Economic growth in an oil-dominant economy of Nigeria: The role of financial system development

Figures & data

Figure 1. Share of the oil, non-oil sector and national savings (% of GDP).

Source: Authors’ computation and data from CBN Statistical Bulletin (2018).

Table 1. List of variables

Variable	Definition	Source
RGDPN	Gross Domestic Product of Non-Oil Sector (in constant 2010 basic local currency)	Central Bank of Nigeria (CBN) Statistical Bulletin (2018)
RGDPO	Gross Domestic Product of Oil Sector (in constant 2010 basic local currency)
OILP	Oil price is measured by international crude Brent spot price	BP Statistical Review of World Energy (June 2018)
TO	Degree of openness to trade is proxied by share of total trade (exports plus imports) to GDP	World Development Indicators database of the World Bank (2018)
INV	Real gross fixed capital formation
dbagdp	Deposit money bank assets to GDP	Financial Structure Database of World Bank (2018)
llgdp	Liquid liabilities as a proportion to GDP
pcrdbgdp	Private credit as a share to GDP
fdgdp	Ratio financial system deposits to GDP

Table 2. Eigenvalues, proportion and eigenvectors of each first principal component

Eigenvalues	3.651775
Proportion	0.9129
Eigenvectors (loadinding)
Variables	Scale	Weighted Average
Llgdp	0.480491	0.240347287
Dbagdp	0.510741	0.255478695
Pcrdbgdp	0.491315	0.24576158
Fdgdp	0.516606	0.258412438

Authors’ computation, data sourced from World Bank Financial Structure Database (2012).

Table 3. Correlation matrix

Correlation	FD_INDEX	OILP	INV	TO
FD_INDEX	1.000000
OILP	0.185790	1.000000
INV	0.362034	0.666374	1.000000
TO	−0.330773	−0.155424	−0.053410	1.000000

Source: Authors’ Computation.

Table 4. Zivot-Andrews unit root test

Variable	Level I(0)		First difference I(1)
	t-Statistis	Break location Model	t-Statistis	Break location Model	Order of integration
RGDPN	−4.684117	C	−7.29665***	C	I(1)
RGDPO	−2.145805	A	−6.26644***	A	I(1)
FD	−3.531053	A	−5.76034***	A	I(1)
OILP	−3.554179	A	−4.718261*	A	I(1)
TO	−2.300005	A	−5.017470**	A	I(1)
INV	−5.790775***	A			I(0)

*, ** and *** indicates significance at 10%, 5% and 1% level respectively.

Table 5. ARDL bounds co-integration test result

Model	Dependent variable	F-statistic	Result
Model 1 ARDL (2, 3, 2, 2, 3)	RGDPN	23.21755***	Co-integration
Critical Value Bounds	1%	5%	10%
I(0) Bound	4.4	3.47	3.03
I(1) Bound	5.72	4.57	4.06
Model 2 ARDL (1, 2, 1, 3, 2)	RGDPO	8.829103***	Co-integration
Critical Value Bounds	1%	5%	10%
I(0) Bound	3.74	2.86	2.45
I(1) Bound	5.06	4.01	3.52

*, ** and *** indicates significance at 10%, 5% and 1% level respectively.

Table 6. Estimated long run coefficients using ARDL approach

	Model 1 ARDL (2, 3, 2, 2, 3)	Model 2 ARDL (1, 2, 1, 3, 2)
C	25.7365*** [4.03]	13.7227*** [4.57]
@TREND	0.0638*** [9.11]
FD	0.4742*** [3.11]	0.0262 [0.29]
OILP	0.4620*** [4.17]	0.2496*** [2.98]
TO	−0.2078*** [−3.66]	0.4707*** [6.24]
INV	−0.6565**[2.67]	−0.2659** [−2.42]

Robust t-statistics are reported in parentheses of estimated coefficients. *, ** and *** indicates significance at 10%, 5% and 1% level respectively. ARDL model selected based on AIC.

Table 7. Short-run error correction estimates

	Model 1 ARDL(2, 3, 2, 2, 3)	Model 2 ARDL(1, 2, 1, 3, 2)
ΔLFD_B	−0.0069 [−0.28]	−0.0913 [−1.45]
ΔLOILP	−0.0125 [−0.80]	0.0604 [1.41]
ΔLTO	−0.1204*** [−5.86]	0.0044 [0.08]
ΔLINV	0.1069** [2.93]	0.0219 [0.33]
Δ@TREND	0.0242*** [5.69]
ECM (−1)	−0.3807*** [−3.83]	−0.6097*** [−4.77)

Robust t-statistics are reported in parentheses of estimated coefficients. *, ** and *** indicates significance at 10%, 5% and 1% level respectively.

Table 8. ARDL-VECM model diagnostic tests

	Model 1	Model 2
R^2	0.9997	0.9663
Serial correlation X^2(1)	[0.4523]	[0.5738]
Heteroscedasticity X^2(1)	[0.7217]	[0.3124]
Functional form	[0.1334]	[0.9419]

R2 means R-squared. Serial correlation is the Breusch–Godfrey serial correlation LM test. Heteroscedasticity is the ARCH test for heteroscedasticity test, Functional form is the Ramsey RESET test for Functional form; p-values in [].

Figure 2. Plot of CUSUM and CUSUMSQ for coefficient stability for ECM model (1).

Figure 3. Plot of CUSUM and CUSUMSQ for coefficient stability for ECM model (2).

World Bank Financial Structure Database. (2012) World Bank World Development Indicators (WDI) Database. http://econ.worldbank.org/http://data.worldbank.org/data-catalog/world-development-indicators

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