FACULTY OF THE SOCIAL SCIENCES
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Item Infrastructure-Structural Transformation Nexus in Africa: The Role of Financial Sector Development. Journal of African Development(Penn State University Press, 2021) Raifu, I. A.; Nnadozie, O. O.; Adeniyi, O. A.This study investigates the link between infrastructure and structural transformation in Africa as well as the mediating role of financial development on the nexus. We employ data from 24 African countries for the period 2003 to 2019 and adopt the system Generalized Method of Moments (sGMM) estimation technique. Our empirical results suggest that infrastructure and financial development foster structural transformation. However, our results show varying effects of ICT, electricity, and transport on sectoral value-added. Specifically, ICT infrastructure spurs the agricultural and manufacturing sectors value-added, electricity infrastructure aids all sectoral value-added, and transport infrastructure is important to the development of the manufacturing and services subsectors. Also, the agricultural and manufacturing sectors benefit more than the services sectors from financial-sector development. Overall, we find that infrastructure stimulates structural transformation. The net effect of the interaction of financial development and infrastructure on structural transformation appears to be zero, suggesting that financial development does not augment the nexus between infra- structure and structural transformation in Africa.Item Financial Development and Economic Growth in Nigeria: Evidence from Threshold Modelling(Elsevier Ltd, 2015) Adeniyi, O. A.; Oyinlola, M. A.; Omisakin, O.; Egwaikhide, F. O.This paper re-examined the relationship between financial development and economic growth in Nigeria. Unlike existing studies, we attempted to assess the information content of non-linearities in the finance–growth nexus for Nigeria. We also attempted to inventively gauge the impact of financial reforms on the Nigerian economy particularly in terms of economic growth. Using annual data covering the period 1960–2010, we factored in threshold effects through the financial development (FD) measures. Following these, we unearth a number of interesting results. First, financial development negatively impacted growth but a sign reversal resulted on accounting for threshold-type effects. This is indicative of some turning points in the finance–growth association. Second, using a composite index of FD led to a similar outcome. Third, on the heels of sample splitting, the coefficients for the pre- and post-reform era are hardly distinguishable casting doubt on the efficacy of financial system reforms. On the basis of the foregoing, broader structural reforms should pervade Nigeria’s policy space if the aim of sustained, inclusive and employment-generating growth is to be realized.Item Structural Breaks and the Finance-Growth Hypothesis in ECOWAS: Further Empirical Evidence(Eastern Macedonia and Thrace Institute of Technology, 2014) Omisakin, O.; Adeniyi, O. A.This study makes a cross sectional case in investigating the validity, or otherwise, of the finance driven growth hypothesis in the ECOWAS countries using annual data from 1970 to 2008 for seven countries namely: Burkina Faso, Cote d’Ivoire, The Gambia, Ghana, Nigeria, Senegal and Togo. In contrast to earlier studies on developing countries, this study specifically tests for the possibility of structural breaks/regime shifts in the finance-growth long run relationship by employing the Gregory and Hansen (1996) residual based test which accounts for endogenous structural break. While the Gregory-Hansen structural break cointegration result confirms the existence of cointegration relationships among the selected countries despite the breakpoints, the Granger-causality test result indicates a general pattern of causality running from financial development to economic growth in most of the countries. Also, the striking feature of the result of our estimated growth model generally lends credent to the importance of financial development in explaining growth dynamics among the selected countries, thus reinforcing the finance-driven growth hypothesis.Item Financial System Development and Economic Growth in Sub-Saharan Africa(West African Institue of Financial Economic Managemnt, 2016) Egwaikhide, F. O.; Oyinlola, M.A.; Omisakin, O.; Adeniyi, O. A.This paper contributes to the age-old debate on the link between financial development and economic growth by examining the role of monetary policy. There is a possibility that monetary policy enhances financial system performance with attendant impact on growth. To unveil this influence, this paper employs fixed effects and System GMM on data from 28 sub-Saharan African countries over the period 1996 to 2014. Results from the baseline estimation using fixed effects indicate that financial development indicators are negatively and significantly associated with growth for two of the three measures used (LGDP and PGDP), while money growth is positively related albeit insignificantly. The results largely remain the same on interaction with money growth. The coefficients of the interactive terms though largely negative are, however, not significant. The results from System GMM presents a different outcome. First, all measures of financial development turn out positive (except BBD) and insignificant. Financial development equally turns negative but insignificant after interacting with money growth. Overall, monetary policy measures, together with their interactions with financial development indicators, show up as weak growth predictors if not dampening, suggestive of the plausible independence of the nexus on the actions of monetary authorities in these countries.Item Industrialisation, Finance and Urbanisation in Africa(Penn State University Press, 2023) Adeniyi, O. A.; Folarin, O.This article investigates two key questions: what is the impact of industrialization on urbanization in Africa? And to what extent does financial development affect this industrialization–urbanization nexus? To elicit answers to these questions, data from 33 African countries over a period of 28 years were analyzed using a dynamic panel estimator. The findings showed that industrialization had positive and significant effects on urbanization. Further, the study shows that financial development had a positive effect on urbanization, although it lowers the positive effect of industrialization on urbanization. Hence, industrial policies, particularly those with marked job creation possibilities, should be accompanied by well-designed urban planning policies in order to sidestep the adverse socioeconomic consequences connected with the development of slums in urban areas.Item Savings-Investment Gap in Sub Saharan Africa: Does the Interaction of Financial Sector Development and Migrant Remittances Matter?(Statistics, Department of the Central Bank of Nigeria:, 2022) Adeniyi, O. A.; Afolabi, J.; Adekunle, W.; Babatunde, M.; Omiwale, E.This study analyzes the interactive effects of migrant remittances and financial development on savings-investment gap for a panel of 18 Sub-Saharan Africa (SSA) countries from 1990-2017. Results from a panel ARDL model show that migrant remittances reduce savings-investment gap in the long run. The gap is further reduced when the individual effect of financial development, and the interactive effects of migrant remittances and financial development are taken into consideration. Further analysis reveals evidence of widening effects of rising real GDP growth and bank deposits over a long-term horizon, while higher private sector credit widened the savings-investment gap only in the short-run. The study suggests the need for a policy to reduce migrant remittance transfer costs and encourage beneficiaries to prioritize investment over consumption.Item Infrastructure-Structural Transformation Nexus in Africa: The Role of Financial Sector Development. Journal of African Development(Penn State University Press, 2021) Raifu, I. A.; Nnadozie, O. O.; Adeniyi, O. A.This study investigates the link between infrastructure and structural transformation in Africa as well as the mediating role of financial development on the nexus. We employ data from 24 African countries for the period 2003 to 2019 and adopt the system Generalized Method of Moments (sGMM) estimation technique. Our empirical results suggest that infrastructure and financial development foster structural transformation. However, our results show varying effects of ICT, electricity, and transport on sectoral value-added. Specifically, ICT infrastructure spurs the agricultural and manufacturing sectors value-added, electricity infrastructure aids all sectoral value-added, and transport infrastructure is important to the development of the manufacturing and services subsectors. Also, the agricultural and manufacturing sectors benefit more than the services sectors from financial-sector development. Overall, we find that infrastructure stimulates structural transformation. The net effect of the interaction of financial development and infrastructure on structural transformation appears to be zero, suggesting that financial development does not augment the nexus between infra- structure and structural transformation in Africa.Item Remittances and Output Growth Volatility in Developing Countries: Does Financial Development Dampen or Magnify the Effects.(Springer-Verlag GmbH, 2019) Adeniyi, O. A.; Ajide, K.; Raheem, I. D.The paper empirically investigated the relationship between remittance flows and output growth volatility for an extensive sample predominated by emerging and developing countries. Following this broad treatment, it goes further to estimate the extent to which the degree of financial development (FD) impacts on the remittances– growth volatility nexus. This novelty distinguishes the work from previous studies. Using the system-generalized method of moments estimator, which corrects for endogenity and omitted variable concerns, on data spanning the period 1996–2012 for a total of 71 countries some interesting findings ensued. One, both remittances and FD had growth volatility dampening effects. Two, the interaction between proxies for FD and remittances produced mixed results. Three, when volatility of FD is accounted for, the interactive term had mixed results. For instance, banking sector credit produces positive and insignificant coefficients, while private sector produced significant and negative coefficients. Summarily putting these results in other words, the countercyclicality of remittances was established, while the complementary dampening effect of financial development is dependent upon its measure. On the basis of the foregoing, a few related policy lessons are documented to conclude the paper.Item Financial System Development and Economic Growth in Sub-Saharan Africa(West African Institue of Financial Economic Managemnt, 2016) Egwaikhide, F. O.; Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. A.This paper contributes to the age-old debate on the link between financial development and economic growth by examining the role of monetary policy. There is a possibility that monetary policy enhances financial system performance with attendant impact on growth. To unveil this influence, this paper employs fixed effects and System GMM on data from 28 sub-Saharan African countries over the period 1996 to 2014. Results from the baseline estimation using fixed effects indicate that financial development indicators are negatively and significantly associated with growth for two of the three measures used (LGDP and PGDP), while money growth is positively related albeit insignificantly. The results largely remain the same on interaction with money growth. The coefficients of the interactive terms though largely negative are, however, not significant. The results from System GMM presents a different outcome. First, all measures of financial development turn out positive (except BBD) and insignificant. Financial development equally turns negative but insignificant after interacting with money growth. Overall, monetary policy measures, together with their interactions with financial development indicators, show up as weak growth predictors if not dampening, suggestive of the plausible independence of the nexus on the actions of monetary authorities in these countries.Item Financial System Development and Economic Growth in Sub-Saharan Africa(West African Institue of Financial Economic Managemnt, 2016) Egwaikhide, F. O.; Oyinlola, M. A.; Omisakin, O.; Adeniyi, O. AThis paper contributes to the age-old debate on the link between financial development and economic growth by examining the role of monetary policy. There is a possibility that monetary policy enhances financial system performance with attendant impact on growth. To unveil this influence, this paper employs fixed effects and System GMM on data from 28 sub-Saharan African countries over the period 1996 to 2014. Results from the baseline estimation using fixed effects indicate that financial development indicators are negatively and significantly associated with growth for two of the three measures used (LGDP and PGDP), while money growth is positively related albeit insignificantly. The results largely remain the same on interaction with money growth. The coefficients of the interactive terms though largely negative are, however, not significant. The results from System GMM presents a different outcome. First, all measures of financial development turn out positive (except BBD) and insignificant. Financial development equally turns negative but insignificant after interacting with money growth. Overall, monetary policy measures, together with their interactions with financial development indicators, show up as weak growth predictors if not dampening, suggestive of the plausible independence of the nexus on the actions of monetary authorities in these countries.