Open Access Original Research Article

Conduit Mentality and the Economy: The Nigerian Experience

S. Samuel, Ogunbiyi, G. Tunde, Monogbe

South Asian Journal of Social Studies and Economics, Page 1-13
DOI: 10.9734/sajsse/2020/v6i130156

The study is about conduit mentality and the Nigerian economy. Conduit mentality was proxied by annual values of aggregate illicit funds, then the economy was proxied by Educational level (EDU), Standard of living and Health in Nigeria over the period of 1996 to 2018. The research design is expost facto, for our analysis, we used the Autoregressive Distributed Lag Method of regression Analysis. Our result showed that, as expected, the relationship that exists between the dependent and independent variables are negative. We discovered that corruption as proxied by illicit funds is a serious issue in Nigeria and must be tackled if we intend to develop our economy as desired.

Open Access Original Research Article

Stock Market Development and Economic Development in Emerging Economies

A. Ibrahim, Ayankunle, J. Emeka, Okereke, P. Ebele, Ifionu

South Asian Journal of Social Studies and Economics, Page 32-43
DOI: 10.9734/sajsse/2020/v6i130159

This study investigated the effect of stock market development on economic development in developing economies which include Nigeria, South Africa, Angola and Kenya using time panel data between the periods 1986 to 2018. The study employed panel co-integration test, panel regression and granger causality test. We measure stock market development using all share index, market capitalization, foreign portfolio investment and total volume traded while human development index is used as a proxy for economic development. Findings reveal that stock market activities in most African countries have not significantly impacted their economic development except for few African countries which had adequate market regulations. We further find evidence to assert that activities in South African stock market significantly promote economic development in their nation when compared to other countries under investigation. Although the Nigerian stock market activities are also significant in contributing to the economic development process, but in a negative manner while Angola performs less to Nigeria and finally, Kenya stock market activities do not significantly promote economic development in their nation. As such, we recommended that adequate regulation should be implemented introduced as this will help in ascertaining a stable stock market and thereby encouraging the foreign participant to operate in the market.

Open Access Original Research Article

Linkages between External Reserves and Economic Performance in Nigeria, 1981-2018: Bounds Test and ARDL Approaches

Ifeanyi A. Ojiako

South Asian Journal of Social Studies and Economics, Page 44-62
DOI: 10.9734/sajsse/2020/v6i130160

Aims: This study seeks to explore a two-way relationship between Nigeria’s economic performance, measured by the GDP, and her stock of foreign reserves over time.

Study Design: It uses secondary data - documented time series of Nigeria’s gross domestic product (GDP) and foreign exchange reserves (FER) – collected from various volumes of the Central Bank of Nigeria (CBN) Statistical Bulletin. The annual time series data cover a period of 38 years, from 1981-2018.

Methodology: The time series properties of the variables were verified using the Augmented Dickey-Fuller (ADF) unit roots’ test procedure. Also, the Bounds test technique was used to test for cointegration while the autoregressive distributed-lag (ARDL) and error correction models were estimated to analyze short- and long-run relationships between the variables. Relevant diagnostic tests were carried out to validate the resultant model estimates.

Results: Results of unit roots’ test reveal both GDP and foreign reserves as I(1) series. Bounds test for the GDP model revealed an observed F-statistic (.421) that is less than the critical lower bound F-statistic (4.94) at P=.05 and cointegrating relationship was not confirmed. However, Bounds test for the foreign reserves revealed an observed F-statistic (6.445) lager than the critical upper bound F-statistic (5.73) at P=.05 and cointegration was established leading to specification of a long-run error correction model (ECM). Result of ARDL model estimation shows that only one-year-lag of GDP was significant (P=.05) and positive in explaining variations in the current GDP. Previous year’s values of both GDP and foreign reserves have positive influence on the long-run foreign exchange with over 81.8% explanatory power. The adjustment coefficient of the error correction equation is highly significant (P=.001) with the desired negative sign, implying that previous periods’ errors are correctable by adjustments in the subsequent periods, and convergence is attainable. Granger-Causality test result revealed a unidirectional causality that runs from GDP to the external reserves.

Conclusion: The study establishes a long-run relationship between stock of foreign reserves and economic performance in Nigeria. The finding corroborates the view that a booming economy has the propensity to attract foreign direct investment thereby boosting the stock of the country’s foreign reserves. To attract more FDI in the critical sectors of the Nigerian economy, the government should create enabling and investment-friendly environment, implement policies and programmes capable of amplify ease-of-doing-business, and boost investors’ confidence in the economy.

Open Access Review Article

Small and Medium Enterprises Investment Vehicles in Nigeria: The Challenges and Prospect

Gbalam Peter Eze, Nelson Johnny

South Asian Journal of Social Studies and Economics, Page 14-20
DOI: 10.9734/sajsse/2020/v6i130157

This study stands to find out the various investment vehicles in the Small and Medium enterprises (SME) sector in Nigeria. The research also ascertained the challenges confronting investors to invest in the identified investment vehicles in the SME subdivision. The research utilized both interpersonal interview and desk research approach and reviewed related epistles on the phenomenon to provide conceptual evidence. The paper observed that there are numerous investment vehicles in the SME sector that potential and existing investors can benefit from. The viability of the SME subdivision has a great influence on the growth of the overall economy of a nation. The research recommended in line with the evidence from the reviewed papers and the drawn conclusion that, government should provide enabling economic, political and socio-cultural environment to influence investors to invest in the SME sector in Nigeria. Government should reduce the multiple tax options and implement policy that will regulate those imposing unnecessary dues on the SME sector in Nigeria. Government should provide the basic infrastructural needs to enable SME sector to operate effectively in Nigeria. Government should do more to provide security gadgets everywhere in Nigeria to detect the bad gangs, armed robbers, etc. so as to reduce insecurity.

Open Access Review Article

The Relationship between Electric Power Consumption, Foreign Direct Investment and Economic Growth in Sri Lanka

S. Maheswaranathan

South Asian Journal of Social Studies and Economics, Page 21-31
DOI: 10.9734/sajsse/2020/v6i130158

Purpose: This paper investigates the long run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka.

Design/Methodology/Approach: The annual time series data over the period 1970–2017 is considered to this study. Augmented Dickey–Fuller (ADF) unit root analysis is employed for examining the stationary properties of the variables. Consequently, Autoregressive Distributed Lag (ARDL) analysis is employed to examining the short- run and long-run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka. Further, this study used the diagnostic tests such as the residual normality test, heteroskedasticity and serial autocorrelation tests for misspecification to validate the parameter estimation outcomes achieved by the estimated model. CUSUM test is applied to test the stability of the model. Collected data were analyzed using STATA version 15.

Findings: The findings of the bound test confirm that the variables are cointegrated. Further the results reveal that there is a statistically positive significant relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka in the long run and short term. The empirical finding reveals that one percent increase in electricity consumption and foreign direct investment increases the GDP by 1.5 percent and 12.9 percent in the long run respectively.