Öz
Purpose- The Nigerian manufacturing sector is performing below expectations despite government’s proactive measures to address critical issues in the sector. A key driver of performance in this sector is the volatile exchange rate, but the direction of this effect is unknown. To shed more light on it, this study considers two types of exchange rates, namely effective and interbank exchange rates and studies manufacturing sector based on product classification.
Methodology: An Auto Regressive Distributed Lag estimator was adopted to estimate the relationship between sectoral output and volatile exchange rate using quarterly data from 2010:1 to 2023:4.
Findings- The volatility of each of the exchange rates is computed by utilizing eGARCH(1,1) based on monthly exchange rate data from 2010:1 to 2023:12. With the aid of autoregressive distributed lag (ARDL), the result indicates that interbank exchange rate volatility matter more than effective exchange rate in the Nigerian manufacturing sector. Further, exchange rate volatility in the manufacturing subsectors is more of a short-run than long-run phenomenon. Specifically, textiles, electrical & electronics, and wood & wood products are adversely affected by interbank exchange rate volatility. Textile, chemicals and oil refining are adversely affected by effective exchange rate volatility. Interbank exchange rate volatility encourages oil refining (up to three lags) and vehicle assembly. In the long run, interbank exchange rate volatility facilitates the performance of electrical & electronics, textile and vehicle assembly while effective exchange rate significantly affects electrical & electronics. Nonmetallic, iron & steel, plastic, cement products are affected negatively by both interbank and effective exchange rate volatility while interbank exchange rate volatility drags the activity in the oil refining products. Economic implications and recommendations are offered based on the findings.
Conclusion- It is therefore concluded that interbank exchange rate volatility matter more than effective exchange rate in the product categories of the manufacturing sector in Nigeria. Further, interbank exchange rate has detrimental effect on most of these products, both in the short and long runs.
Anahtar Kelimeler
Industry studies manufacturing generalized autoregressive conditional heteroskedasticity foreign exchange
Kaynakça
- Abiola, O. .M, (2024) Impact of Exchange Rate Volatility on the Manufacturing Sector Growth Performance in Nigeria. Available at http://dx.doi.org/10.2139/ssrn.4728928
- Adewuyi, A & E. Olubiyi (2020). Do governance institutions matter for trade flows between sub-Saharan Africa and its trading partners? African Economic Research Consortium, AERC Research Paper 376.
- Ali, N (2020). Analysis of the effect of exchange rate fluctuations on the manufacturing performance in Nigeria 1981-2018. International Developing and Emerging Economies, 8(1), 31-49.
- Arachchi A., (2018). The impact of exchange rate volatility on industrial export performance in sri lanka: vecm approach. European Journal of Accounting, Auditing and Finance Research , 6 (7), 29 - 38.
- Bahmani-Oskooee, M & A. Mohammadian (2017). Asymmetry effects of exchange rate changes on domestic production in Japan. International Review of Applied Economics, 31(6), 774-790.
- Bakla, S., G. Goshi and A. Abimiku (2024). Exchange volatility and manufacturing sector exports in Nigveria. International Journal of Innovation Research in Education Technology and Social Strategies, 11(1), 1.22.
- Buabeng, E (2019). The effect of exchange rate fluctuation on the performance of manufacturing firms: empirical evidence from Ghana. Economic Literature, 1(2), 133-147.
- Central Bank of Nigeria (2021). CBN Statistical Bulletin, Central Bank of Nigeria, Abuja.
- De Grauwe, P (1988). Exchange rate variability and the slowdown in growth of international trade. IMF Staff Papers, 35(1), 53-84
- Engle, R (1982) Autoregressive Conditional Heteroskedasticity with Estimates of the Variance of United Kingdom Inflation. Econometrica, 50, 987-1007.
- Ethier, W (1973). International trade and the forward exchange market. The American Economic Review, 63(3), 494-503.
- Falaye, A., O. Eseyin, a. Otekunrin, F. ASamu, P. Ogunlade, B. Egbide, B. Rasak, M. Niyi-Oyebamiji & D. Eluyela (2019). Impact of exchange rate on the manufacturing sector in Nigeria, 1990-2014. International Journal of Mechanical Engineering and Technology 10(2), 1568-1583.
- Hakeem Aidi et.al. (2018). Exchange Rate Volatility and the Nigerian Industrial Performance. Saudi Journal of Economics and Finance , 2 (5), 208 - 215.
- Ishinwe, A and H. Ngalawa (2015). Exchange rate volatility and manufacturing exports in South Africa. Banks and Bank Systems, 10(3), 29-38.
- Jalil, A., Ma, Y., and Naveed, A. (2008). The finance-fluctuation nexus: Further evidence from Pakistan and China. International Research Journal of Finance and Economics, 3(14), pp. 212-231.
- Jongbo, O. C. (2014). The Impact of Real Exchange Rate Fluctuations on Industrial Output in Nigeria. Journal of Policy and Development Studies , 9 (1), 268 - 278.
- Lotfalipour M. R. et.al. (2013). Exchange Rate Impacts on Investment of Manufacturing Sectors in Iran. Business and Economics Research , 3 (2), 12 - 22.
- Mambo, C (2020). Exchange rate and manufacturing sector performance in SACU states. Cogent Business and Management, 7(1), 1-16.
- Muhammad Jamil et.al. (2012). Exchange Rate Volatility and its Impact on Industrial Production, Before and After the Introduction of Common Currency in Europe. International Journal of Economics and Finance Issues , 2 (2), 85 - 109.
- Nelson, D. (1991) Conditional Heteroskedasticity in Asset Returns: A New Approach. Econometrica, 59, 347-37
- Ogunjimi J.A. (2020) Exchange rate dynamics and sectoral output in Nigeria> a symmetric and asymmetric approach. American Journal of Social Sciences Humanities. 5(1): 178-193. DOI: 10.20448/801.51.178.193
- Ogunmuyiwa Micheal Segun et. al. (2018). Measuring the Impact of Exchange Rate on Industrial Output in Nigeria. European Journal of Market and Economics , 1 (2), 87 - 93.
- Ojeyinka, T (2019). Exchange rate volatility and performance of manufacturing sector in Nigeria (2981-2016). African Journal of Economic Review, 8(2), 27-41.
- Oladipo, O., A. Onabote, F. Adekanye, O. Ogunjobi & E. Folarin (2023). Exchange rate fluctuation and manufacturing output: stylized evidence from Nigeria. Development Economics, 22(3), 32-44.
- Oseni, I. O., Adekunle, I. A., & Alabi, M. O. (2019). Exchange rate volatility and industrial output growth in Nigeria. Journal of Economics and Management, 38(4), 129-156
- Pamba, D. (2023) Impact of exchange rate volatility on South Africa’ exports: new evidence from NARDL and STR Models https://www.researchgate.net/publication/376231545_Impact_of_Exchange_Rate_Volatility_on_South_Africa%27s_Exports_New_Evidence_from_NARDL_and_STR_Models.
- Pesaran, M. and Y. Shin (1999) An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis, In Strom, S. (Ed.): Econometrics and Economic Theory in 20th Century: The Ragnar Frisch Centennial Symposium, Part V, Chapter 11, Cambridge University Press, Cambridge.
- Pesaran, M., and B. Pesaran (1997). Working with Microfit 4.0: Interactive Econometric Analysis. Oxford University Press, Oxford.
- Pesaran, M., Shin, Y., and Smith, R (2001) Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
- Polodoo, V.,, B Seetanah, & R. Sannassee (2016). Exchange rate volatility and manufacturing trade: evidence from Africa. The Journal of Developing Areas 50(5), 241-256.
- Takpa, B. S., Oriin, C.K, Akunna, C.K. (2023) Real exchange rate and manufacturing sector of the Nigerian economy: 1999-2021. International Journal of Multidisciplinary Research and growth Evaluation, 4(3). 691-697
- Ukunwa, J., Ihugba, O.& Okoro, D. (2022) Exchange rate fluctuations and Nigeria’s industrial sector productivity and growth. International Journal of Innovative Finance and Economics Research, 10(3).80-97. Available at https://www.researchgate.net/publication/362578914_Exchange_Rate_Fluctuations_And_Nigeria_Industrial_Sector_Productivity_Growth
Öz
Kaynakça
- Abiola, O. .M, (2024) Impact of Exchange Rate Volatility on the Manufacturing Sector Growth Performance in Nigeria. Available at http://dx.doi.org/10.2139/ssrn.4728928
- Adewuyi, A & E. Olubiyi (2020). Do governance institutions matter for trade flows between sub-Saharan Africa and its trading partners? African Economic Research Consortium, AERC Research Paper 376.
- Ali, N (2020). Analysis of the effect of exchange rate fluctuations on the manufacturing performance in Nigeria 1981-2018. International Developing and Emerging Economies, 8(1), 31-49.
- Arachchi A., (2018). The impact of exchange rate volatility on industrial export performance in sri lanka: vecm approach. European Journal of Accounting, Auditing and Finance Research , 6 (7), 29 - 38.
- Bahmani-Oskooee, M & A. Mohammadian (2017). Asymmetry effects of exchange rate changes on domestic production in Japan. International Review of Applied Economics, 31(6), 774-790.
- Bakla, S., G. Goshi and A. Abimiku (2024). Exchange volatility and manufacturing sector exports in Nigveria. International Journal of Innovation Research in Education Technology and Social Strategies, 11(1), 1.22.
- Buabeng, E (2019). The effect of exchange rate fluctuation on the performance of manufacturing firms: empirical evidence from Ghana. Economic Literature, 1(2), 133-147.
- Central Bank of Nigeria (2021). CBN Statistical Bulletin, Central Bank of Nigeria, Abuja.
- De Grauwe, P (1988). Exchange rate variability and the slowdown in growth of international trade. IMF Staff Papers, 35(1), 53-84
- Engle, R (1982) Autoregressive Conditional Heteroskedasticity with Estimates of the Variance of United Kingdom Inflation. Econometrica, 50, 987-1007.
- Ethier, W (1973). International trade and the forward exchange market. The American Economic Review, 63(3), 494-503.
- Falaye, A., O. Eseyin, a. Otekunrin, F. ASamu, P. Ogunlade, B. Egbide, B. Rasak, M. Niyi-Oyebamiji & D. Eluyela (2019). Impact of exchange rate on the manufacturing sector in Nigeria, 1990-2014. International Journal of Mechanical Engineering and Technology 10(2), 1568-1583.
- Hakeem Aidi et.al. (2018). Exchange Rate Volatility and the Nigerian Industrial Performance. Saudi Journal of Economics and Finance , 2 (5), 208 - 215.
- Ishinwe, A and H. Ngalawa (2015). Exchange rate volatility and manufacturing exports in South Africa. Banks and Bank Systems, 10(3), 29-38.
- Jalil, A., Ma, Y., and Naveed, A. (2008). The finance-fluctuation nexus: Further evidence from Pakistan and China. International Research Journal of Finance and Economics, 3(14), pp. 212-231.
- Jongbo, O. C. (2014). The Impact of Real Exchange Rate Fluctuations on Industrial Output in Nigeria. Journal of Policy and Development Studies , 9 (1), 268 - 278.
- Lotfalipour M. R. et.al. (2013). Exchange Rate Impacts on Investment of Manufacturing Sectors in Iran. Business and Economics Research , 3 (2), 12 - 22.
- Mambo, C (2020). Exchange rate and manufacturing sector performance in SACU states. Cogent Business and Management, 7(1), 1-16.
- Muhammad Jamil et.al. (2012). Exchange Rate Volatility and its Impact on Industrial Production, Before and After the Introduction of Common Currency in Europe. International Journal of Economics and Finance Issues , 2 (2), 85 - 109.
- Nelson, D. (1991) Conditional Heteroskedasticity in Asset Returns: A New Approach. Econometrica, 59, 347-37
- Ogunjimi J.A. (2020) Exchange rate dynamics and sectoral output in Nigeria> a symmetric and asymmetric approach. American Journal of Social Sciences Humanities. 5(1): 178-193. DOI: 10.20448/801.51.178.193
- Ogunmuyiwa Micheal Segun et. al. (2018). Measuring the Impact of Exchange Rate on Industrial Output in Nigeria. European Journal of Market and Economics , 1 (2), 87 - 93.
- Ojeyinka, T (2019). Exchange rate volatility and performance of manufacturing sector in Nigeria (2981-2016). African Journal of Economic Review, 8(2), 27-41.
- Oladipo, O., A. Onabote, F. Adekanye, O. Ogunjobi & E. Folarin (2023). Exchange rate fluctuation and manufacturing output: stylized evidence from Nigeria. Development Economics, 22(3), 32-44.
- Oseni, I. O., Adekunle, I. A., & Alabi, M. O. (2019). Exchange rate volatility and industrial output growth in Nigeria. Journal of Economics and Management, 38(4), 129-156
- Pamba, D. (2023) Impact of exchange rate volatility on South Africa’ exports: new evidence from NARDL and STR Models https://www.researchgate.net/publication/376231545_Impact_of_Exchange_Rate_Volatility_on_South_Africa%27s_Exports_New_Evidence_from_NARDL_and_STR_Models.
- Pesaran, M. and Y. Shin (1999) An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis, In Strom, S. (Ed.): Econometrics and Economic Theory in 20th Century: The Ragnar Frisch Centennial Symposium, Part V, Chapter 11, Cambridge University Press, Cambridge.
- Pesaran, M., and B. Pesaran (1997). Working with Microfit 4.0: Interactive Econometric Analysis. Oxford University Press, Oxford.
- Pesaran, M., Shin, Y., and Smith, R (2001) Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
- Polodoo, V.,, B Seetanah, & R. Sannassee (2016). Exchange rate volatility and manufacturing trade: evidence from Africa. The Journal of Developing Areas 50(5), 241-256.
- Takpa, B. S., Oriin, C.K, Akunna, C.K. (2023) Real exchange rate and manufacturing sector of the Nigerian economy: 1999-2021. International Journal of Multidisciplinary Research and growth Evaluation, 4(3). 691-697
- Ukunwa, J., Ihugba, O.& Okoro, D. (2022) Exchange rate fluctuations and Nigeria’s industrial sector productivity and growth. International Journal of Innovative Finance and Economics Research, 10(3).80-97. Available at https://www.researchgate.net/publication/362578914_Exchange_Rate_Fluctuations_And_Nigeria_Industrial_Sector_Productivity_Growth
Ayrıntılar
| Birincil Dil | İngilizce |
|---|---|
| Konular | Finans, Finans ve Yatırım (Diğer), İşletme |
| Bölüm | Articles |
| Yazarlar | |
| Yayımlanma Tarihi | 30 Temmuz 2025 |
| Gönderilme Tarihi | 12 Aralık 2024 |
| Kabul Tarihi | 29 Mayıs 2025 |
| Yayımlandığı Sayı | Yıl 2025 Cilt: 14 Sayı: 1 |
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