IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 8 NO. 2 2022
DOI: https://www.doi.org/10.56201/ijebm.v8.no2.2022.pg90.101

---

Analysis of the Impact of Selected Macro-Economic Variables on Balance of Payments in Nigeria

Ukangwa, Jane Uchechi; Ikechi Victor Iheukwumere; Joseph Chukwudi Odionye Innocent Chuka Okonkwo; Godwin Chigozie Okpara; Eugene Iheanacho

---

Abstract

Given that Nigerian economy has recorded unfavourable Balance of Payment (BOP) positive in recent years, it becomes imperative to study the impact of selected macroeconomic variables on BOP in Nigeria. This study therefore sought to determine the impact of exchange rate, inflation rate, interest rate and money supply on BOP in Nigeria. This study used secondary data sourced from Central Bank of Nigeria Statistical Bulletin (2021) in its analysis. The study employed ARDL to estimate the short run and long run impact of the selected macroeconomic variables on BOP in Nigeria. The ARDL bound co-integration showed a long run relationship between BOP and selected macroeconomic variables in the country. The study recommends that the policy makers should take keen interest on how best to improve the value of Nigeria’s export to the world; this will help bring to equilibrium the exchange rates and inflation that play a crucial part in determining the balance of payments. In addition, policies should be put in place to fund government plan of work for a period of time than public borrowing in the case of money supply and interest rate that has led to the increment on Balance of payment (BOP) deficit.

keywords:

Balance of payments, Exchange rates, Inflation rates, Interest rates, and money supply

---

References:

Central Bank of Nigeria Statistical Buletin (CBNSB) (2022)."Globalization and National Economic
Development." Central Bank Annual Report, December.

Central Bank of Nigeria Statistical Buletin (CBNSB) (2021)."Globalization and National Economic
Development." Central Bank Annual Report, December.

Dare, F.D & Adenkunle, O.E. (2020). Exchange rate and balance of payment in Nigeria. Euro-
Economica. 39 (1), 73 – 83.

Dhliwayo, R. (1996). “The balance of payments as a monetary phenomenon: An econometric study of
Zimbabwe’s experience”. African Economic Research Consortium, Research Paper 46.

Eita, J. H. and Gaomab, M. H. (2012). Macroeconomic determinants of balance of payments in
Namibia, International

Falianty, T. (2018), Balance of payment dynamic in Indonesia and the structure of economy,
Economics andFinance in Indonesia, 63(1), 53-80.

Grigorianm, D., Khachatryan, A., &Sargsyian, G. (2004). Exchange Rate, Money and Wages: What is
Driving Prices in Armenia? IMF Working Paper, WPS 129.
Investopedia Team, Kenton, A. & Boyle D. (2021)www.investopedia.com/terms/m/moneysupply.as.
The washing post.Retrieved 8 September 2019.

Iyoboyi, E. & Muftau, O. (2014). Impact of exchange rate depreciation on balance of payments:
Emperical evidence from nigeria. Cogent economics and finance. 2:923323.
Online:http:)//dx.doi.org/10.1080/23322039.2014.923323

Kamin, S.B., & Klau, D. M. (2003).A Multi-Country Comparison of the Linkages between Inflation
and Exchange Rate Competitiveness.International Journal of Finance and Economics, Vol. 8:
167-184

Keynes, J. M. (1971). A treatise on money: The applied theory of money. Vol.6 of The collected
writings of John Maynard Keynes.London: Macmillan (for the Royal Economic Society).

Limbore, N.V. & Moore, S. P. (2019).Impact of exchange rate on balance of payment of India.Review
of Research. 8 (7), 1-5 Linear and Non-linear Causal Linkages Pakistan Institute of
Development Economics Islamabad (PIDE) Working Papers; No. 63.

Moussa, N. (2016). Trade and Current Account Balances in Sub-Saharan Africa:Stylised Facts and
Implications for Poverty. Trade and Poverty Paper SeriesNo.1 UNCTAD Geneva
Muchdie, M. & Narmaditya, B. S. (2019), Are trades related to technology? Evidences from the Baltic
States: Estonia, Latvia and Lithuania, Journal of Asian Finance, Economics and Business,
6(2), 83-93.

Nwanekezie, S. & Onyiro, H. (2018). Exchange rate volatility and the Nigerian balance of payment
(1981 – 2016). Munich Personal Repec Archive, MPRA Paper No. 90562.

Nwanosike, D.U., Uzoechina, B., Ebenyi, G.D. & Ishiwu, V. (2017). Analysis of balance of payment
trend in Nigeria: A test of Marshall-Lerner hypothesis. Saudi Journal of Business and
Management Studies. 2 (5), 468-474

Okonkwo, C.I. (1987). “Oil Export, Money Supply and Inflation: The Nigerian Case”. Department of
Economics, University of reading Discussion Paper in Economics, Series A, No.182, January,
1987. Whitenights, Reading, Berkshire RG6 2AA, UK.

Olanipekun, D.B. & Ogumsola, A.J. (2017). Balance of payment crises in Nigeria: The role of
exchange rate. International Journal of Economics, Commerce and Management. 5 (5), 119 –
140.

Osisanwo, G. B., Maku, O. E., Ajike, E. O., & Egwuonwu,T. K. (2015), Growth effect of balance of
payments and monetary policy in Nigeria (1980-2013): A time series analysis, Global Journal
of Management and Business Research: A Administration and Management, 15(8), 37-46.

Persson, T. (1984). Real transfers in fixed exchange rate systems and the international adjustment
mechanism. Journal of Monetary Economics 13(May):349-69.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001).Bounds Testing Approaches to the Analysis of Level
Relationships.Journal of Applied Econometrics, 16(3), 289-326.

Sujianto, A. E. (2018), Jakarta composite index, sharia stock index and rupiah exchange rate before
and after the Indonesian presidential election 2014, American Journal of Economics, 8(6),
254-262.

DOWNLOAD PDF

---

Back