INTERNATIONAL SCIENTIFIC RESEARCH AND INNOVATION CONGRESS -II
ASSESSING THE ROLE OF FINANCIAL DEVELOPMENT IN EXCHANGE RATE VOLATILITY AND GROWTH NEXUS: A NIGERIA’S CASE
Yazarlar:
Muhammad Ahmad Usman
Ummi Ibrahim Atah
Jamilu Salihu
The present study analyses the role of financial development in reducing the anticipated negative effects of exchange rate volatility on the Nigeria’s economic growth using annual time series data covering the period of 1981 to 2022. The study employs ARDL bound testing and Fully Modified Ordinary Least Squares (FMOLS) methods for analyzing the growth regression model and uses GARCH (1, 1) model for calculating the volatility of exchange rate. The results show the negative effect of exchange rate volatility on Nigerian economic growth, however, as the financial development and its interaction are included in the regression model, the coefficient of exchange rate volatility becomes positive and significant. Thus, it is recommended that government should reinforce the performance and efficiency of financial sector by executing appropriate policies, in such a way that effective resource allocation, financial stability, exchange rate stability, creation of investment opportunities, and consequently economic growth can be attained.
