Department of Finance

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Budgetary Control: A Tool for Cost Control in Manufacturing Companies in Nigeria
(2014-07) Afolabi, Taofeek Sola
This study deals with budgetary control as an effective tool for cost control in manufacturing Companies in Nigeria. The study examined the impact of budgetary control on cost control, profitability of manufacturing companies, the reasons for deviations and how these variances are reported as a means of control in budgeting and also examined whether the manufacturing companies can reduce cost as well as maintain the quality of their products and services. The survey method was used and the companies encompass staff members of Cadbury Nigeria PLC, Friesland Foods Wamco Nigeria PLC and Nestle Nigeria PLC. The study employs the use of questionnaire instrument for the purpose of data collection and the data collected were tested with chi-square statistics through a Statistical Package for Social Sciences. It was discovered that budgetary control contributes to the profitability of manufacturing companies and it was also discovered that there are deviations from planned budget. It was also discovered that manufacturing companies can reduce cost and maintain high quality products. The study recommended that realistic forecasts should be made and that there should be sound planning with effective and efficient formulation of policies and strategies.
Corporate Financial Disclosure In Nigerian Deposit Money Banks
(Society for Science and Education, 2018-02-25) Afolabi, Taofeek Sola
The study examined the impact of corporate financial disclosure on the performance of Nigerian Deposit Money banks. It evaluated the extent to which Nigerian Deposit Money banks complied with the financial disclosure requirements as given by the monetary authorities. Primary data collected through questionnaire were used for the study. Out of 120 copies of questionnaire served on respondents, 100 copies were recovered and used for the analysis of the study. The analytical tools used for the study are the t-test and the Analysis of variance (ANOVA). From the hypotheses tested, the results show that corporate financial disclosure has a significant influence on the banks’ stability and performance in the Nigerian financial sector. Therefore, the study concludes that the corporate disclosure of financial reporting practices by banks in general will enable them to work towards improving and managing their non-performing loans effectively and efficiently for stability and hence better performance. It was therefore recommended among others that efforts should be geared towards improved corporate financial disclosure among money Deposit Money banks in Nigeria and mandatory compliance with the code of corporate governance and effective legal framework which specifies the rights and obligations of banks, it’s directors and shareholders.
Covid-19 Pandemic and the Nigerian Financial Market
(Allied Business Academies, 2021-04-01) Afolabi, Taofeek Sola
The study empirically investigated the effect of the Coronavirus (COVID-19) outbreak on the performance and effectiveness of the Nigerian money market, capital market, and foreign exchange market. The study used time-series data for 120 working days after the first COVID-19 confirmed case in Nigeria and used both exploratory and multiple regression analysis to evaluate the effect of COVID-19 outbreak on the Nigerian financial market. Open buy back rate (OBRR), All Share Index Volume (ASIV) and Parallel Foreign Exchange Rate (PFXR) were used as variables for money market, capital market and foreign exchange market, respectively. The data representing these variables were subjected to econometric analysis, including the ADF-Fisher unit root test, Johansen co-integration test and Ordinary Least squares (OLS) regression technique. Results from the analysis show that the number of COVID-19 cases is inversely related to the interbank money market rate and the All Share Index Volume of the capital market but directly related to the foreign exchange rate. The study concludes that COVID-19 pandemic significantly affects the Nigerian financial market. Therefore, it was recommended that the government should take preventive steps against financial challenges resulting from health risk in order to ensure stability in the financial market. In addition, business owners should provide motivations that will allow their staff to work remotely, wherever they are. Furthermore, the government should, by way of policies, encourage domestic production of goods and services.
Credit Risk and Financial Performance: Evidence from Microfinance Banks in Nigeria
(International Organization of Scientific Research, 2020) Afolabi, Taofeek Sola
Microfinance banks hold the key to economic growth in developing economies and their financial health is crucial to achieving this role. One of the factors associated with the financial health of banks is credit risk. Therefore, this study examined the effect of credit risk on the financial performance of microfinance banks in Nigeria. Published financial reports of six purposively selected microfinance banks, covering the periods 2012 to 2018 were used as panel data for the regression model. The panel Ordinary Least Squares (OLS) technique was used to estimate the influence of the credit risk variables (proxy by non-performing loans and loan-loss provisions) on the financial performance (proxy by returns on assets) of the banks. The results of the analysis revealed that non-performing loan has a significant and negative effect on returns on assets (t-stat = -2.4768 and p = 0.02<0.05) while loan-loss provision has a negative but insignificant effect on returns on assets (t-stat = -1.3316 and p = 0.19>0.05). Further results also showed a significant and positive relationship between total loans and advances (introduced as control variable) and returns on assets (t-stat = 2.8171 and p = 0.01<0.05). The study therefore concluded that credit risk significantly predicted financial performance of microfinance banks in Nigeria. It was recommended that microfinance banks should develop credit policies that will enhance proper monitoring of their loan portfolios in order to reduce defaults. Furthermore, government should through their relevant agencies, ensure microfinance bank’s compliance with the provisions of the law on debt accumulation
Effect of Claims Payments on Profitability in The Nigerian Insurance Industry
(Society for Science and Education, 2018-04-25) Afolabi, Taofeek Sola
Profitability determines an insurance company’s ability to make claims payments as at when due. The objective of this study is to examine the effect of claims payments on the profitability of insurance companies in Nigeria. Secondary data were generated from the financial statements of the two selected insurance companies, covering the periods 2011 to 2016. Using descriptive statistics and the multiple regression techniques, the data was analyzed with the aid of the Statistical Package for Social Sciences (SPSS version 23). The result reveals that ROA (profitability) has an indirect relationship with LR (loss ratio) and NC (net claims), but a direct relationship with ER (expense ratio). It further reveals that net claims have a significantly positive impact on loss ratio. The study recommends that the Nigerian insurance industry must effectively manage their claims processes, in order to reduce the amount of claims for every earned premium.
Effect of Non-Performing Loans on Microfinance Banks’ Performance in Nigeria: A Granger Causality Approach
(International Organization of Scientific Research, 2020-05) Afolabi, Taofeek Sola
Non-performing loan is a major credit risk facing microfinance banks due to their primary role in lending activities. The risk is often associated with more provisions for loan-loss in order to mitigate its effect. This study examined the effect of these credit risk variables (non-performing loans and loan-loss provisions) on the financial performance of microfinance banks in Nigeria, using the Granger causality approach. Secondary data covering the periods 2012 to 2018, from six purposively selected microfinance banks, was used for the hypothesized variables in a Vector Autoregressive (VAR) Model. The unit root test was conducted on the data using the Augmented-Dickey Fuller and Phillip-Perron unit root test, with the aid of the E-VIEW9 statistical software. The results revealed that the variables are stationary which makes them suitable for the VAR model. Furthermore, the Granger causality analysis was carried out and the results established a causal nexus between the credit risk variables and financial performance to include; a unidirectional causality flow from non-performing loans to loan-loss provisions and from loan-loss provisions to returns on assets. The study concluded that non-performing loan influences financial performance among microfinance banks in Nigeria. Therefore, it was recommended that microfinance banks should regularly and strategically monitor their loan portfolios through the establishment of credit limits at the level of individual borrowers, counterparties or group of counterparties, subject to their own unique credit policies and level of risk tolerance. In addition, policy makers in the banking sector should ensure sound macroeconomic policies, such as inflation and interest rates, which will enhance growth in the microfinance sub-sector.
An Empirical Analysis of Public Borrowing and Economic Growth in Nigeria
(Academic Research Publishing Group, 2020-11-07) Afolabi, Taofeek Sola
This study seeks to evaluate the impact of public borrowing on economic growth in Nigeria using time series data from 1980 to 2018. Specifically, the study seeks to analyze the effect of domestic debt (proxy by Federal Government Bonds-FGB) and external debt (proxy by International Monetary Fund Loan-IMFL) on Nigerian’s Gross Domestic Product (GDP). To achieve this objective, secondary data was collected from the Central Bank of Nigeria Statistical bulleting and the Debt Management Office of Nigeria. A multiple regression model involving the dependent variable (GDP) and the independent variables (FGB and IMFL) was formulated and subjected to econometric analysis. These variables were adjusted with the Jarque-bera test of normality while the correlation result was used to check the possibility of multicollinearity among the variables. The t-test was used to answer the research questions and test the formulated hypotheses at the 5percent statistical level. Results from the analysis show that a positive relationship exists between IMF Loan and Nigeria’s gross domestic product, while a negative relationship exists between FG Bonds and Nigeria’s gross domestic product, which violates the Keynesian theory of public debt. The study concludes that both domestic and external debt significantly affect economic growth in Nigeria. Therefore, it was recommended that public borrowing should be efficiently used and contracted solely for economic reasons and not for social or political reasons as this will help to avoid accumulation of debt stock overtime.
An Empirical Investigation of the Determinants of Capital Adequacy of Financial Institutions in Nigeria
(Academy of IRMBR, 2018-07) Afolabi, Taofeek Sola
Determinants of capital adequacy ratio (CAR) in the Nigeria banking subsector was carried out using a panel data of 2010 to 2016 from selected commercial banks in Nigeria. A panel data model was specify to show the relationship between Capital Adequacy Ratio and some variables likely to be the determinants of CAR. Thus, this study examines the relationship between capital adequacy ratio and firm specific (deposits, net interest margin, commercial banks branches, return on asset, inflation and exchange rate). In order to investigate these issues a quantitative method research approach was utilized, by using documentary analysis. The study used panel data functional relationship technique to analyze the data. From the study, the regression result shows a positive relationship of 1.8900 on DP and CAR. The test of hypothesis stated in chapter four and the regression results, show net interest margin with a t-value of -2.51. This however, was significant at a confidence interval of 5%. p<0.05. We thus reject the null and accept the alternative hypothesis that there is a significant relationship between net interest margin and capital adequacy ratio. The same procedure was carried out for other variables stated in the study. The implication of this result is that capital adequacy tends to depend on some of this variables. Therefore, a well-functioning banking system contribute in stabilizing inflation and exchange rate. Also a well-functioning bank encourages technological innovation by identifying and funding entrepreneurs with the best chances of successful innovation. This suggestion emerges from the idea that economic growth requires investment and for realisation of investment, capital is necessary.
An Empirical Investigation of the Determinants of Foreign Exchange in Nigeria
(Society for Science and Education, 2018-06-25) Afolabi, Taofeek Sola
The determinants of foreign exchange rate was carried out using time series data from 1986 to 2016.This analysis attempted to find out the casual relationship between external reserves and foreign exchange rate in the Nigerian context by looking at the impact of foreign exchange rate on external reserves from 1986 to 2016 and after the financial crisis. The Nigeria economy is a mono economy where the import is stronger than export making the Nigeria naira irrelevant in the global market. This prompted the researchers to undertake this study so as to establish a linear relationship between external reserves and other variables likely to affect foreign exchange rate. The theoretical framework of production and risk aversion and model specification variables applied in this study may have been overlooked by previous studies. The study found out that the Nigerian external reserves (RS= 0.000139) positively affect foreign exchange rate in a normal economic situation and negatively affect foreign exchange rate in a period of global financial crisis. In the period of global financial crisis, the study recommends that the Nigeria government can increase her export to strengthen her currency so as to make her currency globally competitive. Furthermore, the external reserve is just a backup plan to cushion the effect of financial crisis and international liability in terms of balance of payment problem not as a core determinant of foreign exchange rate in Nigeria.
Factors Influencing Ponzi Scheme Participation In Nigeria
(Society for Science and Education, 2018-05-25) Afolabi, Taofeek Sola
This study examined the factors influencing Ponzi scheme participation in Nigeria. A multi-stage sampling procedure was used to select 384 participants for the study. Descriptive statistic and One-Way ANOVA was employed to analyze the data. The result of the analysis revealed that friends’ recommendation, expected benefits, current economic situations, ease of obtaining funds and the get rich quick syndrome were the most influencing factors on Ponzi scheme participation and these factors were significant with the gender, age, marital status, employment status and educational level at 5% level of significance. The study concluded that ponzi scheme participation was mostly influenced by friend’s recommendation, expected benefit, current economic situations, ease of obtaining funds and the Get rich quick syndrome. Therefore, the study recommended that the Nigerian government should integrate Ponzi schemes into the Nigerian financial system and subject them to the country’s regulatory environment to minimize the consequences of future failure of the schemes.
Financial Technologies' Evolution and Traditional Banking: A study of Retail Payments in Nigeria
(2021-11) Afolabi, Taofeek Sola
he world of digitalisation is impacting on all aspects of socioeconomic life. This notable change also applies to the financial sector of the global economy. The activities and services of financial technology (FINTECH) overlap with that of traditional banking services. The study seeks to investigate the impact of FINTECH evolution on traditional banking institutions to picture the future of payment systems in Nigeria. Two methods of data analysis were used in the study. An econometric method of data analysis was used to conceptualise the findings of the study. Results from the test of hypotheses reveal that FINTECH affects traditional banking. In conclusion, the present FINTECHs in the Nigerian financial system seem to be slow but are positioned to provide better financial services, especially in payment systems than the traditional banking. The study recommends that the regulators of the Nigeria financial system should incorporate policies into the retail payment system that would ensure full application.
Health Challenge as A Factor Affecting Health Insurance Purchase in Private Sector Organizations in Kwara State, Nigeria
(Academy of IRMBR, 2016-12) Afolabi, Taofeek Sola
This study attempts to investigate health challenge as a factor influencing health insurance purchase in private sector organizations, with special reference to Nigerian Bottling Company Plc as the case study. The study makes use of primary data that was sourced through a well-structured questionnaire. A total of one hundred (100) questionnaires were administered to the selected sample, while ninety five (95) were properly filed and returned. The person product moment correlation coefficient and the t-test were adopted for the data analysis. The result of the analysis shows that there exist a positive relationship between health challenges and health insurance purchase (r = 0.649** N= 95, P < 0.1). In the same line of analysis, the result of the t-test analysis reveal that both health challenges (t = 138.059, p = .000, μ = 4.5912) and health care challenge (t = 141.966, p = .000, μ = 4.5701) are significant at 1% level of significance. It was concluded that there is a significant relationship between health challenges and health insurance purchase and that there is a significant difference between health challenges and health care challenge as a predictor of health insurance purchase. It is recommended among others that health service providers must endeavor to render cutting edge service to their registered members through improving on the quality of drugs and attention to patients.
Human Resources Development: Evidences from Insurance Companies in Nigeria
(2014-07) Afolabi, Taofeek Sola
This article shows the importance of Human Resources Development as it relates to the growth of the Insurance Industry in Nigeria. Primary data were collected through the use of a structured questionnaire from workers in Insurance companies in Nigeria. Our analysis reveals that Human Resources Development has not been made a priority amongst Insurance companies in Nigeria, hence the poor growth in the sector. We suggest that training and re-training of staff should be made a pre-requisite for staff promotion, in order to get the best from them. This will enhance the organization growth and development, resulting in an improved contribution of the Insurance sector to the nation's economy.
Impact of Credit Management Strategies on Loan Performance among Microfinance Banks in Nigeira
(Allied Business Academies, 2021-09) Afolabi, Taofeek Sola
Developing economies like Nigeria need a vibrant microfinance industry to fast-track and sustain their economic growth. However, lending activities in this sub-sector require effective strategies to reduce the risk of loan default. This study examined the nexus between credit management strategies and the loan performance amongst microfinance banks in Nigeria. Primary data were used to determine the impact of the identified credit management strategies (credit term, client appraisal and collection policy) on the loan performance of 180 microfinance banks. The data were sourced from the responses to a research questionnaire by the sampled credit managers/officers in the banks. The ordinal logistic regression technique was used to evaluate the relationships among the variables, with the aid of the Statistical Package for Social Science (SPSS). The results from the analysis revealed that client appraisal has a positive and significant impact on loan performance; credit term has a positive but non-significant impact on loan performance and collection policy has a negative but non-significant impact on loan performance. The study concluded that client appraisal is an integral credit management strategy influencing loan performance among microfinance banks in Nigeria. Therefore, it was recommended that microfinance banks in Nigeria should adhere to strict client appraisal techniques in granting loans. In addition, the government should create and maintain a functional and effective Credit Information Reporting system in the microfinance banking sub- sector, to assist the banks in carrying out thorough client appraisals.
Impact of Environmental Factors on Foreign Exchange Fluctuations in Nigeria
(Academic Research Publishing Group, 2017-04) Afolabi, Taofeek Sola
The study tried to examine the effect of environmental forces on foreign exchange market in Nigeria. The PEST- Political variables such as change in government (CIG) and democratic rule (DMR); Economical variables such as interest rate spread (IRS) and inflation in consumer prices (ICP); Social variable like population growth (PGR); and Technological variables such as fuel exports in merchandise (FEM) and technology export (TEX) were used to evaluate the impact these environmental factors have on foreign exchange market (official exchange rate). This study employed a time series data with the time frame 1973-2015. A multiple regression model was developed and analyzed using the ordinary least square method (OLS) with the help of E-views, a statistical package. The result showed that in isolation, IRS, FEM and DMR significantly influenced dealing rates in the Nigerian foreign exchange market while ICP, CIG, PGR, and TEX did not show any significant influence on foreign exchange market in Nigeria. However, the overall result showed a significant positive relationship between the environmental forces and the foreign exchange market in Nigeria with a p -value of 0.000000. We therefore concluded that environmental factors have significant influence on the Nigerian Foreign Exchange market. Hence, we recommended that relevant stake holders should pay proper attention to those environmental factors with significant impact on our Foreign Exchange Market in Nigeria.
The Impacts of Globalization in a Developing Economy (a Vector Autoregression Analysis)
(Universal Digital Library, 2017-06) Afolabi, Taofeek Sola
This paper investigates the impact of globalization on economic development in a developing country from 1982 to 2016using vector auto-regression method. The objective of the study is to investigate the impact of human capital development on globalization in a developing nation. Through this research, we explore some variables proxy for globalization and likely to impact on economic growth. The vector auto-regression shows the coefficient, standard errors and t-statistics of each of the variables, making it clear for us to predict the direction of each variable in the model. The results revealed that economic indicators such as human capital development and government policy are most robust predictors that aids globalization on economic development in a developing nation. With the present economic position in West Africa, globalization being critical for an economy development, led the study to examine the relationship between some macroeconomics variables that can influence globalization and economic development in a developing economic
Liquidity Management and Deposit Money Banks’ Performance in Nigeria
(2019-12) Afolabi, Taofeek Sola
The primary purpose of this research is to assess the performance of Nigerian Deposit Money Banks (DMBs) in terms of liquidity management. A panel data collected from the financial reports of fifteen listed DMBs Nigeria for the ten years timeframe (2009-2018) was used for this study. Normality test has been conducted using Jacque-bera test of normality. Current ratio, cash ratio, quick ratio, capital adequacy ratio and interest coverage ratio have been used as an indicator of liquidity management and returns on asset, returns on equity and earnings per share have been used as proxies for performance. With the help of Hausman test and random effect of panel least square, t test has been used for data analysis with 5% level of significance. Both positive and negative impacts of liquidity management have been observed on the performance of DMBs in Nigeria. The study concludes that liquidity management affect the performance of DMBs in Nigeria and therefore recommends that the regulators should set up board of professionals to oversee liquidity management amongst DMBs in the country, on a regular basis in order to avoid liquidity problem that may ruin the banks.
MANAGEMENT ACCOUNTING INFORMATION SYSTEM AND EFFECTIVE BUSINESS DECISIONS: AN EVALUATION OF QUOTED FMCG MANUFACTURING FIRMS
(Imo State University, 2018-04) Afolabi, Taofeek Sola
This paper examined the impact short and long term management accounting information system (STmais and LTmais) on effective business decisions of quoted Fast moving consumers’ goods manufacturing firms in Nigeria. A descriptive survey research design was used. The population comprises of 28 quoted companies and source list consists of 8 companies representing 30% of the population with 903 staff selected at random. Primary data were collected and analyzed using regression technique. The analysis results established that STmais has significant effects on effective business decision in FMCG companies in Nigeria (r = .797; p < .05) and LTmais has significant impact on effective business decision in FMCG companies in Nigeria (r = .768; p < .05). The combined impact is also significant (r = .862; p < .05). The study concluded that management accounting information system has a significant impact on effective business decision, therefore recommends that FMCG manufacturers’ should pay more attention to management accounting information system to equip managers for decision making. The study contributed to literature through the empirical result generated from proper date collection and analysis of the harmonized effect of MAIS on effective business decision. The result also validated the findings of previous researchers. It was suggested that future researchers should expand the scope of MAIS components to have an extended assessment of the effect of MAIS on the general business decision.
REDINGTON IMMUNIZATION THEORY APPROACH TO HEDGING INTEREST RATE RISK IN INSURANCE COMPANIES IN NIGERIA
(2013-10) Afolabi, Taofeek Sola
Unstable interest rates due to unstable government policies, inflations or actions of the apex bank has contributed to the inability of insurance companies in Nigeria to meet their obligations, in forms of benefits, claims or assurances as at when due, as accounted for by THE low development in the sector. By adopting Tzeng, Wang and Soo’s linear programming model1, developed from Redington’s classical immunization strategy and using data from the balance sheet of insurance companies in Nigeria, this research work shows how an insurance company’s assets can be immune against interest rate risk. It further reveals that the multiplier-effects of the solution to this problem on the insurance sector and the Nigerian economy at large cannot be over-emphasized.
RELATIONSHIP BETWEEN FISCAL RESPONSIBILITY ACT AND PUBLIC SECTOR FINANCIAL MANAGEMENT PRACTICE: AN EMPIRICAL JUSTIFICATION
(DEPARTMENT OF ACCOUNTING UNIVERSITY OF PORT HARCOURT, CHOBA PORT HARCOURT, RIVERS STATE, 2018-04) Afolabi, Taofeek Sola
Nigeria unrealistic budget practice due to fiscal indiscipline among others gave rise to the enactment of fiscal responsibility act in 2007 as a means of resolving the problem. This study evaluated the relationship between fiscal responsibility act, 2007 and government financial management practice in Nigeria. A descriptive cross sectional survey research design was used and 500 senior staff of ministry of finance, budget office of the federation, fiscal responsibility commission, and National Assembly were randomly selected as the study population based on the researcher’s judgment. Data was collected through questionnaire and analyzed using descriptive and correlation techniques to confirm the six formulated hypotheses. The results concluded that the proxies of fiscal responsibility act - macroeconomic framework; budget performance review; revenue trends and assumptions underlying projections; fiscal strategy paper; analysis and statement on consolidated debt and contingent liabilities; risks to medium-term outlook have positive and significant relationships with public sector financial management practice {Rs = .576; .679; .711; .765; .718; .561; Ps < .05}. It was recommended that fiscal rules should be well implemented to achieve proper revenue projection, expenditure discipline, minimized debt burden, and have a balanced budget that would stimulate economic development. The study contributed to literature by providing empirical explanation for the enactment fiscal rules in Nigeria. A comparative study to review fiscal laws applicable in various countries across continents was suggested for further research. This would assist researchers to properly advise Nigerian government on fiscal laws best practice in the public sector.

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