Impact of Interest Rate on Portfolio Management in Nigeria

Ayodele, A I; Afolabi, Babatunde; Olaoye, Awoniyi

doi:10.9734/ajeba/2017/32882

Cited by 7 publications

(6 citation statements)

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“…The streams of literature on performance of bank portfolios in emerging nations revealed a great deteriorating state amongst the Microfinance Institutions, [4,[11][12][13][14][15]. Studies conducted [16,17] asserted how bank performance impacted by credit management in Nigeria as the author [18] studied Insurances in other countries and recent work on it are by [19] In Nigeria, the author [20] studied portfolio diversification and bank performance.…”

Section: Overviewmentioning

confidence: 99%

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis<br /> <div> <br /> </div>

Jacob Ojomolade,

Ifeanyi Ugwulali,

Joshua Adejuwon

2023

IJFBR

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Financial institutions are economic pivotal that accelerate growth of a nation and serve as inter-connectivity with other sectors of the economy, in the absence of banks; economy may experience slow growth from lack of financial intermediation process. Banks were confronted with risk exposures which is injurious to banking that serves as catalyst for economic growth and development through financial intermediation, active portfolio management becomes inevitable, therefore this study examines the dynamic portfolio management and deposit money banks' performance in Nigeria spanning over 13years (2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020)(2021) The data set were collected from the banks' financial statements which was analysed using panel fully modified least squares and descriptive statistical methods, the normality test was also carried out with probability of 10.2 revealed that the residual is normally distributed. The result revealed that portfolio management has negative association with bank profitability. The challenges of optimal portfolio management and risk exposure is how to explore good risk measurement by banks to achieve optimal returns to the investors and likewise the banks by reducing the inherent risk in portfolio. Achieving vibrant performance by deposit money banks' aptly demand the adoption of advanced technology by banks into their operations. The combination of Capital Asset Pricing Model with the elements of fundamental analysis methods help business entities to avoid systematic risks and to receive adequate returns.

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Section: Overviewmentioning

confidence: 99%

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis<br /> <div> <br /> </div>

Jacob Ojomolade,

Ifeanyi Ugwulali,

Joshua Adejuwon

2023

IJFBR

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“…Getko and Rey (2017) also showed that monetary policy in the United State and the United Kingdom has spillover effect in international financial market using an instrumental proxy VAR approach. Ayodele, Afolabi and Olaoye (2017) examined the effect of interest rate on both long and short term portfolio investment in Nigeria. Using data from 1985 to 2014 and estimating an error correction model, they found that in the long run interest rate (precisely prime lending rate) significantly explained changes in portfolio management negatively both on long and short term basis but it was not significant in short run.…”

Section: 1mentioning

confidence: 99%

Capital Inflows and Monetary Policy in Nigeria

OSIYELU,

OBIAKOR,

OYEDELE

2022

CTSMSR

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This study examined the relationship between capital inflows and monetary policy in Nigeria using data from 1985 to 2020. Employing the Vector Autoregression (VAR) analysis and the granger causality test, the study examined the causal relationship between capital inflow measured as foreign direct investment (FDI) and the nominal interest rate. Other control variables include the real gross domestic products (GDP), domestic savings and unemployment. The results showed evidence of a causal relationship between the nominal interest rate and foreign direct investment. A unidirectional causality was found running from FDI to nominal interest rate. There was a joint significant causality from all the variables to foreign direct investment. There was a unidirectional causality running from FDI to domestic savings. Employing a variance decomposition analysis and an impulse response function, the result showed that innovations in FDI caused changes in the nominal interest rate and vice versa. Policy strategies towards increasing foreign direct investment should include low nominal interest rate.

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“…In Nigeria, Ayodele, et al (2017) examined the impact of interest rate on portfolio investments and found that the prime lending rate significantly influenced portfolio investment. Golit, Adamu, and Belonwu (2018) examine whether or not the Monetary Policy Rate (MPR) of the Central Bank of Nigeria (CBN) is a signalling instrument for foreign portfolio investors and found that changes in the monetary policy rate of the CBN impact the behaviour of foreign portfolio investment in Nigeria.…”

Section: Empirical Literaturementioning

confidence: 99%

Foreign Portfolio Investment Response to Monetary Policy Decisions in Nigeria: A Toda-Yamamoto Approach

Jelilov¹,

Çelik²,

Adamu³

2020

IBR

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This paper examined the response of foreign portfolio investment to Monetary Policy decisions of the Central Bank of Nigeria using monthly data spanning January 2007 to December 2018. The study adopted the Toda-Yamamoto Causality model and Generalized Impulse Response Function for analysis. The results showed that changes in monetary policy stance could only impact the behavior of foreign portfolio investment with 6-month lag and with marginal impact. This implies that monetary policy could still be effective even if the CBN decides to lose policy stance without losing significant capital flight. The conclusion from the findings is that monetary policy is just a signaling instrument for portfolio investors in Nigeria because it influences foreign portfolio investment through the Treasury bill rate rather than through MPR and CRR. The marginal response of investment due to changes in policy rate from the GIRF validate the TY results by indicating that monetary policy rate changes on its own may not be what investors are concern about, rather the expectation of the rates future path. The cash reserve ratio as a monetary policy tool does not seem to exert any impact on foreign portfolio investment.

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Impact of Interest Rate on Portfolio Management in Nigeria

Cited by 7 publications

References 0 publications

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis<br /> <div> <br /> </div>

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis<br /> <div> <br /> </div>

Capital Inflows and Monetary Policy in Nigeria

Foreign Portfolio Investment Response to Monetary Policy Decisions in Nigeria: A Toda-Yamamoto Approach

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Impact of Interest Rate on Portfolio Management in Nigeria

Cited by 7 publications

References 0 publications

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis&lt;br /&gt; &lt;div&gt; &lt;br /&gt; &lt;/div&gt;

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis&lt;br /&gt; &lt;div&gt; &lt;br /&gt; &lt;/div&gt;

Capital Inflows and Monetary Policy in Nigeria

Foreign Portfolio Investment Response to Monetary Policy Decisions in Nigeria: A Toda-Yamamoto Approach

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Product

Resources

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Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis<br /> <div> <br /> </div>

Dynamic Portfolio Management and Deposit Money Banks’ Performance in Nigeria: Panel Analysis<br /> <div> <br /> </div>