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Macroeconomic risks and financial sector stability: the Nigerian case

Patrick, Eke, 0. and Achugamonu, Bede U. and Yunisa, S and Osuma, Godswill (2020) Macroeconomic risks and financial sector stability: the Nigerian case. Decision.

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This study examines the long-term effect of lending rate, exchange rate, inflation, institutional regulatory quality, budget deficit and gross domestic product on financial sector stability, proxied by the behavior of bank credit from 1981 to 2018. Using fully modified ordinary least square technique in an autoregressive distributive lag framework, non-performing loan is directly sensitive to lending rate, budget deficit, inflation rate and gross domestic product growth rate, but negatively related to exchange rate (a proxy for oil price) and institutions’ regulatory quality. The study concludes that macroeconomic risks matter in the live of bank credit, and recommends reforms to promote financial health: focus on capital and securities markets for longtenured lending, credit market competitiveness to reduce lending rate; improved liberalization of foreign exchange market; ease of doing business and economic inclusion to improve the growth rate.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Law, Arts and Social Sciences > School of Management
Depositing User: Dr. Tolulope Adesina (Oladeji)
Date Deposited: 29 Jun 2021 10:16
Last Modified: 30 Jun 2021 14:02

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