TABLE
OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION
1.2 STATEMENT OF THE PROBLEM
1.3 AIMS AND OBJECTIVES OF THE STUDY
1.4 SIGNIFICANT OF THE STUDY
1.5 RESEARCH QUESTION
1.6
HYPOTHESIS
1.7
SCOPE OF THE
STUDY
1.8
LIMITATION
OF THE STUDY
1.9 DEFINITION OF TERMS
1.9.1 BANKING INDUSTRY
1.9.2 FISCAL POLICY
1.9.3 MONETARY POLICY
1.9.4 ECONOMIC GROWTH
1.9.5 INSURANCE BANK
1.9.6 BANK DISTRESS
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 INTRODUCTION
2.2 CONCEPTUALIZING FISCAL POLICY
2.3 FISCAL POLICY AND ECONOMIC GROWTH
2.4 TYPES
OF FISCAL POLICY IN NIGERIA
2.5 FISCAL AND MONETARY POLICY IN NIGERIA
CHAPTER
THREE
3.0 RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
3.2 THE POPULATION OF THE STUDY
3.3 SAMPLING PROCEDURES
3.4 SOURCES OF DATA COLLECTION
3.5 METHOD OF DATA COLLECTION
3.6 DATA ANALYSIS TECHNIQUES
CHAPTER
FOUR
4.1 PRESENTATION, ANALYSIS AND
INTERPRETATION OF DATA
4.2 MEASUREMENT OF DATA
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY AND CONCLUSION
5.2 RECOMMENDATIONS
BIBILOGRAPHY
CHAPTER ONE
1. 0 NTRODUCTION
The growth and development of the Nigerian economy has not been stable
over the years as a result, the country's economy has witnesses so many shocks
and disturbances both internally and externally over the decades. Internally,
the unstable investment and consumption patterns as well as the improper
implementation of public policies, changes in future expectations and the
accelerator are some of the factors responsible for it. Similarly, the external
factors identified are wars, revolutions, population growth rates and
migration, technological transfer and changes as well as the openness of the
country's Nigerian economy are some of the factors responsible.
The cyclical fluctuations in the country's economic activities has led
to the periodical increase in the country's unemployment and inflation rates as
well as the external sector disequilibria (Gbosi, 2001). In other words, fiscal
policy is a major economic stabilisation weapon that involves measure taken to
regulate and control the volume, cost and availability as well as direction of
money in an economy to achieve some specified macroeconomic policy objective
and to counteract undesirable trends in the Nigerian economy (Gbosi, 1998).
Therefore, they cannot be left to the market forces of demand and supply as
well as other instruments of stabilization such as monetary and exchange rate
policies among others, are used to counteract are problems identified (Ndiyo
and Udah 2003). This may include either an increase or a decrease in taxes as
well as government expenditures which constitute the bedrock of fiscal policy
but in reality, government policy requires a mixture of both fiscal and
monetary policy instruments to stabilize an economy because none of these
single instruments can cure all the problems in an economy (Ndiyo and Udah,
2003).
The Nigeria economy started experiencing recession from early 1980s
that led to depression in the mid-1980s. This depression continued until early
1990s without recovering from it. Government continually initiated policy
measures that would tackle and overcome the dwindling economy. Drawing the
experience of the great depression, government policy measures which was used
to curb the depression was in the form of increase government spending
(Nagayasu, 2003).
Okunroumu, (1993) the management of the Nigerian economy in order to
achieve macroeconomic stability has been unproductive and negative because with
evidence in the adverse inflationary trend, government fiscal policies,
undulating foreign exchange rates. The fall and rise of gross domestic product,
unfavourable balance of payments as well as increasingly unemployment rates are
all symptoms of growing macroeconomic instability. As such, the Nicrian
economic is unstable to function well in an environment where there is lowcapacity
utilization attributed to shortage in foreign exchange as well as the volatile
and unpredictable government policies in Nigeria (Isaksson, 2001).
The aim of this work therefore is to assess the impact of fiscal policy
on the macroeconomic stabilization of the Nigeria economy. To facilitate over
task we divided this tudy into four sections. The next chapter represents the
conceptual framework, while chapter 3 is the methodology, chapter four data
analysis while chapter five concludes the study with appropriate
recommendations.
1.2 STATEMENT
OF THE PROBLEM
This study assesses the
impact of policies on the level of economic activities in Nigeria. The choice
of this topic is induced by the poverty situation in the country. The country
has great potential for economic advancement based on its vast material and
human resources, yet these are not utilized. As a result the country is caught
up in poverty trap of low savings which is caused by low income and the low
income is as a result of low productivity which is the result of deficiency of
capital. The deficiency of capital is caused by low income resulting to low
saving.
How can this chronic
poverty cycle trap be broken so that the country will not remain in low
equilibrium growth trap? This is the problem this study revolves around. This
study advances that this poverty trapped can be broken using both fiscal
policies of the government. Government policies will be improved so that it
will be used to stimulate growth rate. All these will help remove the country
from the chronic poverty condition.
1.3 AIMS
AND OBJECTIVES OF THE STUDY
This study seeks to achieve the following
objectives;
a. the
uses of fiscal policy in developing Nigeria economy
b. To evaluate the impact of government
recurrement expenditure on economic activities.
c. To assess the impact of capital expenditure on
the level of economic activities.
d. to assess the impact of taxes on the level of
economic activities.
e. to
assess the impact of regulation in managing economic development
1.4SIGNIFICANT OF THE STUDY
The important of this study cannot be over
emphasizes. It will serve as a useful material to the Fiscal authority, bank
management and staff, worker, depositors, students and indeed the entire
economy.
Never the less, it will add to the volume of
studies on the regards. The report shall be useful in ensuring both Fiscal
stability and a sound, safe and profitable banking environment which will
facilitate the pace for the economic growth and development in Nigeria.
1.5 RESEARCH
QUESTION
The following needs is
to be address for prepare analysis of data
a. Does the government fiscal policy improve
Nigeria’s economic growth?
b. What incentive have the government offered to
improve fiscal policy in Nigeria economy.
c.
What are the need
of fiscal policy in Nigeria economic growth
d. What makes fiscal polity a necessity in Economic
development
e. How came Nigeria economic be improve when apply
fiscal policy
1.9
HYPOTHESIS
The following hypothesis has been formulated as a
guide to the conduct of the study. They should be tested based on the result
obtained from the regression coordinated. The hypotheses are;
a.
Ho: Government in
Fiscal policy does not significantly improve economy growth.
b.
H1: Government in
Fiscal policy significantly improve economy growth
I.e. Ho= Null Hypothesis
Hi= Alternative Hypothesis
1.10 SCOPE OF THE STUDY
Over the last decade, the growth impact of fiscal
policy has generated large volume of both theoretical and empirical literature.
However, most of this study paid more attention to
developed economies and the inclusion of developing countries in case of cross
country studies were mainly to generate enough degrees of freedom in the course
of statistical analysis (Aregbeyen, 2007). There is a popular assertion in the
empirical literature that public spending is negatively correlated with
economic growth due to inefficiency of the public sector especially in the
developing countries where large proportion of public spending is attributed to
non-development expenditure like defence and interest payments on debits
(Husnain, 2011) and Nigerian is not an exception.
However, current trends in fiscal administration
has introduced various ways in view to reducing such expenditure that
contributes little to the development goals of national economy. This thought
is the adoption of MTEF (1998) as part of broad package of budget reforms to
encourage cooperation across various government arms in planning and strategy
form reducing wasteful expenditure.
fiscal policy has not been effective in the area
of promoting sustainable economic growth in Nigeria. Although, the finding
seems invalidating the Keynesian postulation of the need for an active policy
to stimulate economic activities, however, factors such as policy
inconsistencies, high level of corruption, wasteful spending, poor policy
implementation and lack of feedback mechanism for implemented policies evident
in Nigeria which are indeed capable of hampering the effectiveness of fiscal
policy have made it impossible to come up with such a conclusion. To put the
Nigerian economy, therefore, along the path of sustainable growth and
development, the government must put a stop to the incessant unproductive
foreign borrowing, wasteful spending and uncontrolled money supply and embark
upon specific policies aimed at achieving increased and sustainable
productivity in all sectors of the economy.
1.11 LIMITATION OF THE STUDY
It is quite believed that the study of nature
needs sufficient time, finance and materials. The inadequacy of those factors
poses enough limitations to this study. The limitations in general include;
a.
Financial and
Fiscal constraint
b.
Material
constraint
c.
Time constraint
d.
Physical and
Geographical constraint
1.9 DEFINITION
OF TERMS
1.9.1
BANKING INDUSTRY
These refers to the total number of banks and
other financial institution who performs banking function such as acceptance of
deposits,. Issuing of credits/loan and keeping of valuables. Such banks
include; Merchant Banks and Development Banks etc. The banking industry also
consists of the Fiscal authorities such as Central Bank of Nigeria and other
federal bodies whose duty includes the regulation of the economy.
1.9.2 FISCAL POLICY
Is the use of government
revenue collection (taxation) and expenditure spending to influence the
economy. The two main instruments of fiscal policy are changes in the level and
composition of taxation and government spending in various sectors. These
changes affect the following macroeconomic variables in an economy. Aggregate
demand and the level of economic activity, the distribution of income.The
pattern of resources allocation within the government sector and relative to
private sector.
1.9.3MONETARY POLICY
This is the process by which the monetary authority
of a country controls the supply of money, often target a rate of interest for
the purpose of promoting economic growth and stability. The official goals
usually include relatively stable prices and low unemployment. Monetary
economics provides insight into how to craft optimal monetary policy.
1.9.4 ECONOMIC GROWTH
Is the increase of the market value of the goods and services
produced by an economy over time. It is conventionally measured as the percent
rate of increase in real gross domestic product, or real GDP. One of more
importance is the growth of the ratio of GDP to population (DGP per capital),
which is also called per capita income.
1.9.5 INSURANCE BANK
This implies those banks whose risks are insured with Nigeria Deposit
Insurance Commission (NDIC)
1.9.6 BANK
DISTRESS
This is the period in the banking industry when they cannot be able to
meet up its target such as; objectives, dividends, staff remuneration in the
economy as a whole.
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