John Nkwoma Inekwe

FDI, Employment and Economic Growth in Nigeria

The study examines the links between Nigerian economic growth, employment and foreign direct investment (FDI) in the manufacturing and servicing sectors between 1990 and 2009. The significant results of the Johansen cointegration technique and the vector error correction model reveal that FDI in the servicing sector has a positive relationship with economic growth while FDI in the manufacturing sector has a negative relationship. FDI in the manufacturing sector has a positive relationship with employment rate while FDI in the servicing sector has a negative relationship with employment rate. Granger causal relationships among these variables exist. In the growth equation, causality runs from growth to FDI in the service sector while growth and FDI in the manufacturing sector have bidirectional causal effect. For the employment equation, unidirectional causality runs from FDI in the service and manufacturing sectors to employment rate.

Global financial network and liquidity risk

This article investigates the impact of global financial integration on liquidity risk. Using the network approach and bank-level data for 95 countries, we find weak asymmetry in the relationship between net stable funding and financial connectedness. Our results suggest that the degree of connectedness between banks is inversely related to funding stability. We also find that banks that are strongly connected to important lenders take on more risks relative to those that have independent access to finance in the financial network. Our results are consistent and invariant when either internal or external instruments are used to resolve econometric issues. JEL Classification: F21, F34, F36, G15, G33

Remittances and financial development: empirical evidence from heterogeneous panel of countries

ABSTRACT Remittances are the second largest source of external finance after foreign direct investment in the developing economies. In this study, we analyse the role of incoming remittances on financial development for 57 highest remittance recipient economies. A long run equilibrium relationship is established between remittances and three alternative indicators of financial development. Estimates from the dynamic system-generalized method of moments reflect lower elasticity values for developing countries compared to the developed ones. Our findings are robust across countries, and highlight the necessity for strengthening institutional set-ups to increase the inflow of remittances, which will enhance financial development across countries. The role of foreign direct investment is found to be significant in most cases.

The exploration of economic crises: parameter uncertainty and predictive ability

Over a long horizon, this paper examines joint economic crises and determines the power of 49 variables in predicting such episodes. While incorporating dynamism in the prediction, we generate the predictive power of various specifications and model the uncertainty in the parameters of interest. The results reveal that growth of real gross domestic product per capita, regulation, bank non‐performing loans, interest rate and inflation rate are the most significant variables in predicting the joint economic crises. These variables predict economic crises with about 93% accuracy and can predict joint economic crises in developing countries and recent joint crises.

A Network Visualization of Financial Integration and Credit Risk

This study relates financial integration to credit risk of banks in a panel of countries. Over the period of study, we compute measures of financial integration for a panel of banks and examine how they relate to the credit risk of borrowing banks. The result of an instrumental variable approach reveals that banks that engage in more borrowing in the international community do not help to alleviate credit risk state. In addition, borrowing banks that are more important in the network also help to compound credit risk. However, the closeness statistic reveals a significant reduction in credit risk of the borrowing banks such that banks that have independent access to other banks in the network are better positioned in reducing credit risk. The individual country analysis reveals that more borrowings by banks in the international community have different effects based on country of operation.