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AFRICAN REVIEW 2009

MULTIVARIATE CAUSALITY BETWEEN FINANCIAL DEPTH AND ECONOMIC GROWTH IN NIGERIA  MULTIVARIATE CAUSALITY BETWEEN FINANCIAL DEPTH AND ECONOMIC GROWTH IN NIGERIA

Jude Okechukwu Chukwu and Cletus Chike Agu    

The study adopts the multivariate VECM to investigate the causality between financial depth and economic growth in Nigeria from 1971 to 2008. The results suggest that financial depth and economic growth have a stable long-run relationship. The study supports the demand-following hypothesis for the banking sector’s private sector credit and real broad money supply; while it supports the supply-leading hypothesis for loan deposit ratio and bank deposit liabilities. The major finding is that the financial depth indicator used has great influence on the causal inference. This result validates Agu and Chukwu (2008) which employed the Toda and Yamamoto (1995) causality testing approach.


ROSCAS IN UGANDA - BEYOND ECONOMIC RATIONALITY?  ROSCAS IN UGANDA - BEYOND ECONOMIC RATIONALITY?

Lisa Peterlechner    

This article studies why people join Roscas. Both economic and social motivations are taken into account. Theoretical hypotheses about why people join are tested empirically against the results of a field study in Eastern Uganda. It is found that the Roscas in the sample are economically rational in the context of an inadequate formal financial sector. It is also found that their social value plays an important part both in the efficiency of Roscas and in the motivation of their members. The strength of Roscas seems to lie in the combination of economic rationality and social value. The two are interdependent and reinforce each other.




STOCK RETURN VOLATILITY, GLOBAL FINANCIAL CRISIS AND THE MONTHLY SEASONAL EFFECT ON THE NIGERIAN STOCK EXCHANGE  STOCK RETURN VOLATILITY, GLOBAL FINANCIAL CRISIS AND THE MONTHLY SEASONAL EFFECT ON THE NIGERIAN STOCK EXCHANGE

Olowe, Rufus Ayodeji    

This paper investigated the monthly seasonal effect in the Nigerian stock market using the EGARCH-in-mean model in the light of banking reforms, insurance reform, stock market crash and the global financial crisis using daily returns over the period 4 January 2004 to March 2, 2009.The result shows the absence of monthly effect in stock returns but there exists the July and August effects in stock volatility. It is found that, in the Nigerian stock market, returns show persistence in the volatility and clustering and asymmetric properties. The results show that volatility is persistent and there is a leverage effect supporting the work of Nelson (1991). The study found little evidence on the relationship between stock returns and risk as measured by its own volatility.


SUBPRIME CRISIS AND CONTAGION: EVIDENCE FROM THE BRVM  SUBPRIME CRISIS AND CONTAGION: EVIDENCE FROM THE BRVM

Brou Emmanuel Aka    

This paper empirically investigates the issue of contagion from the US stock market to the West African Regional Stock Market (BRVM) during the subprime crisis. It carries out aggregate and sectoral level analyses within a modified EGARCH framework. The results are twofold: 1) at the aggregate level, there are contagion effects in the mean and volatility from the US market to the BRVM; 2) at the sectoral level, it appears that all economic sectors have undergone the crisis through either the mean or the volatility or both.


THE IMPACT OF MACROECONOMIC AND DEMOGRAPHIC FACTORS ON SAVINGS MOBILISATION IN NIGERIA  THE IMPACT OF MACROECONOMIC AND DEMOGRAPHIC FACTORS ON SAVINGS MOBILISATION IN NIGERIA

Sebastian Ofumbia Uremadu    

The role of savings in the economic growth of Nigeria cannot be over-emphasised. However, rapid population growth has posed a serious problem to savings mobilisation. A high dependency ratio of the population will require substantial increase in future spending on health, education and care for dependants. This envisaged decline in the working-age population could lead to lower savings and investment rates and slower GDP growth. Against this background, this paper examines the impact of dependency ratio on savings mobilisation in Nigeria using a number of macroeconomic indicators that influence savings. Nigerian data on relevant variables covering the period under investigation were utilised for the study. A multiple regression approach that incorporated an error-correction model was used for our data analysis and tests. The results suggested that savings ratio is determined by spread between lending and savings deposit rates (SLS), domestic inflation rate, real interest rate and foreign private investment (FPI). The major findings of this study are summarized as follows: (1) demographic factors seem to have played a positive and insignificant role in explaining the savings ratio in over two decades studied, (2) interest rates spread leads savings ratio, (3) domestic inflation rate has a negative and significant impact on savings ratio, and (4) foreign capital inflows, as measured by FPI positively and significantly affect savings ratio in Nigeria. The findings of this research will guide policy makers on economic growth and poverty reduction in countries of sub-Saharan Africa.