Distance Learning Administration

CeFiMS

MSC FINANCE (QUANTITATIVE FINANCE)

DISSERTATION:

Student
Name: Lincoln Bassey
Registration No: 100201886

Title

An Econometric Analysis Of The Impact Of Oil Price Shocks And Bank Credit On Nigeria’S Economic
Stability: (1970-2013)

Marking Report

1st Marker Martin Lozano

Comments

Overall comments. According to the assessment guidelines for postgraduate MSc students, there is
little evidence of an ability to execute a research MSc project. There is some weak awareness and
understanding of the relevant literature and it is poorly developed (see comments about chapter 2).
There is no evidence of a clear and deep understanding of the methodology (see comments about
chapter 4). There is also a limited ability to analyse the data and results (see comments about
chapters 5 and 6). Plus there is a major issue regarding incomplete referencing in almost every
chapter.
The format is not according to the official guidelines. For example, the cover title fails to include a
word count. There is no declaration regarding plagiarism. There is no table of contents, nor abstract.
Given that the official guidelines states that dissertations should include those elements, they are
clearly non-optional, thus they represent a fail in formatting, thus a mark deduction. Starting from
chapter 4, there is no longer a consistency in numbered sections and numbered chapters. In
particular, chapter 4 starts with section 3.1; chapter 5 starts with section 4.1, and chapter 6 with
section 5.1. Almost half of the dissertation length is for econometric software results/tables, which are
presented poorly as copy-paste.

Second chapter. There is no full evidence that the author read the most relevant literature since
according to page 12, none of the papers included in Table 2.1 were actually centered on the impact
of oil price shocks and bank credit on Nigeria’s economic stability. A prominent part of Chapter 2 is
Table 2.1. I understand Table 2.1 is merely intended to list 39 empirical studies. However, it does not
contribute to add real value to the literature review. It is useful to start a literature review with a
preliminary table like this one, but students are required to go a few steps further/deeper and write
some well articulated paragraphs describing the current state of the art on this topic and explaining
how this project is based on (or partially related with) previous studies. A literature review should not
consist of an unsorted and undeveloped list of papers such as Table 2.1. All papers in Table 2.1
should be included in the reference section, and not all of them are (see Lippi and Nobili, 2008 for
example). Section 2.2 includes a number of references which are not listed in the reference section
(none of them), which represents an issue of incomplete referencing.
Third chapter. There is more evidence of incomplete referencing in this chapter. See for example the
last sentence of the second paragraph, the source of Table 3.1, the paragraph above Table 3.2. In
fact, the whole chapter is full of references which are not listed in the reference section. This
incomplete referencing does not contribute to demonstrate a capacity to carry out a substantial piece
of independent academic work. There is some inconsistency regarding what to include in the main
body of the work and what to leave to the appendix. For example, none of the papers included in
Table 2.1 were actually centered on the impact of oil price shocks and bank credit on Nigeria’s
economic stability (according to the author) and still it is part of the main body, whereas economic
growth is a central part of the main objectives and the data is on the appendix. There are other
referencing issues with Tables such as in the last part of page 14 where it mentions Table 1, whereas
the correct table number is 3.1. It is unclear what the numbers in Table 3.1 are; they could be average
annual growth rates or the total growth rate. There is no specific time period for the third column in
Table 3.1 so it is difficult to fully interpret it. I cannot even go to the original source to verify these data
because Iyoha (1996) is not in the reference section. Note that this lack of formality makes it difficult to
discuss/comment deeply other aspects related with the contents. I am confused about Table 3.2
because the numbers do not add 100%, so I am not sure how to interpret the table and the
corresponding trends. There are also some statements which deserve a full explanation or at least a
further discussion for example, the fact that unemployment which is highly dependent on economic
activities appears to be the opposite in the case of Nigeria. Why is that? Any potential explanation? Is
the informal sector or the population concentration in rural areas playing a role here?

Fourth chapter. The method needs to be motivated much further and deeper, including sufficient
detail. A typical and even advisable recommendation in econometric modules at SOAS is to start with
a graphical description of the variables. In this specific case, a scatter plot of OILP_t and NDC_t would
do the job, or perhaps a simple time series plot of both variables. This preliminary but relevant
graphical approach will allow you to suggest that there is some sort of relationship that you are
interested to explore. Then, you should indicate which studies use this specific method to tackle
objectives like yours, clearly and explicitly indicating the pros and cons of such method. After doing
and elaborating all that, a stationary and cointegration analysis would make more sense. I have some
concerns regarding the data frequency. It is difficult to know from Table 2.1, but I see that most of the
empirical studies incorporate quarterly and even a higher frequency. My concern relies on the number
of observations, which is about 42 and given that this period has at least one structural change as the
“SAP”, and the method implies the use of lagged information, this number of observations seems
statistically too low. I also have a major concern about the units of measure of the variables. I believe
that the author is mixing units. For example, I assume that (based on Table 4.1) OILP and NDC are in
monetary units, RGDPG is a percentage growth rate, CPI is an index (not a growth rate), UNR is a
percentage of a total (not a growth rate), and I am not sure about the CU units. Having different units
could be risky in the interpretation of results, and can even represent a mistake in the method
implementation, which I think it is the case in this dissertation because main results mix stationary and
non-stationary variables. Given the state of this chapter, a preliminary graphical analysis of the series
becomes imperative to support the methodology and strengthen the motivation of the whole empirical
exercise. This preliminary graphical analysis would serve as an evidence of a clear train of thought in
the application of the methodology. These comments relate with a weak conduct of the methodology
because a method is applied but it is conducted very poorly and even mistakenly.

Fifth chapter. My comments on chapter 4 puts in risk the validity of chapter 5. However, even if we
overlook my comments regarding chapter 4, chapter 5 has serious faults. Perhaps the most important
is in section 4.2.4 (chapter 5). In this section, the author interprets some causality results as if they
were true, but most of the statements are based on statistically non-significant results. This represents
a limited ability to correctly analyse data and results. This failure turns out to be even more serious for
a quantitative finance degree.

Sixth chapter. Major findings are based on section 4.2.4, which I prove them to be wrongly
interpreted. Thus, findings and recommendations are not accurate/reliable and not convincing.
Signed Martin Lozano Date: 22/10/2014
2nd Marker Theodore Panagiotidis

Comments

The goal of this study is to investigate the effects of the oil price shocks in the Nigerian economy. The
author employs data from 1970-2013. A VAR model is employed and the behaviour of the impulse
response functions is examined. This is in line with empirical literature on the issue. The literature
review is summarised in a very useful table although the results are not discussed in detail neither are
they assessed critically. Overall though it is a very useful review of the literature.

The VAR model that is employed by the student is standard in the literature. ADF is employed to
examine the stationarity properties of the series. Once all the series (or their differences are found to
be I(0) , a VECM is constructed. The Johansen rank test is employed. Granger causality test within
the VECM is also employed in order to assess the direction of causality. Last but not least the
dynamics of the system are examined via Impulse Response Functions.

Signed Theodore Panagiotidis Date: 22/10/2014

External Examiner: Gabriella Legrenzi Mark: 48

Comments

The main purpose of the dissertation is to provide an empirical analysis of the impact of oil price
shocks and bank credit on the economic stability if Nigeria, based on a sample of observations from
1970 to 2013, based on standard econometric methodologies.

Unfortunately, whilst the dissertation shows some awareness and understanding of the
literature and theoretical issues, there is little development, especially in terms of the
literature review. In fact, Chapter 2, is mainly showing a table summarising the main
results of different (and in some cases loosely) related studies, without any significant
discussion and context. Although the table itself can be useful, it needs to be
accompanied by a thorough and critical review of the literature.

The presentation of the empirical results is also not completely satisfactory, as many
results are simply listed, rather that put into a coherent framework, and sometimes are
unclear. I also note that the conclusions are rather abrupt.

The overall presentation of the dissertation also needs some improvement, in particular
the references in the text are not matched with the ones in the references section.