Title: Electoral uncertainty and the volatility of international capital flows in Nigeria

Authors: Ladi Raulatu Balakeffi; Victor Ugbem Oboh; Adegoke Ibrahim Adeleke; Shamsuddeen Zubair Imam; Grace George Bikefe

Addresses: Monetary Policy Department, Central Bank of Nigeria, Nigeria ' Monetary Policy Department, Central Bank of Nigeria, Nigeria ' Monetary Policy Department, Central Bank of Nigeria, Nigeria ' Monetary Policy Department, Central Bank of Nigeria, Nigeria ' Monetary Policy Department, Central Bank of Nigeria, Nigeria

Abstract: This study examines the effects of changing political environment on capital flows and investment decision making especially in developing economies like Nigeria. It utilises structural vector autoregressive (SVAR) and Granger causality test to analyse the objectives of the study. The results indicate that shocks from political events have negative impact on the exchange rate with resultant rising positive treasury bill rates. The implication of these results is that attractiveness of yields in the Nigerian financial market appears to outweigh the political uncertainty consideration by investors during the electioneering periods. Though, these political events have depreciating effects on the foreign exchange market. The study, therefore, recommends that a government that is desirous of achieving optimal capital flows must adopt an appropriate mix of fiscal, structural and monetary policies, before, during and after the electioneering period.

Keywords: electoral uncertainty; capital flows; structural vector autocorrelation; SVAR; Granger causality; Nigeria.

DOI: 10.1504/IJBEM.2022.126540

International Journal of Business and Emerging Markets, 2022 Vol.14 No.4, pp.349 - 373

Accepted: 07 Sep 2021
Published online: 28 Oct 2022 *

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