Explaining Financial Crises in an African Open Economy

This study investigated the probable sources of crisis in the financial sector of Nigeria, over the period, 1960-2014. Two distinct phases of financial crises in the country were enclosed by the scope of the study. Both the policy and economic environments of the country might have contributed greatly to the scale of the crises experienced in the different periods. An analytical approach embedded in allied studies defined the empirical model. The data employed were subjected to preliminary investigations in order to eliminate the possibility of spurious statistical results. Estimates from a regression model were obtained for both endogenous and exogenous factors. Most of the endogenous factors were found to be remarkably consistent in signs and significance. The influence of most of the exogenous factors and closely linked domestic activities found parallels in business cycles of the country. Greater care in policy design and reduced propensity to borrow externally could significantly moderate the negative influence to the determinants of growth in the system.