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Financial Development and the Current Account in Nigeria

Author

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  • Oyadeyi, Olajide
  • Akinbobola, Temidayo

Abstract

This study explored the response of current account to different financial development indicators. Quarterly data from the period of 1981 to 2018 on current account, debt stock, stock market capitalization, stock market value traded, financial liberalization, total deposit money banks’ asset, total monetary asset, private sector credit and real GDP were analyzed using Lag Augmented VAR (LAVAR) procedure. Based on the findings, the study was able to prove that only the current account exerted significant influence on its future values and sustainability, while financial development indicators did not influence the current account for Nigeria. Consequently, efforts should be directed at all stakeholders by developing financial development strategies that would improve the importation of industry raw materials and equipment to improve the volume of domestic production and exportation, thereby improving Nigeria’s current account position and sustainability levels.

Suggested Citation

  • Oyadeyi, Olajide & Akinbobola, Temidayo, 2022. "Financial Development and the Current Account in Nigeria," MPRA Paper 118001, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:118001
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    References listed on IDEAS

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    1. Olajide Oyadeyi & Temidayo Akinbobola, 2020. "Financial Development and Monetary Transmission Mechanism in Nigeria (1986-2017)," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(1), pages 74-90.
    2. Iana Liadze & Ray Barrell & Professor E. Philip Davis, 2010. "The impact of global imbalances: Does the current account balance help to predict banking crises in OECD countries?," National Institute of Economic and Social Research (NIESR) Discussion Papers 351, National Institute of Economic and Social Research.
    3. Olajide Oyadeyi & Temidayo Akinbobola, 2020. "Financial Development and Monetary Transmission Mechanism in Nigeria (1986-2017)," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(1), pages 74-90.
    4. Mohammed Shuaibu & Mutiu Abimbola Oyinlola, 2017. "An Empirical Analysis of Nigeria’s Current Account Sustainability," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 11(1), pages 54-76, February.
    5. Olajide Oyadeyi, 2023. "Financial development, interest rate pass-through and interest rate channel of monetary policy," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2209952-220, December.
    6. Wieladek, Tomasz & Hjortsø, Ida & Weale, Martin, 2016. "Monetary Policy and the Current Account: Theory and Evidence," CEPR Discussion Papers 11204, C.E.P.R. Discussion Papers.
    7. Iana Liadze & Ray Barrell & Professor E. Philip Davis, 2010. "The impact of global imbalances: Does the current account balance help to predict banking crises in OECD countries?," National Institute of Economic and Social Research (NIESR) Discussion Papers 351, National Institute of Economic and Social Research.
    8. Chinn, Menzie D. & Ito, Hiro, 2007. "Current account balances, financial development and institutions: Assaying the world "saving glut"," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 546-569, June.
    9. Linda S. Goldberg, 2013. "Banking globalization, transmission, and monetary policy autonomy," Staff Reports 640, Federal Reserve Bank of New York.
    10. Oyadeyi, Olajide, 2022. "Interest Rate Pass-Through in Nigeria," MPRA Paper 117954, University Library of Munich, Germany.
    11. Paolo A. Pesenti, 2007. "Comment on "Current Account Dynamics and Monetary Policy"," NBER Chapters, in: International Dimensions of Monetary Policy, pages 244-250, National Bureau of Economic Research, Inc.
    12. Elisabeth Beusch & Barbara Döbeli & Andreas M. Fischer & Pinar Yeşin, 2017. "Merchanting and Current Account Balances," The World Economy, Wiley Blackwell, vol. 40(1), pages 140-167, January.
    13. Mark M Spiegel, 2009. "Financial Globalization and Monetary Policy Discipline: A Survey With New Evidence from Financial Remoteness," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 198-221, April.
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    1. Olajide O. Oyadeyi & Idris A. Adediran & Balikis A. Kabir, 2024. "Remittance and Macroeconomic Performance in Top Migrating Countries," Social Sciences, MDPI, vol. 13(5), pages 1-23, April.

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    More about this item

    Keywords

    Current Account; Financial Development; Lag Augmented VAR;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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