Explaining Financial Crises in an African Open Economy

Ethiopian Economics Association (EEA)
Oluremi Ogun, Olutomilola Makinde


This study investigated the probable sources of crisis in the financial sector of
Nigeria, over the period, 1960-2014. Two distinct phases of financial crises in
the country were enclosed by the scope of the study. Both the policy and
economic environments of the country might have contributed greatly to the
scale of the crises experienced in the different periods. An analytical approach
embedded in allied studies defined the empirical model. The data employed
were subjected to preliminary investigations in order to eliminate the
possibility of spurious statistical results. Estimates from a regression model
were obtained for both endogenous and exogenous factors. Most of the
endogenous factors were found to be remarkably consistent in signs and
significance. The influence of most of the exogenous factors and closely linked
domestic activities found parallels in business cycles of the country. Greater
care in policy design and reduced propensity to borrow externally could
significantly moderate the negative influence to the determinants of growth in
the system.