Did Global Financial Crisis Worsen Oil Price Volatility and Banking Sector Nexus in Selected ECOWAS and G-7 Member Countries?

Charles Manasseh, Godfrey I. Ihedimma, Felicia C. Abada, Ifeoma C. Nwakoby, Benson O. Njoku, Jude T. Kesuh, Chizoba G. Okeke, Felix C. Alio and J. U. J. Onwumere
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Godfrey I. Ihedimma: Department of Economics, Spiritan University Nneochi, Abia State, Nigeria,
Felicia C. Abada: Social Science Units, School of General Studies, University of Nigeria, Nsukka, Nigeria,
Ifeoma C. Nwakoby: Department of Banking and Finance, University of Nigeria Enugu Campus, Nsukka, Nigeria
Benson O. Njoku: Department of Banking and Finance, Michael Okpara University of Agriculture, Umudike, Nigeria,
Jude T. Kesuh: Department of Banking and Finance, University of Nigeria Enugu Campus, Nsukka, Nigeria
Chizoba G. Okeke: Department of Economics, Madurai Kamaraj University, India
Felix C. Alio: Department of Banking and Finance, University of Nigeria Enugu Campus, Nsukka, Nigeria
J. U. J. Onwumere: Department of Banking and Finance, University of Nigeria Enugu Campus, Nsukka, Nigeria

International Journal of Energy Economics and Policy, 2020, vol. 10, issue 6, 390-395

Abstract: This study examined the effects of global financial crisis on oil prices and its relationship with banking sector in selected ECOWAS and G-7 group for the period 2000 to 2018. The data for the study were collected from the WDI (2019). Following the work of Driscoll & Kraay (1998), the study adopted panel fixed effect estimation techniques. Since financial crises affect mostly the banking system and banking reforms is reflected in the lending interest rate which is a positive contributor to the rate of investment growth, we therefore estimated the model using investment as the dependent variable. The results show that the lending interest rates exert positive impact on the rate of investment growth for G7 countries. Furthermore, we observed that 1% drop in interest rate would cause investment to grow by about 0.0378% for the ECOWAS region. The interaction of the international oil prices and the rate of inflation express the cost of production in the regions. Thus, it was found that a 1 percent increase in the cost of production would cause a fall in the level of investment growth by 0.000029% and 0.000058% for the G7 and ECOWAS respectively. This result though was found not to be significant, thus not reliable. In G7 and ECOWAS, growth in output was found to positively and significantly influence the growth rate of investment.

Keywords: Financial crisis; oil price; banking sector (search for similar items in EconPapers)
JEL-codes: G01 G21 Q49 (search for similar items in EconPapers)
Date: 2020
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