Exchange Rate Instability, Stock Market Development And Nigeria's Capital Account Balance

Author: Hassan E. Oaikhenan and Anthony I. Monye-Emina
Volume: 56 Issue No:3 Year:2014

Abstract: The paper empirically examined the impact of instability in exchange rate, stock market development and a battery of other control variables on the capital account component of Nigeria's balance of payment. Data used covered the period 1970-2013. The empirical methodology entailed using co-integration and error-correction modelling techniques to estimate the parameters of the multivariate single-equation model that was specified. The control variables used include inflation rate, level of domestic output proxied by the country's GDP, the country's debt to income ratio and the differential between domestic and foreign interest rates, a measure of relative rate of return. The empirical results show that instability in exchange rate, stock market development, inflation rate and output levels are germane to explaining capital account balance. Specifically, the study found the effects of exchange rate instability, domestic output, debt income ratio and interest rate differential to be negative and significant although at different levels. The effects of inflation rate and stock market development were positive and significant.

2024-03-15
Visits : 299

The Nigerian Journal of Economic and Social Studies (NJESS) is a general-interest economics and social studies journal. The NJESS is the nation's oldest and most respected international scholarly journal in the economics profession and is celebrating over 50 years of publishing.

65th ANNUAL CONFERENCE ANNOUNCEMENT Date: 2nd - 4th September, 2024 Venue: Transcorp Hilton, Abuja Conference Theme: Socio-Economic Development in Nigeria: Imperatives, Implications & Impacts. CALL FOR ABSTRACTS

Membership of the Society is open to any graduate of economics or allied subjects (Nigerians and non-Nigerians), or anyone adjudged to be sufficiently knowledgeable in Economics or allied subjects by the National Executive Council is eligible for admission into the Society on application.