Effect of Monetary Policy on the Performance of the Nigerian Capital Market (1986 – 2016): Stylized Facts from ARDL Approach

Echekoba, Felix; Ananwude, Amalachukwu Chijindu; Lateef, Oyinloye

doi:10.9734/air/2018/37989

Cited by 6 publications

(8 citation statements)

References 11 publications

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“…Estimating the effect of macroeconomic variables, including economic growth (GDP) and inflation, has often led to conflicting conclusions. Several authors unanimously confirm the existence of a positive relationship between economic growth and bank profitability (Bashir, 2000;Rouabah, 2006;Echekoba et al, 2018;Lawal et al, 2018;Panigrahi et al, 2019, Qureshi et al, 2019. Their opinion was, national wealth promotes all economic activity in the country, positively affects the development of the banking sector and encourages banks to innovate and renovate their management techniques and technologies.…”

Section: Literature Reviewmentioning

confidence: 98%

Determinants of the performance of Moroccan banks

Derbali

2021

JBSED

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PurposeThe economic and financial literature dealing with the subject of bank profitability has often been based in the measurement of banking results on three main indicators: ROA, ROE and MIN. This article aims to determine and analyze the different determinants that influence bank profitability and to identify the impact of these determinants on the profitability of Moroccan banks.Design/methodology/approachFor this purpose, a fixed individual effect model was adopted for the case of six Moroccan banks during the period of study from 1997 to 2018. The authors carried out their estimates at three levels according to three categories of profitability factors: bank factors, factors of the banking system and macroeconomic factors.FindingsThe empirical findings show that Moroccan banks react on their size to boost their performance, which further explains the continued expansion of Moroccan banking networks. The authors confirm that Moroccan banks have not yet reached a level of size that will be detrimental to their performance. Therefore, the authors can conclude that the big Moroccan banks do not follow the concept of economy of scale. The effects of the variation in the level of economic growth as well as the evolution of the level of inflation on the performance of Moroccan banks are not significant.Originality/valueThe authors’ findings and results have some important originality and value. Primarily, these results would consist of better helping the State, bankers, and bank managers to better understand the various determinants of bank profitability. The results may also help to better examine the effect of each factor, whether internal or external, on banks' bottom line.

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Section: Literature Reviewmentioning

confidence: 98%

Determinants of the performance of Moroccan banks

Derbali

2021

JBSED

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“…Thus, research on monetary policy and stock exchange market has become an issue of discourse among policy Effect of Monetary Policy on the Nigerian Stock Market: A Smooth Transition Autoregressive Approach Babangida and Khan makers. In view of this development, the monetary policy tools are adjusted and aimed at achieving the macroeconomic goals of inflation and output targets as well as control any risk or threat to financial system stability (Echekoba, Ananwude, & Lateef, 2018). Evidently, the Central Bank of Nigeria (CBN) has interest in the overall workings of the stock market due to its importance for monetary policy and financial risk management.…”

Section: Introductionmentioning

confidence: 99%

“…The literature showing the relationship between monetary policy and the stock market is unclear both in direction and nature of behaviour. Bulk of the existing literature on the behavior between stock market and monetary policy assumed a linear relationship (Muktadir-Al-Mukit & Shafiullah, 2012;Chude & Chude, 2013;Handoyo, Jusoh, & Zaidi, 2015;Echekoba, Okaro, Ananwude, & Akuesodo, 2017;Echekoba et al, 2018;and Umezurike & Ananwude, 2019). Another strand of studies have shown that a comprehensive explanation of the relationship between monetary policy and stock exchange market goes beyond assuming a linear behaviour (McMillan, 2001;Sarantis, 2001;Aslanidis, Osborn, & Sensier, 2002;Cevik, Dibooglu, & Kutan, 2014;Tumala & Yaya, 2015;and Altintas & Yacouba, 2018).…”

Section: Introductionmentioning

confidence: 99%

Effect of Monetary Policy on the Nigerian Stock Market: A Smooth Transition Autoregressive Approach

Babangida

Khan

2021

CBN-JAS

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This paper examines the nonlinear effect of monetary policy decisions on the performance of the Nigerian Stock Exchange market, by employing the Smooth Transition Autoregressive (STAR) model on monthly data from 2013 M4 to 2019 M12 for All Share Index and monetary policy instrument. This study considers the two regimes characterizing the stock market, which are the lower regime (the bear market) and the upper regime (the bull market). The results show evidence of nonlinear effect of monetary policy on the stock exchange market. Monetary policy rate, money supply, lagged monetary policy rate and lagged treasury bill rate are found to have significant positive effects on the stock exchange market in the lower regime while current treasury bill rate shows a negative effect. In the upper regime, money supply and lagged treasury bill rate have significant negative effect on the stock market. The current treasury bill rate is found to have a positive effect on the stock exchange market. It is recommended that the Central Bank of Nigeria should maintain a stable money supply growth that is consistent with increased activities in the Nigerian stock market.

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“…In Nigeria, the objectives usually include promoting monetary stability, strengthening the external sector performance such as FDI and FPI, also generating a sound financial system that will support increased output and employment (Onoh, 2002;Udude, 2014;Ndugbu and Okere, 2015;Dare and Okeya, 2017).The analysis and transmission of monetary policy by the central bank of Nigeria (CBN) is aimed at facilitating the design of a suitable macroeconomic policy framework that triggers sustainable economic growth, domestic stability and external balance. An indispensable role of central bank is to exercise a firm control over money supply, generally considered the nerve centre of the economy (Onoh, 2007;Echekoba, Ananwude and Lateef, 2017).…”

Section: Introductionmentioning

confidence: 99%

Sensitivity of Foreign Direct Investment to Monetary Policy Dynamics in Nigeria

Ogbonna¹,

Ejem²

2020

RJFA

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Due to the recent slowdown in foreign direct investment in Nigeria, this study considered it necessary to look at the monetary policy dynamics of Nigeria to ascertain if there are gaps in transmission processes. The study made use of annual data from 1988 to 2019 on Foreign Direct Investment (FDI) and four other monetary policy variables; Liquidity Ratio, Monetary Policy Rate, Prime Lending Rate and Degree of trade Openness collected from the globaleconomy.com and Central Bank of Nigeria Statistical Bulletin to examine the relationship between Foreign Direct Investment (FDI) and monetary policy dynamics using Autoregressive Distributive Lags. The major findings are; that monetary policy rate and degree of trade openness have negative and significant relationship with foreign direct investment, while liquidity ratio and prime lending rate insignificantly relate to the foreign direct investment. However, since monetary policy rates is disclosed to significantly but negatively relate to foreign direct investment, the central bank of Nigeria should reduce further the rate in order to woo foreign investors to do more business in Nigeria. Again, since globalization and trade liberalization have totally removed the issue of countries being in the state of autarky (closed economy), most of the beggars thy neighbours policies should be discarded at least to enhance the degree of trade openness. The Central Bank of Nigeria should also conduct the monetary policy with the aim of encouraging foreign investment in Nigeria.

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Effect of Monetary Policy on the Performance of the Nigerian Capital Market (1986 – 2016): Stylized Facts from ARDL Approach

Cited by 6 publications

References 11 publications

Determinants of the performance of Moroccan banks

Determinants of the performance of Moroccan banks

Effect of Monetary Policy on the Nigerian Stock Market: A Smooth Transition Autoregressive Approach

Sensitivity of Foreign Direct Investment to Monetary Policy Dynamics in Nigeria

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