Global Financial Crisis and Export Performance in Nigeria: Evidence from Post-Crisis Dynamic Panel GMM Estimation, 1986–2025

Abstract

This study analysed the effect of the 2007–2009 global financial crisis (GFC) and the role of external financial factors in the Nigerian export trade. The secondary data used were annual time-series data from 1986 to 2025 from the Central Bank of Nigeria, National Bureau of Statistics, International Monetary Fund and the World Bank. Preliminary investigations revealed a mixture of I(0) and I(1) processes and that the variables are cointegrated in the long run according to the Johansen tests. The post-crisis export function was estimated using panel Generalized Method of Moments (GMM) with lagged regressors as instruments because of the likely endogeneity of the financial variables. The GFC dummy (0.370), cross-border capital flow (0.275) and the real effective exchange rate (−0.0015) were identified as significant predictors of exports at the 1% level, while the global financial conditions (contagion) index and the external vulnerability index were not. The Hansen J-test (p = 0.233) did not reject the null hypothesis of instrument validity and the Arellano–Bond AR(2) test (p = 0.481) revealed no second-order serial correlation. The results suggest that the crisis did not have a uniform depressing effect on aggregate exports since capital in-flow eased export performance whereas appreciation harmed competitiveness. The study recommends policies that promote exchange-rate competitiveness, steady long-term capital inflows, trade finance and diversification.

Keywords: global financial crisis, export trade, capital flows, real effective exchange rate, panel GMM, Nigeria