RELATIONSHIP BETWEEN EASE OF DOING BUSINESS, EXCHANGE RATE AND INDUSTRIAL SECTOR PERFORMANCE IN NIGERIA: AN EMPIRICAL INVESTIGATION
Aliyu Umar, Habiba Sani and Abduljabbar Sani Abba
Volume 11 Issue 1
Abstract
Despite abundance studies on the nexus between exchange rate and industrial sector performance, little has been done to examine the relationship between ease of doing business index (EDB), exchange rate (EXCH) and industrial sector performance (IND) in Nigeria. This study examines the impact of EDB, EXCH on the performance of industrial sector in Nigeria using the Fully Modified Ordinary Least Square (FMOLS) and Canonical cointegration Regression (CCR) estimators, to analyze the quarterly data between 1996Q1-2022Q4 period. Therefore, the estimation result of the Johansen cointegration test reveals that there is at least one cointegrating equation. The results from FMOLS and CCR estimators reveal that an improvement in eco-friendly business environment increases the performance of industrial activities in Nigeria. Exchange rate is found to negative and statistically significant in affecting industrial activities in Nigeria. That is, raising official exchange rate reduces the activities of industrial sector in Nigeria. This study recommends that government should introduce appropriate policies that will promote eco-friendly environment for business and firms to thrive. This can be achieved through adequate funding to the bank of industry (BOI) to provide soft loan to small and medium enterprises that will enhance industrial sector performance. Government should determine appropriate exchange rate system that will assist the industrial sector to increase their productivity. Keywords: EDB, EXCH, Industrial Sector and FMOLS/CCR
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