What is it about?
Commercial banks in Nigeria had for years operated several bank accounts for government ministries, departments and agencies in Nigeria. However, the decision to implement the TSA policy ignited a massive withdrawal of these public-sector funds from commercial banks, thus shrinking the lending capacity of affected banks. Motivated from a priori theoretical framework that economic policy announcements influence stock prices, particularly under economic policy uncertainty situation, we evaluate the TSA policy’s impact on commercial banks’ shareholders wealth using an event study methodology.
Featured Image
Why is it important?
The financial services sector in general and the banking sector in particular play very important roles in the Nigerian economy. Report from the last quarter of 2015, indicates that the financial services sector constituted approximately 26% of the equities market capitalization of the Nigerian Stock Exchange, with a capitalization of N2.52 trillion (US$12.63 Billion). Thus, we believe that policies that impact on this sector have the potential to affect the Nigerian economy as a whole. Hence worthy of an empirical investigation.
Perspectives
We hope this article informs decision-makers of the intended and unintended consequences of abrupt economic policy implementation, especially under the extreme level of uncertainty. Political campaign promises can trap newly elected governments into causing a negative impact on stock markets. In the case of Nigeria, the country slipped into economic recession following the change of government. Mainly due to the new government’s campaign promises- which bothered on altering economic policies of previous governments
Olayinka Moses
Victoria University of Wellington
Read the Original
This page is a summary of: Consequences of the Treasury Single Account Policy on the Wealth of Nigerian Commercial Banks’ Shareholders, Emerging Markets Finance and Trade, August 2017, Taylor & Francis,
DOI: 10.1080/1540496x.2017.1356715.
You can read the full text:
Contributors
The following have contributed to this page
