Exchange Rate Volatility and Foreign Private Investment in Nigeria

Omorokunwa, O.G.; Ikponmwosa, Nosakhare

doi:10.19026/ajbm.6.5157

Cited by 16 publications

(12 citation statements)

References 18 publications

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“…From the table, the coefficients of the variables, CRPRIVAT, OPEN, EXCHR and BSAVING show positive signs which indicate their positive relationship to the level of investments in Nigeria during the period under review. Prob(F-statistic) 0.000000 Source: Author's computation from Eviews result The positive effect of exchange rate conforms to Omorokunwa and Ikponmwosa (2014) findings on the dynamic relationship between exchange rate volatility and foreign private investment in Nigeria which shows a strong positive effect on portfolio investment in the long run. The positive coefficient of the BSAVING is in line with Olweny and Chiluwe (2012) study of interaction existing between monetary policy and private sector investment in Kenya that money supply and domestic savings have positive relationship with private sector investment.…”

Section: The Ols Regressionsupporting

confidence: 66%

The Link Between Bank Credit and Private Sector Investment in Nigeria From 1980-2014

Ugwu¹,

Okoh²,

Mbah³

2017

OJBE

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This study attempts to investigate the link between bank credit and private sector investment in Nigeria from 1980 to 2014 using Ordinary Least Square (OLS) regression procedure. The study also employs other preliminary investigations which include, unit root, cointegration and Granger causality test procedures. The OLS result indicates that the coefficients of the variables which include, banks credit to the private sector (CRPRIVAT), trade openness (OPEN), exchange rate (EXCHR) and total bank saving (BSAVING) exhibit positive signs to the dependent variable, private investment (INVEST) during the period under review, while the coefficients of two other variables, capital expenditure (CAP) and interest rate (INTR) indicate negative signs to the dependent variable. The stationarity test result shows that all the variables under consideration are stationary and integrated of order one at 5% significance level. Also, the cointegration test result indicates at most five cointegrating equations at 5% level of significance. The Granger causality test result shows that a bi-directional causality exists between banks credit and private investment and also between private investment and capital expenditure, while a uni-directional causality exists from exchange rate to private investment.Statistically, the descriptive statistics result indicates that all the variables have a positive mean values which ranges from 18.05390 to 2427052 with 34 observations.The correlation test result obtained shows that four variables, CRPRIVAT, OPEN, EXCHR and BSAVING have positive relationships with the dependent variable INVEST. The t-statistic result shows that five of the variables which includes, CRPRIVAT, OPEN, CAP, INTR and EXCHR are statistically significant at 5% significance level. The study recommends that there is a need for increased Federal government support to banks in terms of policies that would encourage lending to the private sector in Nigeria.

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Section: The Ols Regressionsupporting

confidence: 66%

The Link Between Bank Credit and Private Sector Investment in Nigeria From 1980-2014

Ugwu¹,

Okoh²,

Mbah³

2017

OJBE

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“…Figure 1. Flow of FDI and Exchange rate in Nigeria 1970-2014 A good number of authors have argued the importance of exchange rate and its volatility towards FDI inflow; among them are Froot and Stein (1991), Klein and Rosengren (1994), Goldberg and Kolstad (1995), Kiyota and Urata (2004), Xing (2006), Xing and Wan (2006), Ellahi (2011), Ullah et al (2012); some paid more attention to the development in Nigeria (Osinubi andAmaghionyeodiwe 2009, Omokorokunwa andIkponmwosa 2014). Nevertheless, as it becomes unanimous that exchange rates play a significant role in redirecting FDI flows, there are diverse opinions as to the impacts of volatility on FDI.…”

Section: Introductionmentioning

confidence: 99%

Influence of Real Exchange Rate and Volatility on FDI Inflow in Nigeria

Muhammad¹,

Azu²,

Oko³

2018

IBR

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The purpose of this research is to ascertain the effect of real exchange rate fluctuation and its volatility on inward flow of FDI with Nigeria as a focal country, between 1970 to 2014. The research applied GARCH (1,1) to ascertain the level of volatility and ARDL model was used to determine the relevant results-these techniques were adopted for their robustness in estimation. It could be revealed that the effects of exchange rate and exchange rate volatility are more of a short-run phenomenon; while devaluation would increase inflow of FDI, volatility makes foreign investors more sceptical with increasing uncertainty. Increasing uncertainty could deter inflow of FDI into the country. Having captured the effect of political regime in the model, the paper reveals that a democratic regime should be the mainstay since it attracts more foreign investment compared to the military regimes. Therefore, even though devaluation is good, it would be better under civil government regimes.

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“…From the table, the coefficients of the variables, CRPRIVAT, OPEN, EXCHR and BSAVING show positive signs which indicate their positive relationship to the level of investments in Nigeria during the period under review. Omorokunwa and Ikponmwosa (2014) findings on the dynamic relationship between exchange rate volatility and foreign private investment in Nigeria which shows a strong positive effect on portfolio investment in the long run. The positive coefficient of the BSAVING is in line with Olweny and Chiluwe (2012) study of interaction existing between monetary policy and private sector investment in Kenya that money supply and domestic savings have positive relationship with private sector investment.…”

Section: The Ols Regressionmentioning

confidence: 94%

“…The study also notes that the impact of private investment increase on public spending is very different in analyzed countries. Omorokunwa and Ikponmwosa (2014)…”

Section: Investment In Nigeriamentioning

confidence: 99%

Untitled

2017

OJBE

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Exchange Rate Volatility and Foreign Private Investment in Nigeria

Cited by 16 publications

References 18 publications

The Link Between Bank Credit and Private Sector Investment in Nigeria From 1980-2014

The Link Between Bank Credit and Private Sector Investment in Nigeria From 1980-2014

Influence of Real Exchange Rate and Volatility on FDI Inflow in Nigeria

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