The Economic Impacts Of The 2008 Global Financial Crisis: A Comparative Analysis On The Nigerian And Brazilian Economies. (Based On Co-Integration Technique)

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Master of Arts

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The 2008 financial crisis has been recorded as the worst financial crisis in history due to its significant damaging effects across the globe. This thesis examines the economic impact of this financial crisis taking Nigeria a member of NIMPT (Nigeria, Indonesia, Mexico, the Philippines and Turkey) and Brazil, a member of BRICS (Brazil, Russia, India, China and South Africa) as test case. To carry out this study, a financial condition index (FDI) was constructed using M2 (money supply), exchange rate and market capitalization to assess the impact of the financial crisis on gross domestic product (GDP) of the two economies. In addition, financial system deposit as percentage of GDP, net export, and unemployment rate were included as control variables. A restricted Vector auto-regression model based on ARDL bounds testing approach to co-integration was implemented to explore a long run equilibrium relationship if any, among the variables. The findings show that there was long run relationship among the variables for Brazil but no such relationship for Nigeria. The difference in the results between the two economies could be attributed to economic reality as Brazil is more financial integrated as compared to Nigeria.