i...read more


2018 Nigerian Economic Society Annual Public Lecture Announcement

The Executive Council of NES has the pleasure to announce it's 2018 Annual Public Lecture with the t...read more


E-Mail Subscription

VoguePayVisaMasterCard