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Andy Okwu

University of South Africa, Economics and Management Sciences, Post-Doc

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Phone: +27848845808
Address: College of Economics and Management Sciences, University of South Africa, Pretoria, South Africa.

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Papers by Andy Okwu

Value Added Tax and Consumption Expenditure Behaviour of Households in Nigeria: An Empirical Investigation

by Kwarbai Jerry and Andy Okwu

In one way or the other, value added tax has been perceived to influence consumption expenditure ... more In one way or the other, value added tax has been perceived to influence consumption expenditure behaviour of households as well as consumer price index. This study employed ex-post facto research design to investigate the effects of value added tax on consumption expenditure pattern and consumer price index in Nigeria. The study considered value added tax revenue, house hold consumption expenditure on durable and non-durable goods as well as consumer price index for the period 1994 - 2014. Data used for analysis were extracted from National Abstract of Statistics of the National Bureau of Statistics and the Statistical Bulletin of the Central Bank of Nigeria. The tools of analysis were multiple regression models on households’ durable and non-durable goods consumption expenditures and consumer price index with lagged valued variants. Results showed that value added tax and one-period lagged consumption expenditure on durable goods significantly affected households’ consumption expenditure on durable goods. Further, positive significant effects were established for value added tax in relation to households’ consumption expenditures on non-durable goods; and VAT, its variants and previous spending levels did not discourage households’ consumption expenditures; and value added tax did not bear significant relevance on consumer price index. Consequently, the study recommended that the current 5% value added tax rate should be maintained, since any increase would most likely affect the households negatively and escalate consumer price index to undesired levels.

ICT ADOPTION AND FINANCIAL MARKETS: A STUDY OF THE LEADING STOCK EXCHANGE MARKETS IN AFRICA

This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Marke... more This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Markets - the leading exchanges in Africa. Analysis was anchored on panel data metrics of ICT adoption, control and transaction capacities measures of the exchanges. Findings: ICT adoption had heterogeneous effects during the study periods. Use of the Internet had negative effects on the market indices, except capitalisation. Some of the regressors had no significant effects on individual merits, but aggregate effects were significant. The regressors well-explained total variations in the stock market measures. Consequently, this paper considered ICT adoption to be sine quo non to the growth and development of Africa's stock exchange and financial markets; and recommended more investments in ICT innovations and adoptions for greater regional and continental co-operations and possible integration into global settings.
Key words: ICT adoption, Stock exchange markets, Financial markets, Gompertz curve, Disaggregated functional models.

ICT ADOPTION AND FINANCIAL MARKETS: A STUDY OF THE LEADING STOCK EXCHANGE MARKETS IN AFRICA

This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Marke... more This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Markets - the leading exchanges in Africa. Analysis was anchored on panel data metrics of ICT adoption, control and transaction capacities measures of the exchanges. Findings: ICT adoption had heterogeneous effects on the market indices, except capitalisation. Some of the regressors had no significant effects on individual merits, but aggregate effects were significant. The regressors well-explained total variations in the stock market measures. Consequently, this paper considered ICT adoption to be sine quo non to the growth and development of Africa's stock exchange and financial markets; and recommended more investments in ICT innovations and adoptions for greater regional and continental co-operations and possible integration into global settings.
Key words: ICT adoption, Stock exchange markets, Financial markets, Gompertz curve, Disaggregated functional models.

AN ARDL Investigation of the Impact of Financial Liberalization on Credit the Private Sector and Credit Crunch Possibility in Nigeria

The aim of the study was to look at the long and short run impacts of financial liberalization on... more The aim of the study was to look at the long and short run impacts of financial liberalization on the credit to the private sector of the Nigerian economy from 1970 to 2009, using the Authoregressive Distributed Lagged (ARDL) technique, built on the McKinnon Complimentary Hypothesis; within which the study further investigated the possibility of credit crunch in the Nigerian financial system. Upon investigation, the results revealed that there exists a cointegrating relationship among the specified variables in the model and discovered that current financial libralization effect on the credit to private sector indicated a positive but insignificant effect in both the short run and long run. While past (lag one) financial liberalization variable suggested a negative effect in the short run, the consistency in the significant positive effect of the total financial deposits that proxied total saving in both the long and short runs confirmed the conclusion of the World Bank News Report in 2010 that credit crunch did not exist in the Nigerian financial system. The study therefore attributed the failure of financial liberalization to affect credit allocation to inconsistency in reform implementation, and political and institutional settings of reforms. Hence, it recommended commitment in financial liberalization implementation and improved stable macroeconomy; pointing to the fact that, given the absence of credit crunch, there is great need for improved screening of intended credit loan seekers (potential borrowers) and close monitoring of already granted loan investments to minimize, if not avoid, adverse selection and moral hazard given the high level of asymmetric information induced by the current unstable macro-economic environment, inadequate data management and poor supervision and regulation by regulatory authorities resulting to cases of misappropriation of loans, poor corporate governance, unrecoverable loans, and finally illiquidity in the financial system therein compromising the benefits of credit flow to the private economy.

Key words: Investigation, Impact, Financial liberalization, Credit, Private sector, Crunch, Possibility.

Business Environment and the Potentials of Small and Medium Enterprises in Nigeria

Friendly environment enhances enterprise and management practice. This study analysed potentials ... more Friendly environment enhances enterprise and management practice. This study analysed potentials of SMEs in relation to business environment of Lagos State; to contribute to environment-enterprise policy mechanism and regulatory framework of the State and Nigeria, industry and management practice. With World Bank’s sample size model, and relevant criteria, 228 SMEs were drawn via convenience technique. Multifactor business environment-enterprise questionnaire (MBEEQ), akin to assessment tools of various agencies and institutions, was used to elicit cross-sectional survey responses. A system of simultaneous equations model (SSEM) was used to investigate environmental effects on the SMEs. Findings: legal-regulatory frameworks, policy stance and socio-cultural factors reduced potentials, competition aided innovation and growth; on aggregate, the environment significantly enhanced SMEs’ potentials. Recommendations: legal-regulatory and policy reformation towards SME-friendly environment, and SMEs should leverage on opportunities in the environment.

Keywords: Business environment, Small and medium enterprises, potentials, Simultaneous equations model, empirical investigation.
JEL Classifications: C21, E24, L88, O31, R11, R38

An ARDL Investigation of the Impact of Financial Liberalization on Credit to the Private Sector and Credit Crunch Possibility in Nigeria

The aim of the study was to look at the long and short run impacts of financial liberalization on... more The aim of the study was to look at the long and short run impacts of financial liberalization on the credit to the private sector of the Nigerian economy, from 1970 to 2009, using the Autoregressive Distributed Lagged (ARDL) technique, built on the McKinnon Complimentary Hypothesis; within which the study further investigated the possibility of credit crunch in the Nigerian financial system. Upon investigation, the results revealed that there exists a cointegrating relationship among the specified variables in the model and discovered that current financial liberalization effect on the credit to private sector indicated a positive but insignificant effect in both the short run and long run. While past (lag one) financial liberalization variable suggested a negative effect in the short run, the consistency in the significant positive effect of the total financial deposits that proxied total savings in both the long and short runs confirmed the conclusion of the World Bank news report in 2010 that credit crunch did not exist in the Nigerian financial system. The study therefore attributed the failure of financial liberalization to affect credit allocation to inconsistency in reform implementation, and political and institutional settings of reforms. Hence, the study recommended commitment in financial liberalization implementation and improved stable macroeconomy; pointing to the fact that, given the absence of credit crunch, there is great need for improved screening of intended credit loan seekers (potential borrowers) and close monitoring of already granted loan investments to minimize, if not avoid, cases of adverse selection and moral hazard given the high level of asymmetric information induced by the current unstable macro-economic environment, inadequate data management and poor supervision and regulation by regulatory authorities resulting to cases of misappropriation of loans, poor corporate governance, unrecoverable loans, and finally illiquidity in the financial system therein compromising the benefits of credit flow to the private economy.

Key words: investigation, Impact, Financial Liberalization, Credit, Private Sector, Crunch, Possibility.

Value Added Tax and Consumption Expenditure Behaviour of Households in Nigeria: An Empirical Investigation

by Andy Okwu and Jerry D kwarbai

In one way or the other, value added tax has been perceived to influence consumption expenditure ... more In one way or the other, value added tax has been perceived to influence consumption expenditure behaviour of households as well as consumer price index. This study employed ex-post facto research design to investigate the effects of value added tax on consumption expenditure pattern and consumer price index in Nigeria. The study considered value added tax revenue, house hold consumption expenditure on durable and non-durable goods as well as consumer price index for the period 1994 - 2014. Data used for analysis were extracted from National Abstract of Statistics of the National Bureau of Statistics and the Statistical Bulletin of the Central Bank of Nigeria. The tools of analysis were multiple regression models on households’ durable and non-durable goods consumption expenditures and consumer price index with lagged valued variants. Results showed that value added tax and one-period lagged consumption expenditure on durable goods significantly affected households’ consumption expenditure on durable goods. Further, positive significant effects were established for value added tax in relation to households’ consumption expenditures on non-durable goods; and VAT, its variants and previous spending levels did not discourage households’ consumption expenditures; and value added tax did not bear significant relevance on consumer price index. Consequently, the study recommended that the current 5% value added tax rate should be maintained, since any increase would most likely affect the households negatively and escalate consumer price index to undesired levels.

Key Words: Value Added Tax, Households’ Consumption Expenditures, Durable And Non-Durable Goods, Consumer Price Index, Empirical Investigation.
JEL Classifications: D2, E2, F38, H21, P24, R2.

BABCOCK JOURNAL OF ECONOMICS, BANKING AND FINANCE (BJEBF), VOLUME 2, JUNE 2013

As per contributing authors

EFFECTS OF DOMESTIC DEBT ON ECONOMIC GROWTH OF NIGERIA (1990 – 2010)

ABSTRACT Persistent increases in stock of domestic debt in Nigeria have raised concerns about eff... more ABSTRACT
Persistent increases in stock of domestic debt in Nigeria have raised concerns about effects of such debt stock on growth of the economy. This study employed econometric methodology to examine the phenomenon of domestic debt in relation to growth of the Nigerian economy for the period 1990-2010. The objective was to establish the effect of the phenomenal debt stock increases on economic growth in Nigeria during the study period. The major tool of analysis was multiple regression model premised on theorised functional relationship between economic growth and domestic debt stock. Gross domestic product (GDP) entered the model as response variable and proxy for economic growth, domestic debt stock (DDS), expenditure on debt servicing (EDS) and domestic credit to the economy (DCE) were considered as the causal variables, with interest rate (INT) as the moderating variable. Data used for analysis were obtained from Statistical Bulletin of the Central Bank of Nigeria. Diagnostic tests were conducted to ascertain Stationarity, Co-integrating and Stability features of the data series. Facilitated with Econometric Views version7 (EViews7) statistical software, the LS estimation techniques were employed to obtain estimates of model parameters. The estimated model was subjected to evaluation. The results revealed that while those domestic debt components exerted significant positive effects on economic growth, interest rate exerted insignificant negative effect. On the aggregate, the variables jointly exerted significant effect, and highly explained variations in economic growth during the study period. Consequently, the study concluded that domestic debt enhanced growth during the period, and, thus, recommended that growth-oriented strategies should be top priority in domestic debt and its dynamics.
Key words: Domestic debt, Economic growth, Analysis
JEL Classification: C22, C51, H63, O47

A COMPARATIVE ANALYSIS OF EXPORT PROMOTION STRATEGIES IN SELECTED AFRICAN COUNTRIES (SAUTH AFRICA, NIGERIA AND EGYPT)

Abstract This paper employed comparative analysis approach to examine the various export promotio... more Abstract
This paper employed comparative analysis approach to examine the various export promotion strategies in selected African countries of South Africa, Nigeria and Egypt (SANE). The analysis centred on the concepts, levels and need for exports promotion strategies and initiatives as a stimulant of economic growth and development. Summary of the strategies in the selected countries and subsequent comparative analysis revealed some similarities and differences. Consequently, appropriate initiatives for policy formulation and implementation of export promotion strategies in Nigeria were recommended. Keywords: Export, promotion Strategies, Selected countries, Comparative analysis

OKWU OBIWURU OBIAKOR and OFOEGBU JULY - DECEMBER 2013

The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on... more The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on credit components in the private sector of the economy, therein investigating the possibility of credit crunch. Employing data from 1970 to 2009, sourced from the Central Bank of Nigeria Statistical Bulletins, on an Autoregressive Distributed Lag (ARDL) Model to test for the long and short run impacts of financial liberalization and the presence of credit crunch in the private sector, the results revealed that liberalising the Nigerian financial system had boomerang effects on the credits allocated to the sub-sector in the long run (except for mining and quarrying), and in the short run, financial liberalization was in all insignificant and negative. On investigating the presence of credit crunch in the long and short run, the results lead to the conclusion that Deposit Money Banks (DMBs) in Nigeria had a strong discriminating credit behaviour towards the real sectors (Agriculture, Manufacturing and Mining and Quarrying) and the SMEs, as credit crunch was present in these sectors in both the short and long run as indicated by the inverse relationship between increasing deposit liabilities that make up savings and the credit that flows to these subsectors. However, their preference was observed in the significant positive flow of savings in form of credits to services, real estate, commerce and others (private individuals, professional, and government). Suggesting that credit crunch does not exist in this sectors as reflected when aggregate credit is reported.

OBIWURU EDY-EWO AND OKWU IJRCEM CORRECTED

Logic; Web Design and emerging paradigms in allied subjects.

OKWU OBIWURU OBIAKOR and OFOEGBU JULY - DECEMBER 2013

by Andy Okwu and Ofoegbu D O N A L D Ikenna

The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on... more The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on credit components in the private sector of the economy, therein investigating the possibility of credit crunch. Employing data from 1970 to 2009, sourced from the Central Bank of Nigeria Statistical Bulletins, on an Autoregressive Distributed Lag (ARDL) Model to test for the long and short run impacts of financial liberalization and the presence of credit crunch in the private sector, the results revealed that liberalising the Nigerian financial system had boomerang effects on the credits allocated to the sub-sector in the long run (except for mining and quarrying), and in the short run, financial liberalization was in all insignificant and negative. On investigating the presence of credit crunch in the long and short run, the results lead to the conclusion that Deposit Money Banks (DMBs) in Nigeria had a strong discriminating credit behaviour towards the real sectors (Agriculture, Manufacturing and Mining and Quarrying) and the SMEs, as credit crunch was present in these sectors in both the short and long run as indicated by the inverse relationship between increasing deposit liabilities that make up savings and the credit that flows to these subsectors. However, their preference was observed in the significant positive flow of savings in form of credits to services, real estate, commerce and others (private individuals, professional, and government). Suggesting that credit crunch does not exist in this sectors as reflected when aggregate credit is reported.

OWOLABI OLANREWAJU AND OKWU July-Sept 2013

This study attempts to determine the causal linkages between banking sector reforms and output gr... more This study attempts to determine the causal linkages between banking sector reforms and output growth of manufacturing sector as well as the direction of such causality. A selected sample of financial development and manufacturing output of Nigeria with annual data between 1970 and 2008 is used and cointegration and Granger-causality techniques were applied to ascertain evidence regarding this important issue. The result of Granger causality analysis showed that the MDGP and banking sector reforms indicators (BF) move differently with one not predicting the other within the study period. Moreover, the empirical results showed that Bank assets with co-efficient 0.7688 (t=2.4267, ρ < 0.05), Lending Interest rate with co-efficient 0.1662 (t=2.996, ρ < 0.05), Exchange rate with co-efficient 0.0285 (t = 4.6748, ρ < 0.05) and Real rate of interest with co-efficient 0.0224 (t= 3.4927, ρ < 0.05) positively and significantly affected the manufacturing sector"s output growth in Nigeria. On the other hand, the financial deepening indicator (M 2 /GDP) with co-efficient -3.3665 (t= -4.8493, ρ < 0.05) and Interest rate spread with co-efficient -0.2595 (t = -3.2902, ρ < 0.05) negatively and significantly impacted on the MGDP in Nigeria, showing that the effects of banking sector reform indicators could vary widely in an economy. In conclusion, it was discovered that with proper banking policy formulations and guidance in the financial sector, the manufacturing output growth would be positively affected.

OKWU DADA OWOLABI DEC 2013

This paper employed comparative analysis approach to examine the various export promotion strateg... more This paper employed comparative analysis approach to examine the various export promotion strategies in selected African countries of South Africa, Nigeria and Egypt (SANE). The analysis centred on the concepts, levels and need for exports promotion strategies and initiatives as a stimulant of economic growth and development. Summary of the strategies in the selected countries and subsequent comparative analysis revealed some similarities and differences. Consequently, appropriate initiatives for policy formulation and implementation of export promotion strategies in Nigeria were recommended.

EFFECTS OF PUBLIC EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA: A DISAGGREGATED TIME SERIES ANALYSIS

ABSTRACT This study has examined the effect of public expenditure on economic in Nigeria for the... more ABSTRACT
This study has examined the effect of public expenditure on economic in Nigeria for the period 1970 – 2009. The tool of analysis was the OLS multiple regression model specified on perceived causal relationship between government expenditure and economic growth. The major objective of this paper is to analyze the effect of public government spending on economic in Nigeria based on time series data on variables considered relevant indicators of economic growth and government expenditure. Therefore, time series data included in the model were those on gross domestic product (GDP), and various components of government expenditure. Analysis was based on data extracted from the Statistical Bulletin of the Central Bank of Nigeria. Results of the analysis showed that capital and recurrent expenditure on economic services had insignificant negative effect on economic growth during the study period. Also, capital expenditure on transfers had insignificant positive effect on growth. But capital and recurrent expenditures on social and community services and recurrent expenditure on transfers had significant positive effect on economic growth. Consequently, the study recommended more allocation of expenditures to the services with significant positive effect.

Key Words: Analysis, Effect, Public expenditure, Economic growth
JEL Classification: C32, E12, H54, H55, O47

DEREGULATION, SAVINGS, CREDIT TO PRIVATE SECTOR AND ECONOMIC GROWTH IN NIGERIA: AN ARDL-BOUND TESTING APPROACH

Abstract The objective of the study was to assess the impact of financial sector deregulation re... more Abstract
The objective of the study was to assess the impact of financial sector deregulation reforms on savings, credit to private sector, and the economic growth of Nigeria from 1970 to 2009. Upon investigation of the long run and short run impact of financial deregulation on the selected macroeconomic variables, using the ARDL-bound test approach, it was discovered, that in both long and short run, financial deregulation had no significant impact on the real interest rate, and if any, its effect suggest a negative; therefore not in conformity with the McKinnon-Shaw hypothesis, that suggest that deregulation of the financial system enhances competition in the system and therein causes interest rate to be positive. However, increases in savings and the credit to private sector observed in the study, can hardly be attributed to financial deregulation (or the real interest rate) as its effect in the short run were minimally positive, and utterly negative in the long-run. The same effect was evidence in the economic growth variable. The study therefore concluded that the shifting effects from positive in the short run to negative in the long run, is attributable to lack of continuity in the implementation of financial deregulation reforms and absence of competition in the industry. All in all, financial deregulation did not induce positive real interest rate (to encourage savings). Suggesting that, interest rate on deposit has not been the major factor that propelled depositors to save in Nigeria, but rather the lack of investment alternatives outside financial assets.

Keywords: Financial Deregulation, Savings, Credit to Private Sector, Interest Rate and Economic Growth, Complementarity Hypothesis, and the ARDL-Bound Testing

Okwu and Owolabi 2011

This paper employed the tools of quantitative empirical analysis technique to evaluate the contri... more This paper employed the tools of quantitative empirical analysis technique to evaluate the contribution of value-added tax to the development of Lagos State economy. The generic central objective was to examine the effect of the contribution of value-added tax on the development of Lagos State economy. The tools of empirical analysis were simple regression models as abstractions of the respective sectors considered in the study. The study considered a vector of development indicators as dependent variables and regressed each on VAT revenue proceeds to Lagos State for the study period. Development aspects considered included infrastructural development, environmental management, education sector development, youth and social development, agricultural sector development, health sector development and transportation sector development. The state economy was disaggregated into seven strategic economic sectors in the development process, and simple regression models specified to enhance isolated analysis of each sector. The analysis showed that VAT revenue contributed positively to the development of the respective sectors. However, the positive contribution was statistically significant only in agricultural sector development. On the aggregate, the analysis showed that VAT revenue had a considerable contribution to development of the economy during the study period. The paper concludes that various sectors of the economy of Lagos State are yet to benefit significantly from VAT revenue expenditure of the state government. However, it had contributed significantly to the economy as a whole. Consequently, the paper calls for equity in sectoral spending of VAT proceeds in Lagos State in order to ensure balanced development and sustainability of the emerging mega city status of the state. 25 1954 as taxe sur la valeur (TVA in French). He envisioned a sales tax on goods that did not affect the cost of manufacture or distribution but was collected on the final price charged to the consumer. In France, it is the most source of state finance, accounting for approximately 45% of state revenues.

OKWU ET AL 2011

This study examined the effects of monetary policy innovations on stabilization of commodity pric... more This study examined the effects of monetary policy innovations on stabilization of commodity prices in Nigeria. The design is basically exploratory in that the study leaves room for further study in the area. The methodology is empirical econometric analysis approach. Variables used for analysis were consumer price index (CPI), broad money aggregates (BMA) and monetary policy rate (MPR). These variables were considered appropriate indicators of monetary policy innovations and commodity price responses. Main tool of analysis was a multiple regression model specified on perceived functional link between the indicators of Central Bank of Nigeria's monetary policy innovations and commodity prices indicator. CPI as a proxy for commodity prices was treated as response variable while BMA and MPR were treated as causal variables. Data on the variables were used to estimate parameters of the model via the OLS techniques. Estimates of model parameters were evaluated based on relevant statistics from the regression output. The result showed that positive relationship existed between the respective indicators of monetary policy innovations and indicator of commodity prices. Also, monetary policy rate had more immediate effect than broad money on consumer price index, and that commodity prices responded more to monetary policy rates than to broad money aggregates. The result also indicated that, although both broad money and monetary policy rate exerted positive effect on commodity prices, only broad money exerted significant effect at 0.05 level of significance. However, overall effect of both on commodity prices was statistically significant. Consequently, the study recommended, among other things, that the Central Bank of Nigeria should always determine optimal mix of both policy variables to ensure stabilization of consumer goods and other commodity prices, and engender confidence in the Bank's monetary policy.

Okwu and Owolabi 2010

This study has examined the role of human resource development in economic growth in Nigeria. The... more This study has examined the role of human resource development in economic growth in Nigeria. The study employed quantitative analysis approach. The study considered human resource development from education and health perspectives. The variables considered appropriate indices for human resource development were government expenditures on education and health, primary education enrolment rate, secondary education enrolment rate, tertiary education enrolment rate and gross domestic product. The major tool of analysis is a multiple regression analysis model specified on the basis of perceived functional relationship between human resource development and economic growth in Nigeria. Treating gross domestic product as the explained variable and the others as the explanatory variables, a multiple regression model of was specified to forge a link between the two variable sets. With secondary data on the above variables, the model was estimated via ordinary least squares (OLS) techniques, and evaluated based on relevant data from the regression output. The result showed that only secondary and tertiary education enrolment rates exerted statistically significant effect on economic growth in Nigeria. The others exerted positive but insignificant effect on economic growth. However, the explanatory variables jointly exerted significant effect on growth. In addition, the model exhibited high explanatory power and indicated absence of first order serial correlation in the explanatory variables. Based on the findings, the study concluded that a clear-cut and obvious relationship existed between human resource development and economic growth and, thus, recommended for intensified effort in human resource development in Nigeria such as adoption of planned strategies in education and health sectors and increased budgetary allocation to the sectors.

Value Added Tax and Consumption Expenditure Behaviour of Households in Nigeria: An Empirical Investigation

by Kwarbai Jerry and Andy Okwu

In one way or the other, value added tax has been perceived to influence consumption expenditure ... more In one way or the other, value added tax has been perceived to influence consumption expenditure behaviour of households as well as consumer price index. This study employed ex-post facto research design to investigate the effects of value added tax on consumption expenditure pattern and consumer price index in Nigeria. The study considered value added tax revenue, house hold consumption expenditure on durable and non-durable goods as well as consumer price index for the period 1994 - 2014. Data used for analysis were extracted from National Abstract of Statistics of the National Bureau of Statistics and the Statistical Bulletin of the Central Bank of Nigeria. The tools of analysis were multiple regression models on households’ durable and non-durable goods consumption expenditures and consumer price index with lagged valued variants. Results showed that value added tax and one-period lagged consumption expenditure on durable goods significantly affected households’ consumption expenditure on durable goods. Further, positive significant effects were established for value added tax in relation to households’ consumption expenditures on non-durable goods; and VAT, its variants and previous spending levels did not discourage households’ consumption expenditures; and value added tax did not bear significant relevance on consumer price index. Consequently, the study recommended that the current 5% value added tax rate should be maintained, since any increase would most likely affect the households negatively and escalate consumer price index to undesired levels.

ICT ADOPTION AND FINANCIAL MARKETS: A STUDY OF THE LEADING STOCK EXCHANGE MARKETS IN AFRICA

This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Marke... more This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Markets - the leading exchanges in Africa. Analysis was anchored on panel data metrics of ICT adoption, control and transaction capacities measures of the exchanges. Findings: ICT adoption had heterogeneous effects during the study periods. Use of the Internet had negative effects on the market indices, except capitalisation. Some of the regressors had no significant effects on individual merits, but aggregate effects were significant. The regressors well-explained total variations in the stock market measures. Consequently, this paper considered ICT adoption to be sine quo non to the growth and development of Africa's stock exchange and financial markets; and recommended more investments in ICT innovations and adoptions for greater regional and continental co-operations and possible integration into global settings.
Key words: ICT adoption, Stock exchange markets, Financial markets, Gompertz curve, Disaggregated functional models.

ICT ADOPTION AND FINANCIAL MARKETS: A STUDY OF THE LEADING STOCK EXCHANGE MARKETS IN AFRICA

This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Marke... more This paper examined the effects of ICT adoption on Nigerian and Johannesburg Stock Exchange Markets - the leading exchanges in Africa. Analysis was anchored on panel data metrics of ICT adoption, control and transaction capacities measures of the exchanges. Findings: ICT adoption had heterogeneous effects on the market indices, except capitalisation. Some of the regressors had no significant effects on individual merits, but aggregate effects were significant. The regressors well-explained total variations in the stock market measures. Consequently, this paper considered ICT adoption to be sine quo non to the growth and development of Africa's stock exchange and financial markets; and recommended more investments in ICT innovations and adoptions for greater regional and continental co-operations and possible integration into global settings.
Key words: ICT adoption, Stock exchange markets, Financial markets, Gompertz curve, Disaggregated functional models.

AN ARDL Investigation of the Impact of Financial Liberalization on Credit the Private Sector and Credit Crunch Possibility in Nigeria

The aim of the study was to look at the long and short run impacts of financial liberalization on... more The aim of the study was to look at the long and short run impacts of financial liberalization on the credit to the private sector of the Nigerian economy from 1970 to 2009, using the Authoregressive Distributed Lagged (ARDL) technique, built on the McKinnon Complimentary Hypothesis; within which the study further investigated the possibility of credit crunch in the Nigerian financial system. Upon investigation, the results revealed that there exists a cointegrating relationship among the specified variables in the model and discovered that current financial libralization effect on the credit to private sector indicated a positive but insignificant effect in both the short run and long run. While past (lag one) financial liberalization variable suggested a negative effect in the short run, the consistency in the significant positive effect of the total financial deposits that proxied total saving in both the long and short runs confirmed the conclusion of the World Bank News Report in 2010 that credit crunch did not exist in the Nigerian financial system. The study therefore attributed the failure of financial liberalization to affect credit allocation to inconsistency in reform implementation, and political and institutional settings of reforms. Hence, it recommended commitment in financial liberalization implementation and improved stable macroeconomy; pointing to the fact that, given the absence of credit crunch, there is great need for improved screening of intended credit loan seekers (potential borrowers) and close monitoring of already granted loan investments to minimize, if not avoid, adverse selection and moral hazard given the high level of asymmetric information induced by the current unstable macro-economic environment, inadequate data management and poor supervision and regulation by regulatory authorities resulting to cases of misappropriation of loans, poor corporate governance, unrecoverable loans, and finally illiquidity in the financial system therein compromising the benefits of credit flow to the private economy.

Key words: Investigation, Impact, Financial liberalization, Credit, Private sector, Crunch, Possibility.

Business Environment and the Potentials of Small and Medium Enterprises in Nigeria

Friendly environment enhances enterprise and management practice. This study analysed potentials ... more Friendly environment enhances enterprise and management practice. This study analysed potentials of SMEs in relation to business environment of Lagos State; to contribute to environment-enterprise policy mechanism and regulatory framework of the State and Nigeria, industry and management practice. With World Bank’s sample size model, and relevant criteria, 228 SMEs were drawn via convenience technique. Multifactor business environment-enterprise questionnaire (MBEEQ), akin to assessment tools of various agencies and institutions, was used to elicit cross-sectional survey responses. A system of simultaneous equations model (SSEM) was used to investigate environmental effects on the SMEs. Findings: legal-regulatory frameworks, policy stance and socio-cultural factors reduced potentials, competition aided innovation and growth; on aggregate, the environment significantly enhanced SMEs’ potentials. Recommendations: legal-regulatory and policy reformation towards SME-friendly environment, and SMEs should leverage on opportunities in the environment.

Keywords: Business environment, Small and medium enterprises, potentials, Simultaneous equations model, empirical investigation.
JEL Classifications: C21, E24, L88, O31, R11, R38

An ARDL Investigation of the Impact of Financial Liberalization on Credit to the Private Sector and Credit Crunch Possibility in Nigeria

The aim of the study was to look at the long and short run impacts of financial liberalization on... more The aim of the study was to look at the long and short run impacts of financial liberalization on the credit to the private sector of the Nigerian economy, from 1970 to 2009, using the Autoregressive Distributed Lagged (ARDL) technique, built on the McKinnon Complimentary Hypothesis; within which the study further investigated the possibility of credit crunch in the Nigerian financial system. Upon investigation, the results revealed that there exists a cointegrating relationship among the specified variables in the model and discovered that current financial liberalization effect on the credit to private sector indicated a positive but insignificant effect in both the short run and long run. While past (lag one) financial liberalization variable suggested a negative effect in the short run, the consistency in the significant positive effect of the total financial deposits that proxied total savings in both the long and short runs confirmed the conclusion of the World Bank news report in 2010 that credit crunch did not exist in the Nigerian financial system. The study therefore attributed the failure of financial liberalization to affect credit allocation to inconsistency in reform implementation, and political and institutional settings of reforms. Hence, the study recommended commitment in financial liberalization implementation and improved stable macroeconomy; pointing to the fact that, given the absence of credit crunch, there is great need for improved screening of intended credit loan seekers (potential borrowers) and close monitoring of already granted loan investments to minimize, if not avoid, cases of adverse selection and moral hazard given the high level of asymmetric information induced by the current unstable macro-economic environment, inadequate data management and poor supervision and regulation by regulatory authorities resulting to cases of misappropriation of loans, poor corporate governance, unrecoverable loans, and finally illiquidity in the financial system therein compromising the benefits of credit flow to the private economy.

Key words: investigation, Impact, Financial Liberalization, Credit, Private Sector, Crunch, Possibility.

Value Added Tax and Consumption Expenditure Behaviour of Households in Nigeria: An Empirical Investigation

by Andy Okwu and Jerry D kwarbai

In one way or the other, value added tax has been perceived to influence consumption expenditure ... more In one way or the other, value added tax has been perceived to influence consumption expenditure behaviour of households as well as consumer price index. This study employed ex-post facto research design to investigate the effects of value added tax on consumption expenditure pattern and consumer price index in Nigeria. The study considered value added tax revenue, house hold consumption expenditure on durable and non-durable goods as well as consumer price index for the period 1994 - 2014. Data used for analysis were extracted from National Abstract of Statistics of the National Bureau of Statistics and the Statistical Bulletin of the Central Bank of Nigeria. The tools of analysis were multiple regression models on households’ durable and non-durable goods consumption expenditures and consumer price index with lagged valued variants. Results showed that value added tax and one-period lagged consumption expenditure on durable goods significantly affected households’ consumption expenditure on durable goods. Further, positive significant effects were established for value added tax in relation to households’ consumption expenditures on non-durable goods; and VAT, its variants and previous spending levels did not discourage households’ consumption expenditures; and value added tax did not bear significant relevance on consumer price index. Consequently, the study recommended that the current 5% value added tax rate should be maintained, since any increase would most likely affect the households negatively and escalate consumer price index to undesired levels.

Key Words: Value Added Tax, Households’ Consumption Expenditures, Durable And Non-Durable Goods, Consumer Price Index, Empirical Investigation.
JEL Classifications: D2, E2, F38, H21, P24, R2.

BABCOCK JOURNAL OF ECONOMICS, BANKING AND FINANCE (BJEBF), VOLUME 2, JUNE 2013

As per contributing authors

EFFECTS OF DOMESTIC DEBT ON ECONOMIC GROWTH OF NIGERIA (1990 – 2010)

ABSTRACT Persistent increases in stock of domestic debt in Nigeria have raised concerns about eff... more ABSTRACT
Persistent increases in stock of domestic debt in Nigeria have raised concerns about effects of such debt stock on growth of the economy. This study employed econometric methodology to examine the phenomenon of domestic debt in relation to growth of the Nigerian economy for the period 1990-2010. The objective was to establish the effect of the phenomenal debt stock increases on economic growth in Nigeria during the study period. The major tool of analysis was multiple regression model premised on theorised functional relationship between economic growth and domestic debt stock. Gross domestic product (GDP) entered the model as response variable and proxy for economic growth, domestic debt stock (DDS), expenditure on debt servicing (EDS) and domestic credit to the economy (DCE) were considered as the causal variables, with interest rate (INT) as the moderating variable. Data used for analysis were obtained from Statistical Bulletin of the Central Bank of Nigeria. Diagnostic tests were conducted to ascertain Stationarity, Co-integrating and Stability features of the data series. Facilitated with Econometric Views version7 (EViews7) statistical software, the LS estimation techniques were employed to obtain estimates of model parameters. The estimated model was subjected to evaluation. The results revealed that while those domestic debt components exerted significant positive effects on economic growth, interest rate exerted insignificant negative effect. On the aggregate, the variables jointly exerted significant effect, and highly explained variations in economic growth during the study period. Consequently, the study concluded that domestic debt enhanced growth during the period, and, thus, recommended that growth-oriented strategies should be top priority in domestic debt and its dynamics.
Key words: Domestic debt, Economic growth, Analysis
JEL Classification: C22, C51, H63, O47

A COMPARATIVE ANALYSIS OF EXPORT PROMOTION STRATEGIES IN SELECTED AFRICAN COUNTRIES (SAUTH AFRICA, NIGERIA AND EGYPT)

Abstract This paper employed comparative analysis approach to examine the various export promotio... more Abstract
This paper employed comparative analysis approach to examine the various export promotion strategies in selected African countries of South Africa, Nigeria and Egypt (SANE). The analysis centred on the concepts, levels and need for exports promotion strategies and initiatives as a stimulant of economic growth and development. Summary of the strategies in the selected countries and subsequent comparative analysis revealed some similarities and differences. Consequently, appropriate initiatives for policy formulation and implementation of export promotion strategies in Nigeria were recommended. Keywords: Export, promotion Strategies, Selected countries, Comparative analysis

OKWU OBIWURU OBIAKOR and OFOEGBU JULY - DECEMBER 2013

The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on... more The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on credit components in the private sector of the economy, therein investigating the possibility of credit crunch. Employing data from 1970 to 2009, sourced from the Central Bank of Nigeria Statistical Bulletins, on an Autoregressive Distributed Lag (ARDL) Model to test for the long and short run impacts of financial liberalization and the presence of credit crunch in the private sector, the results revealed that liberalising the Nigerian financial system had boomerang effects on the credits allocated to the sub-sector in the long run (except for mining and quarrying), and in the short run, financial liberalization was in all insignificant and negative. On investigating the presence of credit crunch in the long and short run, the results lead to the conclusion that Deposit Money Banks (DMBs) in Nigeria had a strong discriminating credit behaviour towards the real sectors (Agriculture, Manufacturing and Mining and Quarrying) and the SMEs, as credit crunch was present in these sectors in both the short and long run as indicated by the inverse relationship between increasing deposit liabilities that make up savings and the credit that flows to these subsectors. However, their preference was observed in the significant positive flow of savings in form of credits to services, real estate, commerce and others (private individuals, professional, and government). Suggesting that credit crunch does not exist in this sectors as reflected when aggregate credit is reported.

OBIWURU EDY-EWO AND OKWU IJRCEM CORRECTED

Logic; Web Design and emerging paradigms in allied subjects.

OKWU OBIWURU OBIAKOR and OFOEGBU JULY - DECEMBER 2013

by Andy Okwu and Ofoegbu D O N A L D Ikenna

The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on... more The aim of the study was to ascertain the effect of liberalising the Nigerian financial system on credit components in the private sector of the economy, therein investigating the possibility of credit crunch. Employing data from 1970 to 2009, sourced from the Central Bank of Nigeria Statistical Bulletins, on an Autoregressive Distributed Lag (ARDL) Model to test for the long and short run impacts of financial liberalization and the presence of credit crunch in the private sector, the results revealed that liberalising the Nigerian financial system had boomerang effects on the credits allocated to the sub-sector in the long run (except for mining and quarrying), and in the short run, financial liberalization was in all insignificant and negative. On investigating the presence of credit crunch in the long and short run, the results lead to the conclusion that Deposit Money Banks (DMBs) in Nigeria had a strong discriminating credit behaviour towards the real sectors (Agriculture, Manufacturing and Mining and Quarrying) and the SMEs, as credit crunch was present in these sectors in both the short and long run as indicated by the inverse relationship between increasing deposit liabilities that make up savings and the credit that flows to these subsectors. However, their preference was observed in the significant positive flow of savings in form of credits to services, real estate, commerce and others (private individuals, professional, and government). Suggesting that credit crunch does not exist in this sectors as reflected when aggregate credit is reported.

OWOLABI OLANREWAJU AND OKWU July-Sept 2013

This study attempts to determine the causal linkages between banking sector reforms and output gr... more This study attempts to determine the causal linkages between banking sector reforms and output growth of manufacturing sector as well as the direction of such causality. A selected sample of financial development and manufacturing output of Nigeria with annual data between 1970 and 2008 is used and cointegration and Granger-causality techniques were applied to ascertain evidence regarding this important issue. The result of Granger causality analysis showed that the MDGP and banking sector reforms indicators (BF) move differently with one not predicting the other within the study period. Moreover, the empirical results showed that Bank assets with co-efficient 0.7688 (t=2.4267, ρ < 0.05), Lending Interest rate with co-efficient 0.1662 (t=2.996, ρ < 0.05), Exchange rate with co-efficient 0.0285 (t = 4.6748, ρ < 0.05) and Real rate of interest with co-efficient 0.0224 (t= 3.4927, ρ < 0.05) positively and significantly affected the manufacturing sector"s output growth in Nigeria. On the other hand, the financial deepening indicator (M 2 /GDP) with co-efficient -3.3665 (t= -4.8493, ρ < 0.05) and Interest rate spread with co-efficient -0.2595 (t = -3.2902, ρ < 0.05) negatively and significantly impacted on the MGDP in Nigeria, showing that the effects of banking sector reform indicators could vary widely in an economy. In conclusion, it was discovered that with proper banking policy formulations and guidance in the financial sector, the manufacturing output growth would be positively affected.

OKWU DADA OWOLABI DEC 2013

This paper employed comparative analysis approach to examine the various export promotion strateg... more This paper employed comparative analysis approach to examine the various export promotion strategies in selected African countries of South Africa, Nigeria and Egypt (SANE). The analysis centred on the concepts, levels and need for exports promotion strategies and initiatives as a stimulant of economic growth and development. Summary of the strategies in the selected countries and subsequent comparative analysis revealed some similarities and differences. Consequently, appropriate initiatives for policy formulation and implementation of export promotion strategies in Nigeria were recommended.

EFFECTS OF PUBLIC EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA: A DISAGGREGATED TIME SERIES ANALYSIS

ABSTRACT This study has examined the effect of public expenditure on economic in Nigeria for the... more ABSTRACT
This study has examined the effect of public expenditure on economic in Nigeria for the period 1970 – 2009. The tool of analysis was the OLS multiple regression model specified on perceived causal relationship between government expenditure and economic growth. The major objective of this paper is to analyze the effect of public government spending on economic in Nigeria based on time series data on variables considered relevant indicators of economic growth and government expenditure. Therefore, time series data included in the model were those on gross domestic product (GDP), and various components of government expenditure. Analysis was based on data extracted from the Statistical Bulletin of the Central Bank of Nigeria. Results of the analysis showed that capital and recurrent expenditure on economic services had insignificant negative effect on economic growth during the study period. Also, capital expenditure on transfers had insignificant positive effect on growth. But capital and recurrent expenditures on social and community services and recurrent expenditure on transfers had significant positive effect on economic growth. Consequently, the study recommended more allocation of expenditures to the services with significant positive effect.

Key Words: Analysis, Effect, Public expenditure, Economic growth
JEL Classification: C32, E12, H54, H55, O47

DEREGULATION, SAVINGS, CREDIT TO PRIVATE SECTOR AND ECONOMIC GROWTH IN NIGERIA: AN ARDL-BOUND TESTING APPROACH

Abstract The objective of the study was to assess the impact of financial sector deregulation re... more Abstract
The objective of the study was to assess the impact of financial sector deregulation reforms on savings, credit to private sector, and the economic growth of Nigeria from 1970 to 2009. Upon investigation of the long run and short run impact of financial deregulation on the selected macroeconomic variables, using the ARDL-bound test approach, it was discovered, that in both long and short run, financial deregulation had no significant impact on the real interest rate, and if any, its effect suggest a negative; therefore not in conformity with the McKinnon-Shaw hypothesis, that suggest that deregulation of the financial system enhances competition in the system and therein causes interest rate to be positive. However, increases in savings and the credit to private sector observed in the study, can hardly be attributed to financial deregulation (or the real interest rate) as its effect in the short run were minimally positive, and utterly negative in the long-run. The same effect was evidence in the economic growth variable. The study therefore concluded that the shifting effects from positive in the short run to negative in the long run, is attributable to lack of continuity in the implementation of financial deregulation reforms and absence of competition in the industry. All in all, financial deregulation did not induce positive real interest rate (to encourage savings). Suggesting that, interest rate on deposit has not been the major factor that propelled depositors to save in Nigeria, but rather the lack of investment alternatives outside financial assets.

Keywords: Financial Deregulation, Savings, Credit to Private Sector, Interest Rate and Economic Growth, Complementarity Hypothesis, and the ARDL-Bound Testing

Okwu and Owolabi 2011

This paper employed the tools of quantitative empirical analysis technique to evaluate the contri... more This paper employed the tools of quantitative empirical analysis technique to evaluate the contribution of value-added tax to the development of Lagos State economy. The generic central objective was to examine the effect of the contribution of value-added tax on the development of Lagos State economy. The tools of empirical analysis were simple regression models as abstractions of the respective sectors considered in the study. The study considered a vector of development indicators as dependent variables and regressed each on VAT revenue proceeds to Lagos State for the study period. Development aspects considered included infrastructural development, environmental management, education sector development, youth and social development, agricultural sector development, health sector development and transportation sector development. The state economy was disaggregated into seven strategic economic sectors in the development process, and simple regression models specified to enhance isolated analysis of each sector. The analysis showed that VAT revenue contributed positively to the development of the respective sectors. However, the positive contribution was statistically significant only in agricultural sector development. On the aggregate, the analysis showed that VAT revenue had a considerable contribution to development of the economy during the study period. The paper concludes that various sectors of the economy of Lagos State are yet to benefit significantly from VAT revenue expenditure of the state government. However, it had contributed significantly to the economy as a whole. Consequently, the paper calls for equity in sectoral spending of VAT proceeds in Lagos State in order to ensure balanced development and sustainability of the emerging mega city status of the state. 25 1954 as taxe sur la valeur (TVA in French). He envisioned a sales tax on goods that did not affect the cost of manufacture or distribution but was collected on the final price charged to the consumer. In France, it is the most source of state finance, accounting for approximately 45% of state revenues.

OKWU ET AL 2011

This study examined the effects of monetary policy innovations on stabilization of commodity pric... more This study examined the effects of monetary policy innovations on stabilization of commodity prices in Nigeria. The design is basically exploratory in that the study leaves room for further study in the area. The methodology is empirical econometric analysis approach. Variables used for analysis were consumer price index (CPI), broad money aggregates (BMA) and monetary policy rate (MPR). These variables were considered appropriate indicators of monetary policy innovations and commodity price responses. Main tool of analysis was a multiple regression model specified on perceived functional link between the indicators of Central Bank of Nigeria's monetary policy innovations and commodity prices indicator. CPI as a proxy for commodity prices was treated as response variable while BMA and MPR were treated as causal variables. Data on the variables were used to estimate parameters of the model via the OLS techniques. Estimates of model parameters were evaluated based on relevant statistics from the regression output. The result showed that positive relationship existed between the respective indicators of monetary policy innovations and indicator of commodity prices. Also, monetary policy rate had more immediate effect than broad money on consumer price index, and that commodity prices responded more to monetary policy rates than to broad money aggregates. The result also indicated that, although both broad money and monetary policy rate exerted positive effect on commodity prices, only broad money exerted significant effect at 0.05 level of significance. However, overall effect of both on commodity prices was statistically significant. Consequently, the study recommended, among other things, that the Central Bank of Nigeria should always determine optimal mix of both policy variables to ensure stabilization of consumer goods and other commodity prices, and engender confidence in the Bank's monetary policy.

Okwu and Owolabi 2010

This study has examined the role of human resource development in economic growth in Nigeria. The... more This study has examined the role of human resource development in economic growth in Nigeria. The study employed quantitative analysis approach. The study considered human resource development from education and health perspectives. The variables considered appropriate indices for human resource development were government expenditures on education and health, primary education enrolment rate, secondary education enrolment rate, tertiary education enrolment rate and gross domestic product. The major tool of analysis is a multiple regression analysis model specified on the basis of perceived functional relationship between human resource development and economic growth in Nigeria. Treating gross domestic product as the explained variable and the others as the explanatory variables, a multiple regression model of was specified to forge a link between the two variable sets. With secondary data on the above variables, the model was estimated via ordinary least squares (OLS) techniques, and evaluated based on relevant data from the regression output. The result showed that only secondary and tertiary education enrolment rates exerted statistically significant effect on economic growth in Nigeria. The others exerted positive but insignificant effect on economic growth. However, the explanatory variables jointly exerted significant effect on growth. In addition, the model exhibited high explanatory power and indicated absence of first order serial correlation in the explanatory variables. Based on the findings, the study concluded that a clear-cut and obvious relationship existed between human resource development and economic growth and, thus, recommended for intensified effort in human resource development in Nigeria such as adoption of planned strategies in education and health sectors and increased budgetary allocation to the sectors.