Effect of Global Financial Crisis on Nigerian Economy and the Financial Sector

This research aims to study the effect of 2008- 2010 global financial crisis on Nigerian economy and on its financial sector. Secondary data was obtained from the World Bank, the Central Bank of Nigeria and the IMF World Economic Outlook. The economic indicators examined in this research are: unemployment rate, inflation rate, interest rate, non-performing loans, foreign direct investment, foreign exchange reserve, real GDP growth rate, and exchange rate. The regression analysis was conducted to examine the effect of unemployment caused by the global financial crisis on the country’s real GDP growth rate. Descriptive statistics including the mean, median and standard deviation was also used to analyze the data. Trend analysis was further used to analyze the trend of these indicators over the years. The findings of this research indicated that the inflation rate and banks’ non-performing loans have increased during the global financial crises, however they both moved back to their original levels during the post-crises period. On the other hand the negative effect of the global financial crises on unemployment, foreign direct investment and economic growth remained unchanged even after the post-crises period. Also the dependence of Nigerian economy on its petroleum exports makes its economic growth highly sensitive to the petroleum prices. As the petroleum prices fell during the post-crises period the economic growth of Nigeria was negatively affected. Keywords: Global financial crisis, Nigerian economy, Non-performing Loans, Foreign Direct Investment, Foreign Exchange Reserve, Gross Domestic Product, Exchange rates, Inflation rate, Interest rate, Oil prices, Trend analysis.