Tag Archives: Inflation

Macroeconomic Determinants of Market Capitalization in Nigeria: A Further Investigation (Published)

This study investigated the effect of selected macroeconomic variables on market capitalization in Nigeria. The study adopted Nigerian stock market capitalization as the dependent variable, while macroeconomic variables such as gross domestic product, interest rate, inflation and exchange rate were used as the independent variables. Time series secondary data on the study variables were obtained for evaluation from the Central Bank of Nigeria Statistical Bulletin and the Nigerian Stock Exchange fact book for the period 2001 to 2018. The study employed descriptive statistics and multiple regression analysis based on E-views 10 computer software as the techniques for analysis. The results showed that gross domestic product has significant positive effect on market capitalization; exchange rate has significant negative effect on market capitalization; while interest rate and inflation have insignificant negative association with market capitalization in Nigeria. The study concluded that increasing national output in the economy of Nigeria would ultimately lead to an increase in market capitalization, which is good for developing economy like Nigeria, as it is likely to enhance economic growth and foster rapid development. Based on the findings, the study recommended that the regulatory authorities should formulate policies that would increase national output as it was established that gross domestic product has positive impact on market capitalization. Also, Government should put in place monetary and fiscal policies that would bring about stability in interest, inflation and exchange rates.

 

Keywords: Capitalization, Determinants, Inflation, Interest, Macroeconomics, Market, exchange

Reassessing the Link between Government Spending on Education and National Development in Nigeria (Published)

The study examined the relationship between government spending on education and national development in Nigeria using secondary data from the period 2001 to 2017. The study adopted gross domestic product as proxy for national development and the dependent variable; while government spending on education (representing Federal Government annual budgetary provision for the education sector) and inflation were used as the explanatory variables. Time series data for the study period was collected from the Federal Ministry of Finance, Office of the Accountant-General of the Federation and Central Bank of Nigeria (CBN) Official Gazette. The study employed descriptive statistics and multiple regression analysis based on the E-view 10 software as techniques of data analysis. The results provided evidence that government spending of education had significant positive effect on national development (at 5% level), while inflation had an insignificant effect on national development (at 13%). Overall, the study concluded that government spending on education has statistically significant positive effect on national at 5% with a probability of F-statistics value of 0.000000.  This means that government spending on education will enhance the availability of high level manpower that will ultimately bring about improvements in productivity leading to increase in national development. Based the findings, the study recommend that government should increase annual budgetary allocation to education sector to 26% of total annual budget in line with the UNESCO requirements; that the responsible organs of government should set targets and goals aimed at minimizing as much as possible (if not completely eradicating) misappropriation of funds.

Keywords: Education, Government spending, Inflation, National Development, Output, Productivity

The Impact of Money Supply on Inflation in Nigeria (1980 – 2009) (Published)

This study examined the impact of money supply on inflation in Nigeria between 1980 and 2009, using Vector Error Correction Mode (VECM). The data for the variables were sourced from CBN statistical Bulletin. The results of the test established a significant long run positive relationship between money supply and inflation in Nigeria. Based on this finding, the study recommended that, government intensify the effort to combat inflation by encouraging the monetary authority to put in place policies measures that are gear toward reducing the volume of money in circulation in Nigeria.

Keywords: Inflation, Money Supply, Nigeria, VECM

Analysing Stock Market Reaction to Macroeconomic Variables: Evidence from Nigerian Stock Exchange (NSE) (Published)

This study examined the impact of some selected macroeconomic variables on stock market performance in the Nigerian Stock Exchange (NSE). The study adopted all share index (ASI) as proxy for stock market performance and the dependent variable, while the selected macroeconomic variables included broad money supply (BMS), interest rate (ITR), inflation rate (IFR), and exchange rate (EXR) used as the independent variables. Secondary data for the variables was sourced from Central Bank of Nigeria (CBN) Statistical Bulletins covering the period 1985 to 2017. The study employed multiple regression technique, Augmented Dickey-Fuller unit root test, Johansen co-integration test and Error Correction Model (ECM) based on the E-views 9.0 software as methods of data analysis. The analysis of data revealed that a long-run equilibrium and short-run dynamic relationships existed between the selected macroeconomic variables and stock market performance in the Nigerian Stock Exchange. Overall, the empirical results showed that all the independent variables had significant influence on stock market performance. The impact of the individual macroeconomic variables indicated that broad money supply and exchange rate had significant positive effect on all share-index, while interest rate and inflation rate exhibited an inverse relationship with all-share index. Based on the findings, the study recommended that the monetary authorities should put in place sound monetary policies that would bring about positive developments in the stock market.

Keywords: All share index, Exchange Rates, Inflation, Interest, Money Supply, Stock Market

Perception on the Naira Devaluation and Its Effects on Poverty Reduction in Nigeria (Published)

The crash of crude oil price has devastated Nigerian economy being a mono-product economy. The nation’s reserves have dropped and the Central Bank is finding it difficult to meet its import demands. There is agitation from investors and the IMF to devalue the currency to stimulate economic growth, encourage export and discourage import. The public thinks otherwise. The study revealed devaluation of the naira will not encourage significant demand for local goods but rather rise in the prices of local products which rise in direct proportion with imported substitutes thereby fuelling inflation. Also, the economy has remained neither diversified nor internationally competitive. It is recommended among others that government review the current import tariffs, promote incentives to encourage investment in local manufacturing, direct foreign direct investment (FDI) on manufacturing/productive industries with hundred per cent (100%) local raw materials and tax holidays.

Keywords: Devaluation, Inflation, Perception, Social Infrastructure, economic growth

The Analysis of the Credit Spread Bonds for Banking Sub-Sector Effect in 2014 – 2016 (Published)

The credit spreads are the interpretation of the bond returns received by investors as measured by the difference between the corporate bonds yield rate and government bonds. The purpose of this study is to analyze the impact of changes in macroeconomic variables. Such as volatility of stock returns, default probability and inflation on banking sub-sector credit spread bonds. This study analyzes the change of credit spreads bonds based on the category of the grades, the investment grade and non-investment grade. The data were analyzed using panel data which consist of several companies with investment grade and non-investment grade categories during 2014 – 2016. The result showed that the relationship of default probability and inflation variables had significant effect in the credit spreads of investment grade bonds, while the variable volatility of stock return had no significant effect. While significant effect was found inthe non-investment grade bonds, the variable volatility of stock returns, default probability and inflation.

Keywords: Credit Spreads, Default Probability, Inflation, Panel Data, Volatility of Stock Returns

The Analysis of the Credit Spread Bonds for Banking Sub-Sector Effect in 2014 – 2016 (Published)

The credit spreads are the interpretation of the bond returns received by investors as measured by the difference between the corporate bonds yield rate and government bonds. The purpose of this study is to analyze the impact of changes in macroeconomic variables. Such as volatility of stock returns, default probability and inflation on banking sub-sector credit spread bonds. This study analyzes the change of credit spreads bonds based on the category of the grades, the investment grade and non-investment grade. The data were analyzed using panel data which consist of several companies with investment grade and non-investment grade categories during 2014 – 2016. The result showed that the relationship of default probability and inflation variables had significant effect in the credit spreads of investment grade bonds, while the variable volatility of stock return had no significant effect. While significant effect was found inthe non-investment grade bonds, the variable volatility of stock returns, default probability and inflation.

Keywords: Credit Spreads, Default Probability, Inflation, Volatility f Stock Returns

Public Libraries during Economic Recession: The Nigerian Experience (Published)

Global economy is witnessing a steep in recession and the effect permeates all sectors of the society. Libraries and particularly public libraries are vulnerable to these changes in world economy because of greater reliance on public funding which makes them easy targets for information resource budget cuts, layoffs, foreclosures and job freezes. An investigation into the position of public libraries in this credit crunch stirs up a pragmatic mix of tension between decrease funding in the face of overall cut in public expenditure and increase demand for library services forcing staff to develop new strategies with very limited resources to respond to the information needs of people during recession and explore means to buffer the financial storm. In Nigeria, public libraries suffer chronic neglect which impairs them to display the librarian’s axiom characterized by decrease funding and increased usage in times of fiscal crisis. This paper recommends a redirection of government policy towards the sustenance of public libraries even during recession and a retooling of library human resources for better value.

Keywords: Economic Recession, Inflation, Public libraries, Sustainable Development, Unemployment, information service.

Accounting for Price Level Changes: Prospects and Problems (Published)

Prices do not remain constant over a period of time. They tend to change due to various economic, social or political factors. Changes in the price levels cause two types of economic conditions, inflation and deflation. Inflation may be defined as a period of general increase in the prices of factors of production whereas deflation may fall in the general price level. These changes in the price levels lead to inaccurate presentation of financial statements which otherwise are prepared to present a true and fair view of the company’s financial health. This is so because the financial statements are prepared on historical costs on the assumption that the unit of account. Accounting for price level changes is a system of maintaining accounts in which all items in financial statements are recorded at current values. This system of accounting ascertains profit or loss and presents financial position of the business on the basis of current prices. Accounting for price level changes is also called inflation accounting.

Keywords: Deflation, Equity, Inflation, Price level changes, Prices

Fluctuation Rate Analysis of Rupiah Exchange in the Indonesian Open Economy (Published)

This research aimed to analyze the long-term balance between KURS (Rate of Exchange), inflation (INF), Foreign Direct Investment (FDI), interest rate of Bank Indonesia (SBI), and the degree of openness of Economics (DKE) An open economy Indonesia using time series data period 1998: 1-2016: 4. Models Autoregressive Distributed Lag (ARDL) was used to observe the effect of these variables. The results show that there is a balance of long-term fluctuations in the exchange Rate against the US dollar which is influenced by the variable inflation and SBI are negatively correlated with the exchange rate. While the FDI variable and the degree of economic openness is positively correlated with the exchange rate. The degree of openness of the economy, inflation, FDI leads to fluctuations on the exchange rate. In the long term, SBI gives a significant effect on the exchange rate. Among the exchange rate with the degree of economic openness has a positive and significant impact. This means that increasing the degree of economic openness, it will result in the appreciated (US dollar depreciated). Economic openness leads to significant fluctuations in exchange rates in the short term and long term.

Keywords: Autoreggressive Distribured Lag (ARDL), Degree of Openness, Exchange rate rupiah/US $, Foreign Direct Investment, Inflation, Interest Rate of Bank Indonesia

Inflation, Unemployment and Economic Growth: Evidence from the VAR Model Approach for the Economy of Iraq. (Published)

This study investigates the impact of inflation and unemployment on the economic growth of Iraq. Considering the fact that the majority of the studies on the Phillips Curve have been done in the context of developed economies and on an aggregate level, this study focuses on Iraq, a single developing economy (a disaggregated level) and aims to empirically analyse the impact of Unemployment and inflation on economic growth in the economy of Iraq. The research results indicate that there exist an equilibrium impact between unemployment and inflation in Iraq thereby supporting the validity of the Phillips Curve hypothesis

Keywords: Inflation, Iraq, Philips Curve, Unemployment, VAR Approach, economic growth

Macroeconomic Analysis of the Relationship between Monetary Policy Instruments and Inflation in Nigeria (Published)

This study examined the role of monetary policy instruments in controlling inflation in Nigeria. The study adopted interest rate, minimum rediscount rate, liquidity ratio, and cash reserve ratio as proxy for monetary policy instruments and the independent variables. These were regressed against inflation rate, the dependent variable. Secondary time series panel data for the period covering 1982 to 2011, were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin in 2011. The study employed multiple regression technique based on E-views 7 computer software to analyze data obtained on the study variables. Four hypotheses were tested and the null hypotheses were accepted based on the regression results. The study found that interest rate, minimum rediscount rate, liquidity ration and cash reserve ratio had no significant influence on inflation. The study recommended that Nigeria shift from being a consumption driven (import) economy to production based (export) economy for the impacts of these policies to achieve desired results.

Keywords: Cash Reserve Ratio, Inflation, Liquidity Ratio, Minimum rediscount rate, Monetary Policy

Inflation and Growth Nexus in Nigeria: An Investigation into the Simultaneous Relationship (Published)

The relationship between inflation and economic growth remains an unresolved debate in empirical research. Its relevance in understanding growth behavior however remains pertinent. It is in this light that this study seeks to understand inflation and growth nexus in Nigeria. The study employs a two stage least square estimation to examine a simultaneous equation model with data from the Central Bank of Nigeria Statistical Bulletin and World Bank Indicators. The study shows that inflation is beneficial to growth though not significantly while growth is significantly beneficial to inflation; given the positive relationship between inflation and growth and the negative relationship between growth and inflation. The results further show that Money supply and trade openness are significant determinants of real GDP for all three estimation techniques under consideration. While, real GDP, money supply and interest rate are significant determinants of inflation. The study therefore recommends that inflation be controlled to have its optimal effect on output while production be diversified to optimize its effect on inflation.

Keywords: Inflation, Nigeria, Simultaneous Relationship, economic growth

Modeling Inflation Rates in Nigeria: Box-Jenkins’ Approach (Published)

This study modeled the inflation rates in Nigeria using Box Jenkins’ time series approach. The data used for the work ware yearly collected data between 1961 and 2013. The empirical study revealed that the most adequate model for the inflation rates is ARIMA (0, 0, 1). The fitted Model was used to forecast the Nigerian inflation rates for a period of 12 years.  Based on these results, we recommend effective fiscal policies aimed at monitoring Nigeria’s inflationary trend to avoid damaging consequences on the economy.

Keywords: ACF, ARIMA, Forecasting, Inflation, PACF

Bank Profitability, Inflation and Cost Efficiency: A Case of Pakistani Banks (Published)

The study investigates the impact of internal and external factor and macro-economic variables on profitability on commercial banks of Pakistan. Dependent data analysis confirms that the bank size, capitalization, labor productivity, concentration and inflation were significant impact on the bank profitability in Pakistan

Keywords: Bank, Cost Efficiency, Inflation, Pakistan, Profitability Analysis

Dividend Payout Pattern: Nigeria Deposit Money Banks in Perspective (Published)

Investors invest their money with the hope to have returns that could improve their welfare in future. Dividend is one of those expectations that investors hope to get as a result of their investment. A Company pays dividend in order to encourage further investment for growth. However, the degree and extent by which dividend is made depend on the organization management decision. There has been contradicting arguments on firms dividend payout ratio such as rightist, leftist and the middle of the road hypothesis on whether firms should pay dividend or not. Hence there has not been any conclusive study on the factors that determine the dividend growth pattern of Deposit Money Banks in Nigeria. It is this perceived gap that informs the empirical analysis of growth pattern of dividend payout of quoted banks in Nigeria. The study relies majorly on secondary data sourced from the financial report of seven (7) quoted banks in the Nigeria Stock Exchange. It was found that all the explanatory variables (inflation, share price and earnings per share) have significant impact on dividend payout. The study recommends that deposit money banks in Nigeria should improve on their performance so as to increase earnings which will go a long way in determining the Dividend Payout Pattern of their banks while government should makes both investment and production environment suitable for banks to produce locally and avoid much importation to control inflation.

Keywords: Banks’, Dividend Payout Pattern, Inflation, Investment, Nigeria

QUANTITATIVE ANALSIS OF THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES ON THE GROWTH OF NIGERIAN ECONOMY: (1993-2011). (Published)

This study is on the quantitative impact of Small and medium scale enterprises (SMEs) on Nigeria’s economic growth performance for the sample period 1993 to 2011. The econometric technique adopted for the study was multiple regression method based on ordinary least squares technique. However, in order to avoid the incidence of spurious estimates, evidence from the ADF test conducted revealed that the variables are integrated of order two,1(2). The Johansen test conducted showed evidence of long run equilibrium relationship between small and medium scale enterprises and economic growth. However, in the mean time, output of SMEs (SMEO) does not make any significant contribution to Nigeria’s economic growth performance. The study concludes that poor government policies, on tariffs and incentives, bribery and corruption, non-existent entrepreneurial development centers and poor state of infrastructure act as impediments to the growth and development of SMEs in Nigeria. The recommendations are that governments at all levels should endeavor to establish Microfinance institutions for easy access to credit by SMEs, introduce financial literacy in schools, establish entrepreneurial development centers for capacity building, provide enough infrastructure, especially electricity and road net work, and finally establish agencies for control of bribery and corruption.

Keywords: Bank credit, Inflation, Interest rates., Small and Medium Enterprises, economic growth

ON THE MARKETING RESEARCH OF CONSUMER PRICES AND INFLATION PROCESS (Published)

Marketing information is used by financial and insurance institutions, business enterprises and companies for planning, control, monitoring and forecasting purposes in business. One of the problems is the detection and investigation of factors, which influence the behavior of consumers. Such a basic factor is, for instance, the consumer prices index. The significance of this factor periodically changes and depends on the values of main indexes of economy such as export, import, taxes, labor force, unemployment, inflation level, etc., and also on the behavior of consumers, their taste, living standard and style. For the marketing research of this dependence it is necessary to construct mathematical models of the evolution of consumer prices. In the paper, a new auto regression model with disturbances is constructed for consumer prices. The model includes monetary aggregate amount and control function. A new formula is derived for the solution of an equation for the consumer prices index, which can be used in forecasting the inflation process. Using the data on the consumer prices index in Georgia, a numerical example is given, which illustrates the estimates of the coefficients of the constructed model and the inflation process forecast.

Keywords: Inflation, Marketing, auto regression model, consumer prices

Bank profitability, Inflation and Cost efficiency: A case of Pakistani Banks (Published)

The study investigates the impact of internal and external factor and macro-economic variables on profitability on commercial banks of Pakistan. Dependent data analysis confirms that the bank size, capitalization, labor productivity, concentration and inflation were significant impact on the bank profitability in Pakistan.

Keywords: Bank Profitability, Cost Efficiency, Inflation, Pakistani Banks

ANALYZING THE EFFECTS OF MACRO VARIABLES TOWARD THE DEMAND OF EQUITY FUNDS IN INDONESIA (Published)

The purpose of this research is to analyze how macroeconomics variables, such as interest rate (BI rate), inflation, exchange rate rupiah, GDP per capita and the money supply, influence the demands of equity funds in Indonesia. This research use time series data from 2001 through 2011quarter by using multiple linear regression model and Ordinary Least Square (OLS) method. The result of this research indicates that Net Asset Value of equity funds in Indonesia has increased in 2002 – 2004 in the period of the research. It is influenced by 4 strong macroeconomics indicators in Indonesia along with the improving economic of the country. Downward trends of interest rate happened in early 2002 until 2005 has encouraged investors to search another alternative investment instrument, so that the demands of equity funds increased.

Keywords: Exchange Rate Rupiah, GDP Per-Capita, Inflation, Influence The Demands Of Equity Funds., Interest Rate (BI Rate), Money Supply