Nexus Between Financial Liberalization, Balance Of Payment And Economic Growth In Nigeria

The objectives of this paper are to examine the nexus between financial liberalization,balance of payment and economic growth in Nigeria.The scope of this study due to data availability,especially on measures of balance of payment,covers the period of 1986-2017.This study adopts econometrics techniques of analysis by using Panel Unit Root Tests and Co-integration analysis which is used to determine the long run relationship among economic variables.To test the co-integration relationship this study followed the system proposed by Pedroni(1991)who expands the Engle and Granger[9]two stage technique to heterogeneous board information structure.The study adopts annual time series secondary data for the period of 1986 to 2017.Balance of payment,Official Exchange Rate,Inflation rate(%),Balance of trade,Trade openness,Real Gross Domestic Product growth,and Term of Trade,all data used were obtained from the World Development Indicators.The findings of this study revealed that an increase in exchange rate,interest rate,inflation rate,and trade openness have negatively affect economic growth.Hence,changes or movements in these variables do not necessarily prompt the liberalization decision in the real sector.Therefore,the need to address balance of payment is important,in accordance with the low rate of development in Nigeria.We therefore,recommend that government should monitor both Fiscal and Monetary policies’variables that can significantly influence economic growth in Nigeria.That is,adequate balance of payment that can encourage appropriate financial liberalization should be put in place with,Official Exchange Rate,Inflation rate(%),Balance of trade,Trade openness.

The effects of financial liberalization on productivity:Evidence from India’s manufacturing sector

Using a panel of India’s registered manufacturing firms and both economy-wide and firm-level financial data,we investigate the effects of India’s financial liberalization on the productivity of its manufacturing sector in the 1990s and 2000s.Our dynamic panel analysis shows that the series of financial liberalization policies/measures,at both the macro and micro levels,significantly enhanced the productivity of the manufacturing sector.Total factor productivity increased for all firms,including those owned by the state government,with greater gains for the firms in the private and foreign sectors.Our results suggest that policies favoring financial liberalization should be pursued further in order for India to foster higher economic growth.

RMB Internationalization and Its Implications for Financial and Monetary Cooperation in East Asia

This paper emphasizes the importance of the denomination of financial assets rather than trade invoicing as a long-term determinant of an international currency. China needs to liberalize and open its financial system and make the RMB fully convertible, and to adopt a moreflexible exchange rate system to speed up its currency internationalization, for which China could follow either a global or regional approach. The global approach is a riskier and more unpredictable strategy because it would demand a scope and timeframe of financial liberalization that is likely to be beyond China＇s institutional capacity over the coming decade. There are two options that could be taken in following the regional approach. One is creating an ASEAN＋ New 3 （the Chinese Mainland, Hong Kong, and Taiwan） RMB bloc and the other is liberalizing China＇s financial industries and internationalizing the RMB by playing a leading role in East Asia＇s economic integration within the framework of ASEAN＋ 3, This paper concludes that the latter is a more realistic and effective approach for China.

China's Rapid Accumulation of Foreign Exchange Reserves and Its Policy Implications

In late February 2006, China surpassed Japan to become the world＇s largest holder of foreign exchange reserves. Beijing is now faced with the growing challenge of how to handle these vast reserves effectively. Although China＇s soaring foreign exchange reserves indicate that its overall strength has grown, they have created internal and external pressures on the balance of the economy, and introduced risks to the financial system. It is estimated in the present study that foreign exchange reserves of approximately US$ 400bn in 2005 would have been appropriate under circumstances of a managed floating exchange rate regime and capital control. China ＇s actual reserves have far exceeded its normal demand. The objective of China is to maintain an optimal level that maximizes net benefits as a whole, Four main policv options are available for China to achieve its target： spending and investing foreign exchange reserves, gradual liberalization of the capital account, diversification of foreign exchange reserves and a switch in holders of foreign exchange reserves. Spending and investing in foreign exchange reserves can be undertaken in combination with liberalization in the capital account, given careful consideration of the risks involved. Liberalization should be extensive but gradual so that companies and individuals can adjust to changes in financial markets and manage portfolios while avoiding unnecessary risks.