Volume 8, Issue 4, August 2019, Page: 220-231
The Prospect of Dollarization in Nigeria: An Empirical Review
Uduakobong Edy-Ewoh, Department of Economics, Veronica Adeleke School of Social Sciences, Babcock University, Ilishan Remo, Nigeria
Babatunde Binuyo, Department of Economics, Veronica Adeleke School of Social Sciences, Babcock University, Ilishan Remo, Nigeria
Received: Jun. 13, 2019;       Accepted: Jul. 12, 2019;       Published: Jul. 26, 2019
DOI: 10.11648/j.ijber.20190804.17      View  128      Downloads  29
Abstract
Dollarization has been perceived in literature as a strategy that could help emerging and developing economics achieve price stability via lower inflation rates occasioned by the adoption of a stronger currency. Supporters of dollarization also infer that the strategy has the ability to affect positively real economic variables such as growth and employment through its ability to lower interest rates, increase investment and eliminate currency risk thereby increasing international trade. In this study, we examined the effect of dollarization on selected macroeconomic variables in Nigeria from 1972 to 2017. Using simple regression models, we analysed the impact of real dollarization index on prime lending rates, inflation, unemployment, PCI, FDI, real GDP growth and total trade in Nigeria. Empirical results revealed that dollarization did not exert significant positive effect on the selected macroeconomic variables. The study therefore recommended that government should be intentional about putting measures in place to strengthen the Nigerian naira so that economic agents will see no need to hold their wealth in or transact with a foreign currency. This will discourage dollarization in Nigeria which is perceived to be a major driver of inflation in the country.
Keywords
Dollarization, Prospect, Macroeconomic Variables, Nigeria
To cite this article
Uduakobong Edy-Ewoh, Babatunde Binuyo, The Prospect of Dollarization in Nigeria: An Empirical Review, International Journal of Business and Economics Research. Vol. 8, No. 4, 2019, pp. 220-231. doi: 10.11648/j.ijber.20190804.17
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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