Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling
The study set out to test the McKinnon-Shaw proposition that financial liberalization will significantly increase savings mobilization. The results partly supported the financial liberalization proposition. Variables that capture the effects of currency substitution such as the interest rate differe...
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Series: | South African Journal of Economic and Management Sciences |
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doaj-69f1cb66c8644d1aa783b71885e1b7e72020-11-25T01:13:00ZengAOSISSouth African Journal of Economic and Management Sciences1015-88122222-34362004-04-017231634010.4102/sajems.v7i2.1381433Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modelingM Aziakpono0S B-ObasaUniversity of StellenboschThe study set out to test the McKinnon-Shaw proposition that financial liberalization will significantly increase savings mobilization. The results partly supported the financial liberalization proposition. Variables that capture the effects of currency substitution such as the interest rate differential, a proxy for underground economy, the inflation differential (as a measure of macroeconomic instability) and a dummy for political instability were significant in their adverse impacts on the saving mobilization process in Nigeria. We, therefore, advocate for an active monetary policy that will help manage the delicate balance between domestic and foreign interest rates. This should be combined with macroeconomic policies that create a stable economic environment along with appropriate financial and exchange rate policies, in order to discourage economic agents from preferring foreign denominated assets to those held in the domestic currency.https://sajems.org/index.php/sajems/article/view/1381 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
M Aziakpono S B-Obasa |
spellingShingle |
M Aziakpono S B-Obasa Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling South African Journal of Economic and Management Sciences |
author_facet |
M Aziakpono S B-Obasa |
author_sort |
M Aziakpono |
title |
Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling |
title_short |
Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling |
title_full |
Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling |
title_fullStr |
Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling |
title_full_unstemmed |
Financial liberalization, currency substitution and savings in Nigeria: Evidence from cointegration and error correction modeling |
title_sort |
financial liberalization, currency substitution and savings in nigeria: evidence from cointegration and error correction modeling |
publisher |
AOSIS |
series |
South African Journal of Economic and Management Sciences |
issn |
1015-8812 2222-3436 |
publishDate |
2004-04-01 |
description |
The study set out to test the McKinnon-Shaw proposition that financial liberalization will significantly increase savings mobilization. The results partly supported the financial liberalization proposition. Variables that capture the effects of currency substitution such as the interest rate differential, a proxy for underground economy, the inflation differential (as a measure of macroeconomic instability) and a dummy for political instability were significant in their adverse impacts on the saving mobilization process in Nigeria. We, therefore, advocate for an active monetary policy that will help manage the delicate balance between domestic and foreign interest rates. This should be combined with macroeconomic policies that create a stable economic environment along with appropriate financial and exchange rate policies, in order to discourage economic agents from preferring foreign denominated assets to those held in the domestic currency. |
url |
https://sajems.org/index.php/sajems/article/view/1381 |
work_keys_str_mv |
AT maziakpono financialliberalizationcurrencysubstitutionandsavingsinnigeriaevidencefromcointegrationanderrorcorrectionmodeling AT sbobasa financialliberalizationcurrencysubstitutionandsavingsinnigeriaevidencefromcointegrationanderrorcorrectionmodeling |
_version_ |
1725163729486610432 |