O. Felix Ayadi

Bank performance measurement in a developing economy: an application of data envelopment analysis

Outlines previous research on measuring the performance of banks and the factors leading up to the banking crisis in Nigeria in the 1990s. Applies data envelopment analysis to 1991‐1994 data on ten listed Nigerian banks to assess their relative efficiency and tabulates the results for each year, year by year. Discusses the consistency of the findings with other research and draws conclusions on the root causes of Nigeria’s banking problem, e.g. government interface, poor management, unprofessional practices etc. Calls for a halt to government interference and better bank performance monitoring.

Stock return seasonalities in low‐income African emerging markets

Surveys African stock markets to find out if they are as efficient as developed markets, and follow the same “turn‐of‐the‐year” pattern as other markets. Compares Ghana, Zimbabwe and Nigeria, and focuses on the period between 1985 and 1995. Describes the environment of each, and computes monthly stock returns, testing them for seasonality. Finds evidence of the January effect only in Ghana, and there it is small. Notes that this may be the result of spillover from London.

Financial liberalization and price rigidity in the Nigerian banking system

Purpose – Many developing countries embarked on a program of financial liberalization in order to maximize the benefits associated with a free market system. The preponderance of the evidence in the financial economics literature is that market-determined interest rates become volatile subsequent to financial liberalization. This paper aims to examine the liberalization program in Nigeria with a view to finding out whether the level of banking competition is increased after financial liberalization. Design/methodology/approach -The test of banking competition is premised on the argument by Hannan and Berger that retail interest rate rigidity results from either market concentration or the size of the customer base. The cointegration and error correction models are applied to quarterly wholesale and retail interest rates from 1987 through 2001, in order to analyze their long-run as well as short-run dynamics. Findings - The retail lending and deposit rates possess a long-run equilibrium relationship. Moreover, the minimum rediscount (wholesale) rate (MRR) and the deposit rate also exhibit a long-run equilibrium relationship. If the lending and deposit rates diverge from their long-run equilibrium relationship, 37 per cent of the disequilibrium is corrected each quarter by changes in the lending rate. On the other hand, any disequilibrium in the long-run relationship between the deposit and MRRs can be corrected by changes in the MRR at about 58 per cent per quarter. Originality/value - The results imply that the financial liberalization in Nigeria failed to achieve its key objective of a market-driven interest rate system.

Artificial Neural Network and the Financial Markets: A Survey

This study describes the structure and function of a new financial modeling technique, namely, the Artificial Neutral Network (ANN) in predicting financial markets’ behavior. With the advancement of the computer technology to date, ANN allows us to imitate human reasoning and thought processes in identifying the optimal trading strategies in the financial markets. The paper identifies the theory and steps involved in performing ANN and Generic Alogorithm in financial markets, the accuracy of the computer learning process, and the appropriate ways to use this process in developing trading strategies. It further discusses the superiority of ANN over traditional methodologies. The study concludes with the description of successful use of ANN by various financial institutions.

Investment implications of the korean financial market reform

Abstract This paper investigates if the Korean equity market has any structural relationship with other stock markets in Asia and the industrialized world. Unlike earlier studies, this one places emphasis on the Korean equity market relative to other markets in the sample. The numerical taxonomy technique is applied to investigate if the Korean index exhibits a short-run comovement with the other indexes in the sample. The results indicate some comovement between the Korean and the Japanese indexes. The comovement with the U.K. and U.S. indexes is slight with no consistent pattern. On the long-run, the pairwise cointegration test indicates that there is no consistent structural relationship between the Korean stock market and any of the sampled indexes.

The impact of Nigeria's external debt on economic development

Purpose – This paper aims to investigate the impact of huge external debt with its servicing requirements on economic growth of the Nigerian economy so as to make meaningful inference on the impact of the debt relief which was granted to the country in 2006.Design/methodology/approach – The neoclassical growth model which incorporates external sector, debt indicators and some macroeconomic variables was employed in this study. The paper investigates the linear and nonlinear effect of debt on growth and investment utilizing the ordinary least squares and the generalized least squares.Findings – Among other things, the negative impact of debt (and its servicing requirements) on growth is confirmed in Nigeria. In addition, external debt contributes positively to growth up to a point after which its contributions become negative reflecting the presence of nonlinearity in effects.Originality/value – Nigerias external debt is analyzed in a new context utilizing a different but innovative model and econometric ...

A Vector Autoregressive Analysis Of An Oil‐Dependent Emerging Economy — Nigeria

This paper models the interrelationship among a variety of macroeconomic variables representing the financial, as well as the energy, sectors of the Nigerian economy from 1975 through 1994. The attempt is to investigate the impact of the energy sector on the functioning of the Nigerian economy, including the financial markets. The investigation is explored within a vector autoregressive (VAR) system. The results reveal that the energy sector exerts a significant influence on the Nigerian economy by acting as a prime mover. More importantly, Nigeria seems to find itself in a vicious circle, because of its inability to exercise control over the price of its main export and its imports. Thus, the strength and autonomy exhibited by Nigerias macroeconomic managers during the oil boom era appears to have been barren.

Asian financial crisis: the pre‐ and post‐crisis analysis of Asian equity markets

This study adds to the ongoing analysis of the long‐term impact of Asian financial crisis on the stock markets of eight Asian‐Pacific countries. Using current data to capture postcrisis behavior of returns, multivariate cointegration analysis reveals that a cointegrating relationship exists among the markets that transcend the financial crisis. Both vector error correction (VEC) and Granger causality tests demonstrate the profound effect of financial crisis in Korea on the returns of other countries. Granger causality tests further reveal that the events surrounding the crisis in Thailand and Indonesia largely dictate their own short‐run returns behavior since the advent of the crisis. Compared to earlier period, the post‐crisis era also experiences a closer relationship among the index returns of Hong Kong, Korea, and Singapore and a heightened degree of convergence among the returns of Asian markets.

Adverse selection, search costs and sticky credit card rates

Several scholars of financial economics observed that during the 1980s, market interest rates declined continuously with little or no impact on credit card rates. Recently, Meyercord (1994), Sinkey and Nash (1993) and Sullivan and Worden (1995) recorded significant changes in the credit card market indicating an increased level of competition. This study represents an attempt to determine the sensitivity of credit card rates to the costs of funds in the U.S. economy. The evidence from the Johansen Cointegration test confirms that credit card rates and cost of funds possess a long-run equilibrium relationship with one another. Furthermore, the results of the error correction models are indicative of a sluggish rate at which credit card interest rates adjust to the costs of funds. Between 1982 and 1994, credit card rates adjust to changes in the cost of funds at about 15 percent per quarter. These results represent anecdotal evidence for the validity of adverse selection, search and switch costs explanations that have been discussed in the financial contracting literature.

Historically Black Colleges and Universities (HBCUs) as Agents of Change for the Development of Minority Businesses.

This article attempts to make a wake-up call to Historically Black Colleges and Universities (HBCUs) to respond to the plight of minority business owners while also fulfilling their role of educating students. Although the state of minority businesses was much better than what the public is made to believe, however, these businesses continue to face challenges. Aside from the traditional problem of limited capital resources many challenges have ensued from the economic, social, and political changes in our society today. As long as the current political and economic climates persist, leading to a negative impact on the economies of minority population, institutions of higher learning, particularly HBCUs, have a unique opportunity to be the catalyst of change in the development and promotion of minority businesses.