The Challenges Of The Global Economic Crisis And Nigeria’s Financial Markets’ Stability

Project and Seminar Material for Economics

The Challenges Of The Global Economic Crisis And Nigeria’s Financial Markets’ Stability


Abstract


This study is on the challenges of global economic crisis and Nigeria’s financial market stability.The total population for the study is 200 staff of CBN in Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers, accountants, customer care officers and senior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Chapter One


Introduction

1.1 Background of the Study

The Emergence of the Global Financial Meltdown The global economy has been hit by the worst economic crisis since the Great Depression. What began as a meltdown of the United States sub-prime mortgage market in 2007, had grown steadily into a full blown economic crisis by 2008, wiping out trillions of dollars of financial wealth, undermining global trade and investment and putting the real economy on a course of protracted recession around the world (ILO, 2009.3; World Bank, 2009.1; Igbatayo, 2009.5). The foreclosure epidemic in the United States mortgage market in 2006 became a key factor that triggered the global financial crisis. Economies in all the continents and espousing different ideologies and institutional organization were quickly caught in the inevitable web of multifarious networks which are the hallmark of globalization. The growing liberalization of international trade attained in the last twenty years of the 21th century, propelled by the reform policies championed by the World Bank and the International Monetary Fund (IMF) prepared the ground for full blown globalization. This new system of doing international business may be defined as the growing integration of markets in goods, services and capital across national borders. With the emergence of globalization, economic crisis can no longer be confined to one country, or even an economic community. The Nigerian economy has demonstrated particular vulnerability to the emergent global economic crisis. Driven by crude oil and gas, the nation’s economy is anchored on the petroleum sector, which accounts for 80 percent of government’s annual revenue and foreign exchange earnings. The petroleum sector also contributes about 50 percent of Nigeria’s annual gross domestic product. The global oil and gas industry enjoyed tremendous price increases associated with sustained economic growth around the world until mid-2008, when the price of crude oil packed at US$147.00 per barrel. While the boom lasted, Nigeria became a major beneficiary of crude oil price upswings, increasing its foreign exchange reserves to an unprecedented level of about US$60 billion. The windfall also afforded Nigeria the rare opportunity to exit the Paris Club of creditors, in a development which catalyzed the discharge of its foreign debt obligations through the payment of US$18 billion, while the sum of US$12billion was waived by creditors, leaving a paltry sum of US$2billion. However, with the advent of the global economic turmoil, global oil prices plummeted to less than US$40.00 per barrel by the 1st quarter of 2009. This development has unleashed an external shock on the Nigerian economy. The sharp drop in oil revenue has reversed few years of fiscal surpluses to severe deficits. The dominance of the oil sector has therefore impacted negatively on Nigeria’s macroeconomic performance, particularly since the emergence of the global crisis. Igbatayo (2011) opined that in the case of Nigeria, the emergent global crisis has impacted negatively on the nation’s financial sector, triggering instability in banks and the capital market. The banking sector is shaken particularly hard, causing the Central Bank to inject more than N400 billion naira or US$2.72 billion into vulnerable banks to forestall systemic collapse in the sector. In the capital market, equity prices, in the past couple of years, have fallen sharply, with the All-Share Index at the Nigerian Stock Exchange down by 33 percent at the end of December 2009, from levels recorded in December, 2008. Here in Nigeria, how are we affected by the ravaging financial crisis? What measures are needed to cushion the impact on the economy and the people? It is important to stress that the global economy is inter-related. No country is isolated. What affects one country directly or indirectly affects the others. The instability in Nigeria’s financial markets poses severe challenges to policy makers, requiring urgent measures to stem the tide. The 2008/2009 global economic meltdown was a challenge to the Nigerian economy. As a major petroleum producing country, Nigeria was not insulated from its effects. An important effect of the global meltdown was the decline in the demand for crude petroleum. Crude prices fell precipitately from about $150.00 per barrel in 2008 to less than $40.00 early in 2009, a development that subjected budgets at all tiers of government to drastic downsizing. In a way, the recent global meltdown may be considered as a trial run and a simulation of conditions in Nigeria’s post petroleum era.


1.2 Statement of the Problem

The Nigerian economy has demonstrated particular vulnerability to the emergent global economic crisis. Driven by crude oil and gas, the nation’s economy is anchored on the petroleum sector, which accounts for 80 percent of government’s annual revenue and foreign exchange earnings. The petroleum sector also contributes about 50 percent of Nigeria’s annual gross domestic product. The global oil and gas industry enjoyed tremendous price increases associated with sustained economic growth around the world until mid-2008, when the price of crude oil packed at US$147.00 per barrel. While the boom lasted, Nigeria became a major beneficiary of crude oil price upswings, increasing its foreign exchange reserves to an unprecedented level of about US$60 billion. The windfall also afforded Nigeria the rare opportunity to exit the Paris Club of creditors, in a development which catalyzed the discharge of its foreign debt obligations through the payment of US$18 billion, while the sum of US$12billion was waived by creditors, leaving a paltry sum of US$2billion. However, with the advent of the global economic turmoil, global oil prices plummeted to less than US$40.00 per barrel by the 1st quarter of 2009. This development has unleashed an external shock on the Nigerian economy. The sharp drop in oil revenue has reversed few years of fiscal surpluses to severe deficits. The dominance of the oil sector has therefore impacted negatively on Nigeria’s macroeconomic performance, particularly since the emergence of the global crisis. From this background the researcher wants to investigate the challenges of global economic crisis and Nigeria’s financial markets stability


1.3 Objective of the Study

The objectives of the study are;

  1. To ascertain the causes of global economic crisis
  2. To ascertain the effect of global economic crisis on Nigeria’s economy
  3. To ascertain the relationship between global economic crisis and financial market stability in Nigeria
  4. To ascertain the causes of Nigeria’s financial market stability

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: there is no effect of global economic crisis on Nigeria’s economy
    H1: there is effect of global economic crisis on Nigeria’s economy.
  2. H02: there is no relationship between global economic crisis and financial market stability in Nigeria.
    H2: there is relationship between global economic crisis and financial market stability in Nigeria

1.5 Significance of the Study

This study, which is primarily aimed at explaining the challenges of global economic crisis and Nigeria’s financial market stability, will provide an insight into the problems associated with global economic crisis and Nigeria’s financial market stability. This report would be of great benefit for Nigeria’s financial sector, to expose them to the solution to global economic crisis and Nigeria’s financial market stability. The findings will be useful for researchers to further generate knowledge in the field


1.6 Scope and Limitation of the Study

The scope of the study covers the challenges of global economic crisis and Nigeria’s financial market stability. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


1.7 Definition of Terms

Challenges:

A call to someone to participate in a competitive situation or fight to decide who is superior in terms of ability or strength

Global Economic Crisis:

Global economic crisis may refer to: Economic events of the late 2000s: Financial crisis of 2007–2008 • Great Recession. A global recession; Earlier global economic events, such as: The Great Depression, a global economic downturn from the late 1920s until World War II; The Long Depression, an international depression.

Financial Market:

A financial market is a market in which people trade financial securities, commodities, and value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural products.

Financial Stability:

Financial stability is a state in which the financial system, i.e. the key financial markets and the financial institutional system is resistant to economic shocks and is fit to smoothly fulfill its basic functions: the intermediation of financial funds, management of risks and the arrangement of payments.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was on the challenges of global economic crisis and Nigeria’s financial market stability. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the challenges of global economic crisis and Nigeria’s financial market stability


5.2 Summary

This study was on the challenges of global economic crisis and Nigeria’s financial market stability. Four objectives were raised which included: To ascertain the causes of global economic crisis, to ascertain the effect of global economic crisis on Nigeria’s economy, to ascertain the relationship between global economic crisis and financial market stability in Nigeria, to ascertain the causes of Nigeria’s financial market stability. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of CBN in Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers, accountants, customer care officers and senior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

The effect of the global financial crisis has demonstrated unexpected decline in the growth of most underdeveloped countries in the world most especially Africa. The policy response by the apex bank of Nigeria (CBN) and Nigeria economy emphasis on and discussed the rising success of policy response by Central Bank of Nigeria also implementation policy by monetary authority to constraint complexity and widespread of Global Financial Crisis. Nigeria should implore adequately, stability comprehensive measures to address the future occurrence of the financial crisis through fiscal and monetary policy.


5.4 Recommendation

The immediate response of the CBN to ensure the maintenance of the banking system stability achieved great success. However, there is the need to provide long lasting policy measures that would address future threats of global shock in the Nigeria banking industry. These included:

  1. The need to remain resolute in the implementation of the second phase of the current interventions and reforms by the monetary authority on the banking sector.
  2. The efforts at injecting liquidity into the system need to be sustained, given that actual reserve money positions has been below its potential for growth (given the benchmark) for the most period to cautiously avoid inflationary pressure.
  3. Efforts should be made to channel these funds to the productive sectors of the economy by improving the infrastructure.
  4. Adequate prudential supervision and regulation of the financial sector, especially the banking sub-sector is very important and should be pursued vigorously by the monetary authorities.
  5. Injection of funds and recapitalization of banks could lead to an expansion of banks credits as money balance increase.
  6. Building strong institution and implementing sound supervision and regulation will help in reducing the risk of financial and currency crisis.
  7. Strengthening banking systems to ensuring that fund are allocate to most efficient uses, instead of being loan to cronies or directed to inefficient state-sanctioned projects

How To Get The Complete Material For The Challenges Of The Global Economic Crisis And Nigeria’s Financial Markets’ Stability


Project Material Download

3,000 Naira


The Complete Material will be Sent to You in Just 2 Steps

Quick & Simple…


Step One Purchase

Make a Mobile Transfer or POS Payment of ₦3,000 to any of the Account Below

Access Bank PlcAcc No: 0811003731
Samphina Academy
Current Account
Zenith BankAcc No: 1225513212
Samphina Academy
Current Account

Or CLICK HERE To Pay With Debit Card

FOR CLIENTS OUTSIDE NIGERIA
CLICK HERE To Pay With Debit Card ($15)
GHANA – Make Payment of 80 GHS to MTN MoMo, 0553978005, Douglas Osabutey 

Step Two Purchase

Send the Following Details on WhatsApp ( 08143831497) After Payment

  • Payment Details
  • Email Address 
  • The Challenges Of The Global Economic Crisis And Nigeria’s Financial Markets’ Stability

The Complete Material Will Be Sent To Your Email Address After Receiving Your Details
T & C Apply


  Contact Our Help Desk


⚠️ Need a different topic? Perform a quick search



Get A Complete Business Plan For Any Business In Nigeria

Business Plan for Businesses in Nigeria

  Business Plans in Nigeria


Disclaimer


This research material “The Challenges Of The Global Economic Crisis And Nigeria’s Financial Markets’ Stability” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as samphina.com.ng will not be liable for any who copied the material.

The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”.

samphina.com.ng is only providing this material “The Challenges Of The Global Economic Crisis And Nigeria’s Financial Markets’ Stability” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.