Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach

Figures & data

Table 1. Descriptive statistics and test for variables normality

	RGDP	NDC	STR	TRD	M2
Mean	139.8787	1.238583	10.95455	11.88182	3.323117
Median	133.6508	6.671433	12.000000	11.700	3.580605
Maximum	158.2074	21.76893	16.500000	28.802	37.66733
Minimum	117.7256	−96.39948	6.000000	4.105	−99.89880
STD.DEV	13.80807	20.62040	3.173873	4.564793	17.93176
Skewness	0.007096	−2.597353	−0.084587	0.846133	−4.258121
Kurtosis	1.492403	12.48918	1.904266	3.649962	26.52031
Jarque–bera	4.167259	214.5540	2.253628	6.024590	1147.147
Probability	0.00078	0.000000	0.00064	0.00017	0.0050
Observations	384	384	384	384	384

Source: Author’s computation (2016) using e-Views 7.

Table 2. ADF test results

Variables	ADF level	ADF – First differ	Order of integration
InRGDP	−1.0878	−7.5324	I(1)
NDC	−2.6632	−4.3112	I(1)
M2	−2.6307	−4.2738	I(1)
TRD	−2.0394	−4.3090	I(1)
STR	−3.3705	−5.4924	I(0)

Notes: Statistical sign at 1% level; Statistical sign at 5% level.

Source: Author’s computation (2015) using e-View Package, version 7.2.

Table 3. Lee and Strazicich’s minimum LM unit root tests with a single break

Series	Constant	St−1	K	Dt	Dt,	Break date
RGDP	−0.096 (20.850)^*	−0.121 (−3.151)	4	−0.23 (−2.430)	−0.020 (−2.450)	2002:02
InRGDP	0.026 (3.741)^**	−0.634 (−3.814)^***	4	0.016 (1.318)	−0.027 (−3.866)^**	2005:08
TRD	0.053 (6.801)^*	0.185 (−2.891)	4	0.030 (1.175)	0.008 (0.422)	2005:01
InTRD	0.030 (4.021)^*	−1.001 (−4.644)^*	2	0.042 (2.624)^**	−0.042 (−4.335)^*	2010:07
STR	0.083 (4.122)^*	−0.113 (−2.163)	2	−0.012 (−0.561)	−0.038 (−1.741)^**	2002:04
InSTR	−0.025 (−2.788)^**	−0.835 (−4.506)^*	1	−0.109 (−2.526)^**	0.122 (4.554)^*	2005:12
NDC	0.005 (3.364)^**	−3.204 (−3.146)	4	0.033 (3.452)^**	−0.012 (−3.106)^**	2000:11
InNDC	0.001 (0.4118)	−1.242 (−5.422)^*	1	0.012 (1.441)	−0.012 (−2.027)^*	2005:09
M2	−0.087 (19.866)^*	−0.133 (3.052)	4	−0.11 (−2.21)	−0.012 (−2.211)	2001:05
InM2	0.014 (3.551)^**	−0.452 (−2.811)^***	4	0.008 (1.211)	−0.029 (−3.744)^**	2008:10

Notes: K represents the lag length, S_t−1 is the coefficient of the unit root parameter and t-values are parentheses. Critical values are gotten from Lee and Strazicich (2003). The critical values applied to the dummy variables follow the standard normal distribution.

Source: Author’s computation (2016).

^* Significance level at 1%.

^** Significance level at 5%.

^*** Significance level at 10%.

Table 4. F-statistics for testing the existence of a long-run relationship among the variables

Model	F-statistic	Decision
FInRGDP (InRGDP/NDC, M2, TRD, STR)	5.3215^*	Cointegration exist
FM2 (M2/InRGDP, NDC, TRD, STR)	2.1101	No-cointegration exist
FNDC (NDC/InRGDP, M2, TRD, STR)	6.4221^*	Cointegration exist
FTRD (TRD/RGDP, NDC, M2, STR)	7.4003^*	Cointegration exist
FSTR (STR/InRGDP, NDC, M2, TRD)	5.1214^**	Cointegration exist

Notes: The relevant critical value bounds presented in this table are obtained from Pesaran and Shin (1999) Pesaran et al. (2001). The critical values for all the regressions with intercept and trends are 2.762–3.428 at 10% significance level and 3.084–4.219 at 5% significance level.

Source: Author’s computation (2016).

^* Significance level at 5%.

^** Significance level at 10%.

Table 5. Estimated long-run and short-run coefficients using the ARDL based on Schwarz Bayesian criterion

Regressors	Dependent variables (Coefficients and T-ratio)
	RGDP		M2		NDC		TRD		STR
	LR	SR	LR	SR	LR	SR	LR	SR	LR	SR
RGDP			0.8808 (3.0085)	0.4747 (0.7919)	0.1923 (3.0198)^**	0.0767 (0.5284)^**	0.5779 (2.4338)^*	0.0779 (2.8165)^*	0.1188 (0.6521)^**	0.6687 (2.3191)^**
M2	0.3156 (1.2023)	0.0070 (0.2075)			0.4244 (3.1298)^**	0.0589 (2.2204)^*	−0.6469 (−1.3073)	−0.3735 (−4.0315)	0.6469 (1.3098)^*	0.4747 (4.3015)^*
NDC	0.44659 (3.1576)^**	0.15570 (0.9579)^**	−1.0361 (−0.824)	0.1440 (0.8390)^*			0.8698 (2.1345)^**	0.9985 (6.2354)^**	−0.7309 (−1.465)^**	−0.4125 (−4.4551)^*
TRD	−0.22074 (−1.68)^***	0.6206 (6.5815)^**	−0.7832 (−1.15)^*	−1.0875 (−0.717)^*	0.1016 (1.214)^*	0.7309 (1.248)^*			0.9854 (3.1196)^*	0.2987 (2.9856)^*
STR	0.3957 (2.2885)^*	0.0825 (0.0409)	1.4782 (1.8959)^*	0.4315 (1.720)^*	0.3735 (4.0315)^***	0.0160 (0.1611)^**	0.1188 (0.1111)^**	0.0160 (0.1611)^**
Trend	0.0049 (0.8739)	0.0105 (2.142)	0.0798 (1.1516)	−0.0102 (−1.877)	0.0232 (2.9174)	0.0032 (4.4219)	0.0049 0.8739	0.0006 (0.8862)	0.09856 (4.1566)	0.0343 (3.6541)
ECM (−1)		−0.5367 (−3.09)^***		0.1348 (2.9623)		−0.1389 (−3.271)^**		−0.2563 (−4.532)^**		−0.3047 (−4.192)^**

Note: t-Statistics are presented in angle brackets.

Source: Author’s computation (2016) using Microfit 4.0.

^* Significance level at 10%.

^** Significance level at 5%.

^*** Significance level at 1%.

Figure 1. (a) Plot of cumulative sum of recursive residuals and (b) Plot of cumulative sum of squares of recursive residuals.

Note: The straight lines represent critical bounds at 5% significance level.

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