European Journal of Economic Studies

50-59

Authors: Lawrence Okojie Aghedo, Anna Tizhe

The study estimated differential impact of components of capital inflows on macroeconomic growth rate in Nigeria using principal component model. Study period span between 1980 to 2018. The study found that foreign investors' equity into Nigeria plus net advances to enterprises together with capital transfers in cash from abroad plus net compensation of employees of non-resident workers are two foremost components of foreign capital that significantly stimulate economic growth in Nigeria. The study recommends amongst others, the need for corporate sector such as banks and other financial institutions to intensify the volume of official flows by reducing transaction cost, streamlining transfer procedures and by encouraging the use of formal financial channels. Also, Nigerian foreign investment policy should be directed towards attracting and boosting more inflows of foreign capital especially in the direction of remittances and foreign direct investment.

66-88

Authors: Solomon E. Effiong

In this study, an attempt was made to investigate the strength of the interaction between financial integration, financial development and economic growth for countries of ECOWAS sub-region covering 1986 to 2019. The study employed ARDL model suitable for treatment of panel data with cross-sectional dependencies and heterogeneities. Unlike our previous study that measured financial depth by money supply/GDP ratio, financial depth was measured by domestic credit to private sector/GDP ratio. The results of the estimated regression revealed that the current degree of financial integration among ECOWAS countries is very low. The evidence shows that only four countries in the sub-region were more integrated when integration is measured as the ratio of a country’s financial assets to the regional pool: Gambia (18.38 %), Ghana (22.87 %), Guinea (17.94 %) and Nigeria (20.22 %), at 0.10, 0.05, 0.10 and 0.05 levels of significance respectively. Interestingly, integration measured as interest rate convergence reveals that only Senegal exhibited significant integration level of 29.22 %, at the 0.05 significance level of the test. The result further shows that financial integration does not have short run significant effect on financial development, but, a deleterious effect on financial development, in the long run. A well-coordinated, capable and robust central regulatory oversight regulatory system cannot be over-emphasized. Such central agency is suited to provide timely support in macro-prudential management and generate both short run and long run macroeconomic stability that further enhances integration conditions in the long run and avert potential downside risks of spillovers and spillbacks which are often associated with increasingly regional interconnected financial markets. Policy coordination is necessary to avert potential detrimental impacts of financial integration on the domestic financial development.