Table of Content
Title Page
Certification Page
Approval Page
Dedication
Acknowledgement
Table of Content
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
1.2 Statement of Problems
1.3 Research Questions
1.4 Objectives of the Study
1.5 Research Hypotheses
1.6 Scope of the Study
1.7 Significance of the Study
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Framework
2.2 Theoretical Literature
2.2.1 Theory on Financial Reforms
2.2.2 Theory on Money Demand
2.2.2. 1 Keynesian Liquidity Preference Theory
2.2.3 Post-Keynes Theory
2.2.4 Classical Theories
2.3 Empirical Literature on Financial Reforms and Demand for Money
2.3.1 Review of Foreign Studies
2.3.2 Review of Domestic Studies
2.4 Limitations of Previous Studies
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Theoretical Framework
3.2 Model Specification
3.2.1 Financial reform and Money Demand
3.2.2 Financial Reform and Economic Growth
3.3 Estimation Procedure
3.3.1 Unit Root Test
3.4 Justification of the Model
3.5 Preliminary tests on variables of the study
3.5.1 Testing for normality
3.5.2 Testing for stationarity
3.5.3 Testing for serial correlation
3.6 Data and Sources
3.7 Econometric Software
4.1 Introduction
4.2 Unit root tests and the order of integration
4.3 Correction of non-stationarity
4.4 Testing for co integration using the engel-granger residual approach
4.5 Money Demand and financial reform
4.6 Error correction model (ECM) for the impact of financial reform on money demand
4.7 Diagnostic tests
4.8 The short term dynamics of economic growth
4.9 Diagnostic tests
CHAPTER FIVE: SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of the findings
5.2 Recommendations
5.3 Conclusions
5.4 Areas for further study
REFERENCES
APPENDICES
ABSTRACT
The study investigated the impact of financial sector reform on money demand and the rate of economic growth in Nigeria. The residual based autoregressive distributed lag-error correction model (ARDL-ECM) was used to analyse the study with a time series data sourced from the central bank of Nigeria statistical bulletins and World Bank Development Indicators records covering a period of 1970-2013. A dummy variable was created to represent the financial reform periods-especially the recent reform periods that commenced fully in 2005. The result established that money demand and economic growth have responded positively to policies of financial sector reform introduced in Nigeria recently as both the bank reform indicator-private sector credit and stock exchange indicator stock value traded-though with a negative impact. In agreement, the study also investigated the impact of money demand on economic growth via financial development. The results also indicate that financial development has positively affected money demand in Nigeria-when examined from private sector credit from banks and negatively related to economic growth from the stock market side. Thus, from the findings of the study, financial reform was found to have positively impacted on money demand and economic growth.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The rising importance of the financial sector in the economic development of countries especially developing countries, as well as the rapid rate of innovation in the sector has generated growing research interest in financial policy changes. The Nigerian financial system is one of the largest and most diversified in Sub-Saharan Africa (Afangideh, 2010). The system became liberalized when the structural adjustment programme was introduced in 1986. In recent years, the system had undergone significant changes in terms of the policy environment, number of institutions, ownership structure, depth and breadth of markets, as well as in the regulatory framework.
The financial reforms which began in 2004 with the consolidation programme were necessitated by the need to strengthen the banks and financial sector in general. The policy thrust at inception, was to grow the banks and position them to play pivotal roles in driving development across the sectors of the economy. As a result, banks were consolidated through mergers and acquisitions, raising the capital base from N2 billion to a minimum of N25 billion, which reduced the number of banks from 89 to 25 in 2005, and later to 24. However, this led to the expanded use of branches by existing and new banks. The expansion of branch banking in Nigeria has occurred with the development of new technologies to deliver financial services, such as Automated Teller Machines (ATMs) and other stored value cards. These cost effective innovations and products that have become available, have the purpose of reducing the pressure on over-the-counter services to bank customers.
It is important to note that the recapitalisation and merging of some banks affected dealings in the stock market as banks raised their required minimum capital through the capital market by issuing new securities. Beyond the need to recapitalize the banks, the regulatory reforms also focused on the....
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