International Journal of Business and Economics Volume 25, No. 1 June, 2026

Financializing West African Regional Economy for Currency Stability: A Panel Autoregressive Distributive Lag Analysis

Kolawole Subair

Department of Economics, Nigerian Army University, Biu, Nigeria

Sodiq O. Jimoh

Department of Economics, Kwara State University, Malete, Nigeria

Abstract

West African currencies have been susceptible to vagaries in the international trading activities of the region and this has continued to distort its growth and development. Most of these economies have been facing the problems of stagflation arising from the vulnerability of their currencies to various shocks in the world market. This therefore makes their exchange rates to be unstable. More worrisome is the inability of most of these countries to meet their needs and hence, resort to massive importations with low foreign exchange earnings. Attempts at ensuring currency stability in the region through formation of common currency area have failed and thus, the perpetual exchange rate instability. Hence, the need to examine the impact of financialization on exchange rate stability that often in turn impacts on domestic currency using Panel Autoregressive Distributive Lag (PARDL) analysis to estimate the dataset from 1996 to 2020. With this estimation, financialization and other control variables positively and significantly impact on exchange rate; hence on currency stability in the region to some extent. This study therefore recommends abrogation of black market so as to avoid round tripping and enhance the region's capital market efficiency among other solutions to achieving currency stability.

Keywords：Currency Stability, Financialization, Exchange Rate Stability, Panel Autoregressive Distributive Lag Model, West Africa

JEL Classifications：C33, E44, F31, F33

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