Modebe, Nwanneka J. and Okoye, Lawrence U. and Ado, Ahmed (2017) EXCHANGE RATE MOVEMENTS AND MANUFACTURING CAPACITY UTILIZATION IN NIGERIA. ESUT JOURNAL OF ACCOUNTANCY, 8 (1).
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Abstract
The study examines the effect of exchange rate fluctuations on the performance of the manufacturing sub-sector in Nigeria. To achieve this objective, changes in exchange rate and its key determinants were analyzed to ascertain the extent to which they impact on capacity utilization in the sub-sector. Key determinants of exchange rate behavior selected for analysis are interest rate, inflation rate and trade openness. Empirical studies related to the subject area have basically focused on the response of aggregate output (GDP) to changes in these economic indicators. Studies on sector-specific responses to changes in these economic indicators, particularly in developing economies like Nigeria, have not only been dearth but have produced mixed results. Quantitative research technique based on ex-post facto design was adopted for the study. Econometric method based on vector error correction mechanism was adopted in estimating the parameters of the model. Model estimates show that, in the long-run, all the exogenous variables (exchange rate, interest rate, inflation rate and trade openness) have significant positive impact on manufacturing capacity utilization. The study also shows significant positive effect of exchange rate and trade openness on manufacturing capacity utilization in the short-run. Inflation and interest rates were observed to exert non-significant impact on manufacturing capacity utilization during the period covered by the study. Diversification of the economy away from oil is strongly recommended in order to achieve enhanced foreign exchange inflow necessary for rapid development of domestic manufacturing
| Item Type: | Article |
|---|---|
| Subjects: | H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance |
| Divisions: | Faculty of Law, Arts and Social Sciences > School of Social Sciences |
| Depositing User: | Mrs Patricia Nwokealisi |
| Date Deposited: | 12 Feb 2018 12:51 |
| Last Modified: | 12 Feb 2018 12:51 |
| URI: | http://eprints.covenantuniversity.edu.ng/id/eprint/10195 |
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