The Impact of Covid-19 Induced Capital Flight on the Bond and Foreign Exchange Markets In Ghana (Published)
This paper provides evidence on the adverse effects of Covid-19 induced capital flight on the bond and foreign exchange markets in Ghana. Based on trend analysis, the study found significant portfolio reversals after the country recorded its first case of Covid-19 on March 12, 2020. This excessive capital flight had a far-reaching adverse impact on nominal exchange rate. Precisely, the Ghanaian Cedi shed earlier gains recorded in the first half of the year against the US Dollar. The prime contribution of this study is that it provides insight into the impact of the Covid-19 pandemic on the bond and foreign exchange markets in Ghana. To the best of our knowledge, this study is novel in the sense that no prior study has examined the response of the domestic bond market and nominal exchange rate to unanticipated global shocks in Ghana. The findings imply that, over-reliance on foreign portfolio inflows renders the bond and foreign exchange market vulnerable to unanticipated external shocks. Thus, the Covid-19 pandemic is a wake-up call for operationalization of policies to strategically develop the domestic bond market in order to build a wider domestic investor base to cushion the Ghanaian economy from such shocks.
Foreign Exchange Management and the Nigerian Economic Growth (1960 – 2012). (Review Completed - Accepted)
The study examined foreign exchange management and the Nigeria economic growth from 1970 to 2012. The scope of the study is limited to Nigeria. The empirical model for the study was based on the conclusion of our theoretical framework. The data used for this study were majorly sourced from the Central Bank of Nigeria Bulletin (2011). The ordinary least square estimation techniques within the error correction model (ECM) framework are employed in the study. The choice of the ECM is to enable it account for the explanatory potent of the regressions in both the short run and long run as well as ascertaining the dynamics of attaining long run equilibrium, an issue which is the key to studies related to macroeconomics variables one of which is the exchange rate. The Johansen-Joselius Co- Integration test is employed in this study, to test for the presence of a long run relationship between the dependent variable (exchange rate) and the independent variables. The result of the co-integration as revealed show that trace statistics and maximum Eigen values are greater than the critical values at 5% level of significance. It shows that there is a unique long run relationship among Y, EXCR, EXPT,IMP, INF and FDI. The result further shows that the explanatory variables explain and account for about 99% of variation in economics growth peroxide by GDP, which is an evidence of a good fit of the model. The f-statistics shows that the explanatory variables are jointly significant in explaining economic growth (dependent variable). The result above shows export and foreign direct investment are statistically significant in determining economic growth which considered at 5% and 10% respectively. However, exchange rate import and inflation are found to be statistically non-significant. It is against this back drop of the above findings, that it is recommended that effort be made to increase the consumption of made in Nigeria goods, which includes the usage of raw material that can be sourced locally by Nigerian industries in order to increase foreign exchange earnings. The implication of this is that local industries should be encouraged to look inward for their raw material. Having uncovered from the study that the nexus between economic growth and foreign exchange management being a short run relationship, it is necessary that the foreign exchange management policy initiatives be made to satisfy the shorts–run behavioral expectations of the variables used in uncovering this fact