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Journal of Applied Financial Econometrics

Journal of Applied Financial Econometrics

Frequency :Bi-Annual

ISSN :2583-374X

Peer Reviewed Journal

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Table of Content :-Journal of Applied Financial Econometrics, Vol:3, Issue:1, Year:2022

EMPIRICAL REVIEW OF IMPLICATIONS OF FINANCIAL LEVERAGE ON PERFORMANCE OF QUOTED OIL AND GAS COMPANIES IN NIGERIA

BY :   Etim Osim Etim, Peter Samuel Ubi, Nseabasi Imoh Etukafia and Raymond Ekwere Enang
Journal of Applied Financial Econometrics, Year:2022, Vol.3 (1), PP.1-28
Received:28 January 2022 | Revised:20 February 2022 | Accepted :28 February 2022 | Publication:19 June 2022
Doi No.:https://doi.org/10.47509/JAFE.2022.v03i01.01

This study was conducted to examine the implication of financial leverage on performance of quoted oil and gas companies in Nigeria. This is premeditated on the fact that debt capital is usually acquired by firm to finance assets with the expectation the returns from such investments will exceed the costs of the debt capital used. Often, this is always not the case either because of inappropriate management strategies or other reasons. Ex-post-facto research design was adopted involving use of panel secondary data as published by eight(8) oil and gas companies selected from the population of twelve(12) firms quoted on the floor of the Nigerian Stock Exchange (NSE) for the period 2006-2020. Descriptive and multiple linear regression statistics were used to analyze data collected. The dependent variable was return on Assets (ROA), proxy for financial performance and independent variables being financial leverage decomposed into Debt Ratio (DR), Debt-to-Equity Ratio (DER), Long-term Debt Ratio (LTDR) and Cost of Debt (COD,) Results Shows DR, LTDR and COD had negative and significant implications on ROA, while DER also had negative but insignificant implications on ROA of quoted oil and gas firms in Nigeria. Hence, it was concluded that during the period of the study, leverage had negative and significant implications on financial performance of oil and gas firm in Nigeria. It was recommended that oil and gas firm should minimize debt capital usage in their financial structure to shore-up returns.

Keywords: Debt, Equity, Debt Equity, ROA.

Etim Osim Etim, Peter Samuel Ubi, Nseabasi Imoh Etukafia and Raymond Ekwere Enang (2022). Empirical Review of Implications of Financial Leverage on Performance of Quoted Oil and Gas Companies in Nigeria. Journal of Applied Financial Econometrics, Vol. 3, No. 1, pp. 1-28. https://DOI:10.47509/JAFE.2022.v03i01.01

EFFECT OF WORKING CAPITAL INVESTMENT AND FINANCING POLICIES ON THE PROFITABILITY OF LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

BY :   Msurshima Josephine Orban and Seini Odudu Abu
Journal of Applied Financial Econometrics, Year:2022, Vol.3 (1), PP.29-51
Received:12 February 2022 | Revised:05 March 2022 | Accepted :10 March 2022 | Publication:19 June 2022
Doi No.:https://doi.org/10.47509/JAFE.2022.v03i01.02

Working capital and financing decisions or policies are essential in determining companies’ capacity to invest in any securities, be it non-current or current assets which has a significant role in retaining the organization’s liquidity, solvency, survival, continuity and profitability. This study investigates the effect of working capital investment and financing policies on the profitability of listed industrial goods companies in Nigeria. The ex-post facto research design was adopted, and data were sourced from annual reports and accounts of 21 listed industrial goods companies in Nigeria, out of which 14 firms were selected and form the sample size with 140 firm-year observations for the period of 10 years from 2012 to 2021. The ordinary Least Square (OLS) regression model was employed to analyze the data. The test of normality, multicollinearity, and heteroscedasticity were all conducted to improve the reliability and validity of statistical results. Also, the model selection using a Hausman specification test was conducted to determine between random and fixed effects models. The outcome enables the study to reject the fixed and accepted random effect estimator. The study established that aggressive and conservative investment policy have negative and insignificant impact on profitability. The conservative financing policy has a positive and insignificant effect on profitability, while aggressive financing policy has a positive and significant impact on profitability. Hence, the study concludes that aggressive financing policy and conservative financing policy improve profitability, and aggressive investment policy and conservative investment policy reduce the profitability of listed industrial goods companies in Nigeria. The study recommends that companies should mbrace aggressive financing policies as a way of increasing their profitability. This will enable the companies to use an appreciable level of current liability to finance their operations’ thereby attracting more improve to enhance a significant positive impact on their profitability. This will enable the companies to use more current assets to finance the industrial goods, thereby generating more profits for firms and shareholders.

Keyword: Profitability; Aggressive investment policy; Conservative investment policy; Aggressive financing policy; Conservative financing policy

Msurshima Josephine Orban & Seini Odudu Abu (2022). Effect of Working Capital Investment and Financing Policies on the Profitability of Listed Industrial Goods Companies in Nigeria. Journal of Applied Financial Econometrics, Vol. 3, No. 1, pp. 29-51. https://DOI: 10.47509/JAFE.2022.v03i01.02

INTER RELATIONSHIP BETWEEN RAINFALL INDEX AND NIFTY INDEX: AN EMPIRICAL STUDY

BY :   Dileep N. and G. Kotreshwar
Journal of Applied Financial Econometrics, Year:2022, Vol.3 (1), PP.53-63
Received:22 February 2022 | Revised:25 March 2022 | Accepted :10 April 2022 | Publication:19 June 2022
Doi No.:https://doi.org/10.47509/JAFE.2022.v03i01.03


Dileep N. & G. Kotreshwar (2022). Inter Relationship between Rainfall Index and Nifty Index: An Empirical Study. Journal of Applied Financial Econometrics, Vol. 3, No. 1, pp. 53-63. https://DOI: 10.47509/JAFE.2022.v03i01.03

INTERNATIONAL TRADE AND ECONOMIC DEVELOPMENT IN NIGERIA

BY :   Zwingina, Christy Twaliwi, Ndubuisi, O. C. and E. A. Adegun
Journal of Applied Financial Econometrics, Year:2022, Vol.3 (1), PP.65-77
Received:13 April 2022 | Revised:29 April 2022 | Accepted :05 May 2022 | Publication:19 June 2022
Doi No.:https://doi.org/10.47509/JAFE.2022.v03i01.04

The benefit of international trade had not been noticed in the economic growth of Nigeria because some of the goods imported into the country were those that can cause damages to local industries by rendering theirs products inferior and being neglected , thereby reducing the growth rate of output of such industries which later spread to aggregate economy. The work investigated the extent to which international trade impacted global economic development with particular reference to the Nigerian economy between 1986 and 2018. The data employed for this study are basically annual time series data covering 1986-2018. The data were obtained from World Bank data outlook, and central bank of Nigeria statistical bulletin. This study adopts the statistical method of method of multiple linear regression approach using ordinary least squares to examine the relationship between RGDP as dependent variable and degree of openness, foreign exchange rate and interest rate as independent variables. The paper revealed that relationship exist between international trade and economic growth, and that while some components of international trade exerted positive and significant effect on growth, INTR exerted positive but insignificant effect. The result further shows that all the regressors except interest rate were statistically significance at 5% level of significance. Some policy recommendations which would be helpful and applicable to the Nigerian economy were suggested. For the degree of openness, Nigeria should adopt more policies on trade liberalization like reducing non-tariff barriers, reducing barriers, eliminating quotas that will enable the economy to grow at a spectacular rate. The finding with respect to exchange rate implies that the policy makers should adopt long term policies because in the long run, a strong currency depends on economic fundamentals. To have a strong exchange rate, countries will need a combination of low inflation rate, productivity growth, economic and political stability.

Keywords: International Trade, Global Economic Development, Real Gross Domestic Product, Openness, economic growth

Zwingina, Christy Twaliwi, Ndubuisi, O.C. & E.A. Adegun (2022). International Trade and Economic Development in Nigeria. Journal of Applied Financial Econometrics, Vol. 3, No. 1, pp. 65-77. https://DOI:10.47509/JAFE.2022.v03i01.04

OIL PRODUCTION AND THE NIGERIAN ECONOMY: AN ANALYSIS OF THE CONTRACTUAL ARRANGEMENTS

BY :   Gabriel Efe Otolorin, Nsudoh Samuel Nsudo, Christopher N Ekong and Ettah Bassey Essien
Journal of Applied Financial Econometrics, Year:2022, Vol.3 (1), PP.79-96
Received:23 April 2022 | Revised:11 May 2022 | Accepted :25 May 2022 | Publication:19 June 2022
Doi No.:https://doi.org/10.47509/JAFE.2022.v03i01.05

This paper is an assessment of the crude oil contractual arrangement in Nigeria. Following the ambiguity and secrecy surrounding the contractual arrangement in Nigeria as well as the call by researchers to shift away from joint venture agreement to production sharing contract, the study employed monthly time series data for the period 2017 – 2020 to search if there is a need to move away as well as possibility of seasonality in crude oil production by contractual arrangement and to determine the relationship between oil price, oil revenue and the contractual arrangement based on crude oil production. The empirical results clearly show a uni-causal relationship between exchange rate and JV as well as oil price and JV. The study also showed evidence of causality between PSC and exchange rate, as well as PSC and Oil Price. Which signifies changes in exchange rate and oil price granger causes changes in crude oil production by PSC and JV. The study also revealed that there is seasonality in production in the month of July and August which may have resulted to higher gross oil revenue noticeable in the third quarter. The study also discovers the likelihood for production and revenue to be lower in the first half of the year and higher in the second half of the year cumulatively. The study recommends that rather than shifting away from JV to PSC, the federal government should continue with all the contractual arrangement since they have their individual peculiarities but concerted effort should be made to encourage indigenous contract arrangement as already springboard through the marginal field. Also, the government should pay close attention going forward on the seasonal patterns as such information can be used for planning as there is the likelihood of FAAC to be higher or lower within the period identified in the study.

Keywords: Contractual agreement, service contract, Marginal Field

JEL: Classification: C22, J48, K12, Q43

Gabriel Efe Otolorin, Nsudoh Samuel Nsudo, Christopher N Ekong and Ettah Bassey Essien (2022). Oil Production and the Nigerian Economy: An Analysis of the Contractual Arrangements. Journal of Applied Financial Econometrics, Vol. 3, No. 1, pp. 79-96. https://DOI:10.47509/JAFE.2022.v03i01.05

MONETARY POLICY AND INDUSTRIAL SECTOR PERFORMANCE IN NIGERIA: MEASURING THE EXTENDED IMPACT ON THE ECONOMY

BY :   Christopher Nyong Ekong and Uduak Michael Ekong
Journal of Applied Financial Econometrics, Year:2022, Vol.3 (1), PP.97-131
Received:13 May 2022 | Revised:02 June 2022 | Accepted :11 June 2022 | Publication:19 June 2022
Doi No.:https://doi.org/10.47509/JAFE.2022.v03i01.06

The study empirically investigates the impact of monetary policy shocks on the performance of the industrial sector in Nigeria, and how this affect the general growth performance of the economy in the periods 1980-2018. Monetary policy variables used were money supply (M2t), monetary policy rate (Mprt), Treasury bill rate (Tbrt) and Credit to the private real sector (Credt). We also gauged the system with other control variables like gross fixed capital formation (gcft), inflation (????t) and exchange rate (exr). Utilizing Vector Autoregression (VAR) and Generalized Method of Moments (GMM), we found that any unanticipated shock on monetary policy rate and money supply growth will produce falling impact on industrial sector output that is consistent with no sign of convergence throughout the period. However, shocks to credit supply and treasury bill rate produces positive growth outliers at different magnitudes in the industrial sector. We also found statistically significant pass-through effect of monetary policy from the industrial sector to the general economy of at least 30 percent growth effect. A number of possible policy menu capable of deepening monetary policy-industrial performance nexus in Nigeria in years following the study have been prescribed in the studyincluding improved stock market development, bond market development and other credit channels that easily linked policy to the private sector for seamless policy transmission.

Keywords: Monetary Policy, Industrial Sector, Passthrough, Performance, Nigeria.

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