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Trade, Poverty and Sustainable Development in Nigeria:
A Dynamic Analysis
--Taofeek Olusola Ayinde and Abiodun S Bankole
This study investigates the relationship between trade, poverty and sustainable development in Nigeria for the period 1980-2013. The paper uses Autoregressive Distributed Lag (ARDL) technique for examining the long-run equilibrium condition and a re-parameterized framework to capture the short-run dynamics. The results show that long-run equilibrium condition exists between trade and sustainable development, on the one hand, and trade and poverty, on the other. Interestingly, the results also indicate that the relationship between trade, poverty and sustainable development is more of a dynamic nature than static as the lagged dependent variables are significant. It is observed that though development is highly sustainable and poverty is fairly alleviating as the recovery back to equilibrium when affected by shock is fast. But a striking result shows that trade only matters for sustainable development and not for poverty reduction in Nigeria. The growth process of the Nigerian economy is the major driver for poverty reduction, as it significantly increases the per capita income. Again, the results obtained indicate that only optimum levels of government involvement, exchange rate and economic growth that will not aggravate poverty and at the same time will also stimulate sustainable development, are desirable.
© 2016 IUP. All Rights Reserved.
Macroeconomic Determinants of India’s Foreign Exchange Reserves:
An Empirical Analysis
--Devi Prasad Panda and Pushpa Trivedi
The study of foreign exchange (forex) reserves has assumed importance due to increasing globalization of emerging market and developing economies. The journey of India from abysmally low reserves in 1991 to today’s comfortable position has made the study of forex reserves very relevant in Indian context. This study, covering the period from 1996-97:Q1 to 2014-15:Q4, attempts to identify various macroeconomic determinants of India’s forex reserves. While the ratio of India’s forex reserves to its GDP is considered as the dependent variable, the ratio of M3 to GDP of India, trade openness of India, and volatility of US dollar-INR bilateral nominal exchange rate are considered as the explanatory variables. The study performs stationarity tests, Johansen’s cointegration test, Johansen’s Vector Error Correction Model (VECM) in VAR, impulse response function and variance decomposition analysis. With all the variables in log terms being I(1), Johansen’s cointegration test confirms one long-run relationship among the variables. Forex reserves are found to be varying positively with money supply and trade openness, and negatively with exchange rate volatility. Deviations in forex reserves adjust towards the equilibrium level in the long run, but at a low speed. Therefore, RBI may be engaged in active reserve management.
© 2016 IUP. All Rights Reserved.
The Role of Household-Level Characteristics in Predicting the Unbanked
in Rural India: A Comparison of Eastern and Western Regions
--Atul Mehta and Joysankar Bhattacharya
In India, despite numerous measures adopted by Reserve Bank of India (RBI) to ensure adequate supply of financial services in rural areas, the banking participation by households in terms of owning a bank account is considerably low. The present paper employs Discriminant Analysis (DA) and Logistic Regression Analysis (Logit) technique to determine the unbanked households in rural India using information on various socio-demographic characteristics of the households from National Family Health Survey (NFHS) – 2005-06 data. The unique feature of the paper is that it combines the results from both the methods to improve the predictive accuracy and compares the household-level characteristics that affect the banking participation in the two regions with highest and lowest unbanked households in rural India. Combining both the methods, the paper correctly predicts 95.1% and 83.3% of unbanked households in Eastern and Western region respectively. It is also observed that the number of adults along with their education level increases the probability of being banked, while families belonging to two major minority religions (Muslim and Christian) reduce the probability of the same. While female headship and belonging to SC or ST category reduces the banking participation in Western region, female headship is found to increase banking participation in Eastern region.
© 2016 IUP. All Rights Reserved.
Efficiency and Productivity Analyses
of Public Sector General Insurance Firms in India
--Joy Chakraborty
Despite the rising presence of private players after the enactment of the Insurance Regulatory and Development Authority of India (IRDAI) Act in 1999, the four major public sector general insurance firms in India, namely, the National Insurance Company Limited, Oriental Insurance Company Limited, New India Assurance Company Limited and the United India Insurance Company Limited continued to dominate the Indian general insurance sector with a collective market share of 50.24% at the end of the FY 2014-15. However, the significant decline in the market shares of the state-owned general insurers, with an abrupt rise in the footfall of private players, has eventually raised concerns about their operational efficiency and productivity growth in the country’s general insurance sector. The present study addresses the efficiency and productivity issues of the four major public sector general insurance firms in India against the backdrop of the US financial crisis of 2007-08. The study applies the nonparametric Data Envelopment Analysis (DEA) to evaluate the technical and scale efficiency scores along with total factor productivity changes of the four public sector non-life insurance companies during the post-deregulation study period from 2008-09 to 2014-15. The results of the study show United India Insurance Company as the most technically and scale efficient player, whereas the National Insurance Company was found to be the most productive player among the public sector general insurance firms during the period.
© 2016 IUP. All Rights Reserved.
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