Lagos Journal of Banking, Finance and Economic Issues

Financial Integration and Financial Development: Evidence from Sub-Saharan African (SSA) Countries

E. Olalekan Obademi, Abass, Shiro, Ojumu, Olayiwola — Fri, 29 Sep 2023 13:01:26 +0000

The study examined the effects of financial integration on financial development for 49 Sub-Saharan

Africa (SSA) countries for the period 2002 to 2021. Five independent metrics of financial development

and two financial integration measures were utilized to ensure robustness of the anticipated results.

Using a dynamic panel GMM-SYS estimation technique, it was discovered that the impacts of

financial integration on financial development in SSA are highly dependent on the proxies employed

to capture these two variables of financial integration. Financial integration has a beneficial

influence on private sector credit, domestic credit, liquid liabilities, and finance size, when proxied by

the interest rate spread. However, this measure of financial integration limits the volume of financial

activity of financial intermediaries as it’s negatively correlated. Similarly, when measured using gross

private capital flows, financial integration has statistically positive effects on financial development as

measured by liquid liabilities but has a negative impact on financial development as measured by

finance activity and financial size in Sub-Saharan African nations. The general implication of these

findings is that the influence of financial integration on financial development in SSA is complex.

However, before reaching a firm conclusion about the relationship between these two variables,

several transmission mechanisms by which former influences the latter, as well as their various

proxies, must be considered

DETERMINANTS OF FIRMS’ PERFORMANCE IN THE NIGERIAN HYDROCARBON INDUSTRY: DOES INTELLECTUAL CAPITAL MATTER?

Isola 1 , W. A., Oyeniran, Ishola Wasiu — Fri, 29 Sep 2023 13:01:33 +0000

This study adopts the Pulic (2002) VAIC^TM approach as a measure of intellectual capital, to examine the role of intellectual capital in the financial performance of the oil and gas industry in Nigeria. With the aid of panel analysis framework, it was found that aggregated composites of intellectual capital (VAIC) perform less satisfactorily in influencing the financial performance of firms in the oil and gas industry. However, when VAIC^TM was disaggregated into human, relational, and structural capital efficiency, it was discovered that the positive effect of human capital on the financial performance of these firms was cancelled out by the negative effect of structural capital. However, the relational capital efficiency that could have improved the financial performance of these firms has no significant impact on these firms’ performance and, as such, is ultimately responsible for the insignificant overall effect of intellectual capital (VAIC) on the financial performance of firms in Nigeria’s oil and gas industry. One of the implications of these findings is that these firms place much emphasis on human assets and neglect intangible assets such as processes, patents, copyright, research and development, customer care, etc. Also, the current structural capital of the firms in this industry constitutes a drag on their financial performance. Thus, serious attention should be placed on the effective management of firms’ relational and structural capital efficiency in order to ensure a better financial return.

Savings-Growth Nexus in Nigeria: An Asymmetric ARDL Approach

Yetunde Adegoke — Fri, 29 Sep 2023 00:00:00 +0000

This study investigates the asymmetric relationship between savings and growth in Nigeria

between 1970 and 2020. The study employs Asymmetric ARDL method in tracing the non-linear

relationship between the variables. The study discovered using non-linear ARDL (NARDL)

causality that there was a unidirectional causal relationship running from the positive component

of savings to real GDP in the short-run, long-run and very long-run (strong causality). This

implies that the positive component of savings is a determinant of real GDP in Nigeria. The

result further showed that there was significant positive relationship between positive component

of savings and real GDP in the short and long-run but the negative component of savings was not

a significant determinant of real GDP both in the short-run and long-run, more importantly, the

study discovered an asymmetric relationship between savings and growth for the period under

studied. The study, therefore, recommended that savings must be encouraged in the country to

have more investment base as a sound fiscal policy that could propel growth, because the

negative effect of dis-savings on growth is more pronounced than the positive effect of savings

on growth.

Effect of Audit Quality on Financial Performance of Deposit Money Banks in Nigeria: Corporate Governance Perspectives

Kehinde A. Alliu, Olukayode Oyewale, Ayodele Ajayi — Fri, 29 Sep 2023 00:00:00 +0000

This study examined the effects of audit quality on the financial performance of 10 out of 16 Deposit

Money Banks (DMBs) listed on Nigeria Stock Exchange (NSE) for which data were available covering a

period of 10 years (2010-2019). While the specific objectives are to ascertain the effect of Audit Fee

(AUF), Audit Report Lag (ARL) and Audit Committee Diligence (ACM) on the financial performance of

Deposit Money Banks (DMBs) in Nigeria, it applied Return on Assets (ROA) as a measure of financial

performance. The study adopted ex post facto research design, data for the study were collected from

annual reports and accounts of listed DMBs. The study employed multiple regression analysis using SPSS

to test the formulated hypotheses. The result showed Audit Fees (AF) and Audit Reported Lag (ARL)

significantly affect financial performance of DMBs in Nigeria while Audit Committee Diligence (ACM)

has insignificant effect on the financial performance of DMBs in Nigeria. The study recommends that:

DMBs should strive to enhance the efficiency of their financial reporting processes to reduce the need for

extensive audit procedures. Implementing robust internal control systems, automating processes, and

adopting advanced accounting software can streamline financial reporting and potentially lower audit

fee; DMBs should strive to streamline their internal processes and improve the efficiency of the financial

reporting and auditing processes. This includes ensuring timely preparation of financial statements,

prompt resolution of accounting issues, and effective communication with auditors. By reducing

unnecessary delays in the audit process, companies can minimize audit report lag; DMBs should promote

a culture of continuous improvement and learning within audit committees. This can be achieved through

ongoing professional development programs, access to relevant resources and training, and opportunities

for committee members to stay updated on emerging trends and regulatory changes. By continuously

enhancing their knowledge and skills, audit committees can contribute more effectively to financial

performance.

Digital Entrepreneurship: A Strategy for Curbing Youth Unemployment in Lagos, Nigeria

T. Adenike Egunjobi — Fri, 29 Sep 2023 00:00:00 +0000

Technological advancements had created an avenue for digitisation and the development of

information and communication technologies (ICT). This had created incredible potential and

benefits in electronic commerce (E-commerce) and entrepreneurial skills, especially among

youths. The study's main purpose was to explore digital entrepreneurship as a panacea for

reducing Nigeria's youth unemployment rate and providing new jobs. The study focused on the

effect of ICT on job creation, the extent to which e-commerce contributes to employment

creation and the influence of programmes geared towards spurring entrepreneurship training

on line. The study further tested null hypothesis to determine if there was no significant

relationship between digital entrepreneurship and employment creation. 110 owners of small

firms were surveyed to investigate how ICT, e-commerce, and online training programmes had

aided in the creation of jobs in Lagos state through descriptive tools and multiple regression

technique. The study findings showed that in Lagos state, ICT and e-commerce had substantially

contributed to job creation and aided in disseminating commercial activities to a wide range of

customers. The findings also showed that many people gained a wide range of skills through

online training programmes. The study recommended the advancement of e-commerce through

a reliable and affordable telecommunication network, provision of access to training platforms,

and affordable prices of various e-commerce training programmes.

The Impact of Debt Burden on the Economic Growth of Nigeria (1970- 2021)

Henry I Onwere , Olalekan Emmanuel Obademi Olalekan Emmanuel Obademi — Fri, 29 Sep 2023 00:00:00 +0000

The study used autoregressive distributed lag (ARDL) to examine the influence of external debt on

Nigeria’s economic growth using annual time series data from World Bank Development Indicators from

1970 to 2021. The findings show a significant positive relationship between interest rates and economic

growth in the short and long run. In contrast, inflation rate significantly negatively impacts economic

growth in the short and long run. External debt, external debt service, and the exchange rate have an

insignificant impact on economic growth in the short and long run. The study recommends reducing the

cost of governance to promote development, while investment in the Nigerian economy should be

encouraged.

Working Capital Management and Firm Value: Evidence from Listed Non-Financial Firms in Nigeria

Feyisayo Tolulope ADEBOLA, B. O Oke, Olalekan Emmanuel OBADEMI — Fri, 29 Sep 2023 14:51:04 +0000

This study examined the effect of working capital management on the firm value of non

financial firms in Nigeria using the enterprise value multiple which was measured as enterprise

value scaled by EBITDA as the indicator of firm value and extracted panel data from audited

financial statements of sampled thirty-three non-financial firms listed on the Nigerian Exchange

Group (NGX) Plc from 2012 to 2021. The results of the static panel least square and the panel

fixed effect model estimation techniques revealed that all the WCM components have a

significant effect on the firm value of non-financial firms in Nigeria which implies that WCM is

highly essential for improved firm value. We, therefore, recommend that non-financial firms in

Nigeria should adopt conservative account payable management strategies that will enable quick

settlement of short-term obligations when they fall due. They should also adopt liberal account

receivable management strategies that will not endanger their liquidity and cash flow.

Nigeria’s Dividend Policy and Stock Price Volatility

Oladimeji J. Abiodun, Sontan Olamiji — Fri, 29 Sep 2023 00:00:00 +0000

This paper explores the impact of dividend policy on stock price in the Nigerian stock market.

Descriptive survey research strategy was utilised for this study and four research questions and

four hypotheses generated to guide the investigation. All 199 shares trading on the Nigerian

Stock Exchange's major exchange at the start of 2010 made up the research's demography which

was later limited to include only businesses that had regularly paid dividends for a period of

twelve years. 29 enterprises in all qualified for the selection for the period from 2010 to 2021.

The study found out that the payout ratio positively affects the stock price, the findings also

indicated that earnings per share has a substantial beneficial effect on the stock price and

significant link between the size rate of a company and its stock price. It is thus recommended

that businesses should maintain a continuous dividend pay-out to raise internal money available

to undertake more profitable projects that will aid increased earnings.

The Intensity of Financial Repression in Nigeria

Aruwa-ocholi, Momoh Ademu, Oke, Babatunde Olufemi, Obademi, E.O, Abass Shiro — Fri, 29 Sep 2023 15:47:28 +0000

This paper focuses on financial repression in Nigeria and its intensity using data from the Central

Bank of Nigeria Statistical Bulletin to construct the financial repression index for Nigeria by

employing the summary measure of the Principal Component Analysis(PCA). Results indicated a

preponderance of financial repression over the study period of 1986-2020 and provided a financial

repression index at a measure of less than 30% over the study period. This measure is seen as far less

than average measures of financial repression from extant cross-country literature on Nigeria’s

financial repression index at the level 64.53% over the period of 1990-2009 and 39.08% average over

the period of over 1970-1997. The study concludes the presence of financial repression in Nigeria at a

magnitude that is reasonably lower than previously estimated from cross country studies in which

Nigeria was sampled

Dividend Policy, Liquidity and Firm Value of Consumer Goods Industry Companies in Nigeria

Adedokun, Kolade Adebanjo, Olalekan Obademi, Abass Shiro — Fri, 29 Sep 2023 00:00:00 +0000

The focus of this study is to determine the effect of dividend policy and liquidity on firm

value. The research was conducted on companies in the consumer goods industry sector on

the Nigeria Exchange Group for the 2012-2021 period. The population used in conducting

this study was obtained from the consumer goods industrial sector companies listed on the

bourse of the Nigeria Exchange Group (NGX Group) which have a total of 25 companies.

Purposive sampling technique was used and 17 companies were selected that met the

condition of regular dividend payment. Panel least regression data analysis technique was

used for the study. Secondary data used were obtained from audited financial statements of

the sampled companies for the period and Nigerian Exchange Group factbook. The results

showed that dividend policy, liquidity and market risk had positive significant relationship

with firm value at 5.8198:0.000; 15:6395:0.000 and 1.2805:0.000 respectively indicating 1%

significance level. Free cashflow had positive insignificant relationship with firm value while

ownership concentration has negative but insignificant causal effect on firm value. R², the

coefficient of determination of 0.8329 reflects that the model explanatory variables account

for 83.29% of value of price to book value, the explained variable. It is recommended that

adequate level of profitability should be a priority to enable payment of dividend. Liquidity

position should be at the acceptable levels and market risk should not exceed tolerance limit.

Board Gender Diversity and Financial Performance of Listed Deposit Money Banks

Kehinde A. Alliu, Olukayode O. Oyewale, Ayodele Ajayi — Tue, 03 Oct 2023 12:18:32 +0000

In developing countries such as Nigeria, the role of women is minimized at the economic and

social strata; thus limiting their contribution in the society. The main aim of this study is

therefore to examine the effect of board gender diversity on financial performance of listed

deposit money banks in Nigeria. The study sampled 12 listed deposit money banks and

obtained data spanning from 2012 to 2022. The result of the regression analysis document

that the proportion of female directors to total directors on the board has no significant

negative effect on financial performance of listed deposit money banks in Nigeria while the

presence of critical mass of female directors (at least three female directors) has a positive

and significant effect on financial performance of listed deposit money banks in Nigeria. The

study recommends for the inclusion and participation of more women on the corporate board

of banks in order to ensure that their impact are more felt on their financial performance.

Effect of Dividend Policy on Share Price Movement of Selected Quoted Companies in Nigeria

Adedokun, Kolade Adebanjo, Olalekan Obademi, Abass Shiro — Tue, 03 Oct 2023 00:00:00 +0000

Dividend Policy remains a contentious area of corporate finance with a school of thought
indifferent and another in support. The two contending views under which other hypotheseswere premised are; on the popular dividend relevance and irrelevance theories. Dividendpolicy scholars argued that it expresses information content about future prospects andcashflow of the firm. Irrelevance proponents hinged their argument on the point that all that isnecessary is the investment policies and risk of an enterprise in maximizing shareholderswealth. The latter proponents advanced their theories in favour on capital and future gainsinpreference to immediate payment of cash in form of dividend. This study centered oneffectsof dividend policy on share price of selected quoted companies in Nigeria with dividendper-share, earnings per-share and profitability taken as endogenous variables. Thirteenquotedcompanies on the floor of the Nigeria Exchange (NGX Group) using randomsamplingwereused. Pooled OLS regression with fixed and random effects models were employedforestimation. The fixed effects model was preferred as the efficient estimator for the studyandthe results revealed that dividend per share has inverse and statistically insignificant effectswith share price, likewise; earnings per share. Profitability has positive but insignificant
effect on share price.

INFLUENCE OF FIRM SPECIFIC AND CORPORATE GOVERNANCEFACTORSON CAPITAL STRUCTURE OF PUBLICLY LISTED NON-FINANCIALFIRMSINNIGERIA

Taiwo Anthony Shonubi — Wed, 04 Oct 2023 09:16:53 +0000

The primary aim of this research is to investigate the impact of firm-specific and corporategovernance variables on the capital structure of non-financial firms that are publiclylistedinNigeria. The study's population consists of 123 non-financial firms listed on the NigerianExchange Group between 2006 and 2020. A sample of 58 firms was selected usinganinclusion and exclusion approach. The data was analysed using the generalized methodofmoments technique. The results indicate that past values of total debt to assets exhibit anoteworthy and favourable impact on present values of total debt to assets. Conversely, thecurrent ratio, return on assets, non-current assets, board ownership, and board independencedisplay an unfavourable and noteworthy influence on total debt to assets. Return onequityand debt-tax-shield, on the other hand, demonstrate an unfavourable and insignificant impact
on total debt to assets. Finally, tangibility and block-ownership manifest a favourableandnoteworthy influence on total debt to assets. Conversely, the variables pertaining tofirm-specific and corporate governance exhibit noteworthy impact on the ratio of long-termdebt toequity. The study recommends that firms should consider past level of debts whensettingcurrent debt levels.

DOES TRADE LIBERALIZATION AND FOREIGN DIRECT INVESTMENT INDUCEENVIRONMENTAL DEGRADATION IN SELECTED WEST AFRICAN SUB-REGIONS?

Ndubuisi Chidi Olunkwa , Anthonia T. Odeleye — Tue, 03 Oct 2023 13:53:58 +0000

This study examined the ef ect of trade liberalization and foreign direct investment onenvironmental degradation within the selected West African sub-region. The data employedinanalyzing the result covers the period 1996 to 2022. Fully modified ordinary least squares anddynamic ordinary least squares were employed in estimating the models. The study's findingsindicate a negative and insignificant influence of trade liberalization and foreigndirect
investment on environmental degradation, indicating that trade liberalization and foreigndirect
investment reduced environmental degradation. Again, the interaction of trade liberalizationandforeign direct investment reduced environmental degradation. Other results confirmed that fossil
fuel energy consumption positively enhanced environmental degradation, although renewableenergy consumption significantly reduced pollution. Based on the empirical findings, sincetradeliberalization and foreign direct investment reduce environmental degradation as fossil fuel
energy consumption increase environmental degradation, implies that ECOWAS governmentsinstitute environmental laws following the race to the top theory to discourage fossil fuel energyusage and push for more renewable energy as it reduces incessant pollution within the region.

THE RELATIONSHIP AND EFFECT OF CAPITAL STRUCTUREONFINANCIAL DISTRESS OF PUBLIC QUOTED NON-FINANCIAL FIRMS IN NIGERIA

Florence Ifeoma Onyenekwe, Peter Ngozi Amah, Samson Ogege — Tue, 03 Oct 2023 14:19:21 +0000

This paper focuses on capital structure and its relationship and ef ect on distress of
public quoted non-financial firms in Nigeria. The study's major objective is to explorethe ef ect of capital structure on the financial distress of publicly quoted non-financial
firms on the Nigeria Exchange (NGX). Independent variables, financial leverage(debt to assets), short-term debt to equity, and long-term debt to equity, wereconsidered to represent the capital structure. The Altman Z-score was usedtomeasure financial distress. The assumptions of trade-of theory, pecking order theory, and agency theory guided this study. The study adopted an ex post facto researchdesign. Secondary data from the financial statements of publicly quoted non-financial
firms in Nigeria from 2011 to 2021 were used. A fixed-ef ects regression analysis
technique has been employed to help answer the hypotheses. The study discoveredthat converting short-term debt to equity has an insignificant positive ef ect onfinancial distress. In contrast, long-term debt to equity has an insignificant negativeef ect on the financial distress of publicly quoted non-financial firms in Nigeria. As aresult, this study recommends considering other factors such as the operatingenvironment not included in the analysis, which could also influence financial distress. It also recommended that businesses should promote prudent financial management.

The Effect of Ownership Structure on Firm Performance of Listed Consumer Goods Firms in Nigeria

Olufisayo Babalola, Olalekan Emmanuel Obademi, Peter Ngozi Amah — Tue, 03 Oct 2023 00:00:00 +0000

The study analysed the influence of ownership structure on the firm performance of fifteen (15) listedconsumer goods firms in Nigeria from 2011 to 2021. The firm's performance was proxied by return onassets and enterprise value. The ownership structure was measured by the chief executive officer
(CEO), board, and block ownership. The findings show that CEO ownership significantly positively
affects the return on assets of listed consumer goods firms in Nigeria. Board and block ownership havean insignificant influence on the return on assets of listed consumer goods firms in Nigeria. Similarly, block ownership significantly positively affects the enterprise value of listed consumer goods firms inNigeria. CEO and board ownership have an insignificant effect on the enterprise value of listedconsumer goods firms in Nigeria. The study recommends that block owners should be allowed to usetheir skills and experience to help companies achieve their goals.

Responsiveness of Industrial Growth to External Debt Question in Nigeria

O. John Ojeka, O. Olayemi Simon-Oke — Wed, 04 Oct 2023 10:06:14 +0000

A high level of industrial growth is associated with higher economicgrowth and development. Still the argument remains whether this mechanismis
sustainable in Nigeria, given the low level of access to external capital flows andlowdomestic capital investment. The study, therefore, employed AutoregressiveDistributed Lag Model (ARDL), variance decompositions, and impulse responsefunctions to examine the long-run ef ect of external debt on industrial growthinNigeria. The study used time series data from 1985 to 2019, and the findings reveal
that external debt has a negative and significant ef ect on industrial growth inthelong run. The evidence from the sensitivity analysis also indicated a negativeresponse of industrial growth to external debt. Consequently, policymakers in Nigeriamust ensure ef ective management of external borrowing through evidence-basedpolicies on external debt and domestic capital formation that can create enablingbusiness environment and stimulate investors’ confidence to accelerate real industrial
growth in Nigeria.

EFFECT OF CORPORATE GOVERNANCE ON FINANCIALPERFORMANCE. A STUDY OF SELECTED BANKING FINANCIALINSTITUTIONS IN NIGERIA.

OLUWATOYIN RUTH MACAULAY, ADENIYI A ADEKOYA, CHARLES ONYEIWU ONYEIWU — Wed, 04 Oct 2023 14:30:38 +0000

The study assessed ef ect of corporate governance on financial performance. Specifically, the study used First Bank of Nigeria PLC, GT Bank Plc, Zenith Bank Plc, UBA Plc, and ACCESS bank Plc as case study. In line with the broad objective, thestudy investigated the ef ect of Audit Committee, Board Size, and board compositionon Return on Asset (ROA) of selected banks. The ex-post facto research designwas
adopted in this study. Data was collected using secondary source of data, while thepooled regression model was used in this study to ascertain the relationship betweenthe variables in the study. Findings of the study revealed that: Audit Committee havea positive and significant ef ect on Return on Asset (ROA), Board size has a negativeand significant ef ect on ef ect on Return on Asset (ROA), while board compositiondoes not significantly af ect Return on Asset (ROA) of selected banks. It was
recommended that: the audit committee members should be permitted to operateindependently, and the audit committee's membership should be reviewed onaregular basis to increase transparency in the audit committee's performance of its
duties. Additionally, banking financial institutions and other organizations shouldhave a reasonable board size that includes more non-executive directors
(representatives of the shareholders) than executive directors. It was recommendedthat a balanced board composition be implemented in response to the observedassociation between board composition and the financial performance of deposit
money institutions as measured by ROA (with emphasis on women inclusion in board).

Implications of Earnings Management on the FirmValue of ListedNon-Financial Firms in Nigeria

Adebayo OLAGUNJU, Risikat Motunrayo SHITTU, Ruth Tony OBIOSA — Wed, 04 Oct 2023 14:48:49 +0000

This study examined the implications of earnings management on the value of
sampled Nigerian non-financial firms. While earnings management was measuredthrough accrual earnings management (ACEM) and real earnings management (REM)
from production, the firm value was measured with Tobin Q. Data used weregenerated from a sample of sixty-nine (69) non-financial firms in Nigeria. In line withthe outcomes of specification tests, fixed ef ect panel regression was employedintesting the hypotheses. The results of the panel regression technique indicate that
while accrual earnings management recorded insignificant negative influence onTobin Q (t=-0.75; p>0.05), real earnings management was found to exerts significant
negative influence on Tobin Q (t=-2.56; p<0.05). The study thus concludes that
earnings management through real activities is detrimental to the market value of
Nigerian listed non-financial firms. Hence, the recommendation that emanates fromthis study is that EM practice among Nigeria non-financial firms shouldbediscouraged as it discourages investors and thus hinders the firm value and longrungrowth of the firm by extension.

Niche Marketing Strategies: Consumer Perceived Value andWillingness to Pay for Whole Wheat Bakery Products

R.D Bakare, A.G Rahim — Wed, 04 Oct 2023 15:03:03 +0000

This study examined the relationship between niche marketing strategies, consumer
perceived value and willingness to pay for whole wheat bakery products. Acorrelational research design was adopted. Questionnaire was used to solicit opinionfrom respondents who are residents within Lagos state metropolis. Conveniencesampling technique was adopted to survey respondents that are accessible and willingto participate in the survey. Pearson correlation and regression analysis were usedtotest the four hypotheses stated. Results of the analysis revealed that the threevariables are significantly related to one another. Specifically, niche marketingstrategies and perceived value (r= .540, p<.000), niche marketing strategies andconsumer willingness to pay (r= .508, p<.000), and perceived value and consumer
willingness to pay (r= .322, p<.000). Furthermore, the results showed that only nichemarketing strategies predicted consumer willingness to pay (β=.472, t=5.190, p=.000), perceived value is not a predictor of consumer willingness to pay (β=.067, t=.742, p=.460) for whole wheat bakery products. The study concluded that nichemarketing strategies is a potent strategy to compete ef ectively in the dynamic andgrowing competitiveness of business environment. On the basis of the findings, thestudy recommends that companies pursuing niche marketing should realize that
niches are relatively too small to be served lucratively, hence, there is need for acustomer database so as to keep track of customer preferences for improvedrelationship building. In addition, to ef ectively pursue niche marketing, firms shoulddevelop strong internal dynamic capabilities to serve as strong defensive barriers that
will enable them to grow along with their market and possibly expand into other
profitable market clusters.