FINANCIAL INTERMEDIATION, MACROECONOMIC DYNAMICS, AND TRADE PERFORMANCE: UNPACKING THE DETERMINANTS OF INTERNATIONAL TRADE IN AN EMERGING AFRICAN ECONOMY

622 International Journal of Social and Educational Innovation Vol. 12, Issue 23, 2025 ISSN (print): 2392 – 6252 eISSN (online): 2393 – 0373 DOI: 10.5281/zenodo.17991966 FINANCIAL INTERMEDIATION, MACROECONOMIC DYNAMICS, AND TRADE PERFORMANCE: UNPACKING THE DETERMINANTS OF INTERNATIONAL TRADE IN AN EMERGING AFRICAN ECONOMY Kayode David KOLAWOLE Department of Accounting Science Walter Sisulu University, Mthatha, South Africa [email protected] 0000-0002-6704-2673 Abstract This study examines the effect of credit of commercial banks on international trade in Nigeria using annual time-series data from 1990 to 2023 from the Central Bank of Nigeria statistical bulletin. The estimation is done using the Fully Modified Ordinary Least Squares (FMOLS) estimation method to determine the contribution of bank credit, exchange rate, inflation, gross domestic product, and structural reforms to trade performance. The findings show that these effects of bank credit and GDP on international trade are positive and relatively strong, whereas the exchange rate has both positive but moderate impacts. On the other hand, inflation shows no substantial effect, showing how little short-term fluctuations in price levels matter in trade. The results emphasize the role of financial sector development, macroeconomic stability and structural reforms, most notably the banking sector consolidation in 2005, in facilitating long-term trade growth. The paper has provided relevant policy recommendations to improve trade finance, exchange rate stability as well as financial inclusion as instruments of bolstering Nigerian integration into the global economy. Keywords: Bank Credit, International Trade, Exchange Rate, Gross Domestic Product, Inflation, Nigeria. JEL Codes: F13, F43, G21, O55 International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 623 1. Introduction Financial intermediation and international trade are two topics that have been core in development economics, especially in the case of emerging economies like Nigeria. Bank credit availability is an important aspect in trade finance to ease liquidity crunch on both exporters and importers. In shallow capital markets, commercial banks would be the key intermediaries in facilitating the finance of trade flows (Patel, 2021). For Nigeria, as international trade is not only a means of growth but also a determinant of external sector stability, there is a need to understand the role of banking credit in trade performance, with regard to policy and practice. Recent evidence suggests inadequate access to credit has often constrained the ability of firms to participate competitively in global trade networks and hence limited export diversification (Hassan & Yu, 2007; Fapetu et al., 2022). The initial aim of this research will be to analyze how the credit of commercial banks influences the volume of international trade in Nigeria. International trade is capital intensive requiring finance for working capital, logistics and foreign exchange transactions. High collateral requirements, high interest rates, and poor credit information systems are other nagging issues in Nigeria that have limited the accessibility of firms to financing (Sghaier, 2021). This paper throws some light on whether the intermediation role played by the financial sector can be used to facilitate the widening trade base in Nigeria by the emphasis on the bank credit as a determinant of the trade. In Africa, whose integration is gaining momentum under the African Continental Free Trade Area (AfCFTA), this goal is especially pertinent as competitive financing is a mandatory condition to participate (UNCTAD, 2021). The second goal is to evaluate how the macroeconomic fundamentals such as inflation, exchange rate, and gross domestic product impact international trade in Nigeria. Trade competitiveness has always been observed to be highly influenced by exchange rate volatility since too much fluctuation results in uncertainty in decisions to export and import (Ezuem & Sagbara, 2025). Inflation, on the other hand, influences relative prices and can lead to distortions in trade incentives while GDP is a proxy for production capacity and demand conditions (Bonga-Bonga & Phume, 2020). Because Nigeria has a history of exchange rate distortions and macroeconomic turmoil, exploring these variables offers some understanding of the short-run and long-run dynamics that influence the outcome of trade. The third goal is to investigate the influence of structural change and domestic policy effects on determining the outcome of trade. In particular, a dummy variable is included in this study to measure the impact of the banking sector consolidation in Nigeria of 2005. The purpose of this reform International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 624 was to improve capital adequacy, financial stability, and efficiency of credit intermediation. Past studies revealed that structural banking reforms have a profound impact on the performance of the financial sector, and consequently, trade financing (Beck et al., 2010; Babajide et al., 2021). The effects of such reforms can be analyzed to determine whether changes wrought by a policy in the financial sector are reflected in the performance of international trade. To accomplish these goals, the analysis will utilize the Fully Modified Ordinary Least Squares (FMOLS) estimation technique to resolve the problem of serial correlation and homogeneity, which will produce solid estimates in the long run. The empirical framework draws from the theories of financial intermediation, international trade, in particular the notion that financial deepening comes with risk sharing and lower transaction costs, both of which boost trade flows (Manova, 2009). By using this methodology, the research is part of empirical discussions of the finance-trade nexus in the African space, where institutional and structural challenges mean that theoretical expectations are often not met (Chua & Safiyanu, 2022). In general, this work contributes to the literature in several ways. First, it presents new empirical evidence on Nigeria, spanning the period 1990-2023, which is characterized by important economic liberalization and reforms. Second, it includes both financial variables and macroeconomic fundamentals, providing an overall picture regarding the determinants of trade. Finally, the emphasis on structural reforms increases the policy relevance of the findings, including lessons for strengthening the financial sector and trade policy within the broader context of economic diversification and global integration. The rest of the paper is organized as follows: the theoretical and empirical literature is reviewed in Section 2, the methodology is presented in Section 3, results and policy implications of the empirical results are discussed in Section 4, and finally, the paper ends with recommendations provided in Section 5. 2. Literature and Theoretical Framework 2. Empirical Review Empirical studies continue to focus on trade finance and bank credit as key limitations to the involvement of firms in global markets. Recent firm-level and country-level research finds that shocks to trade finance or limited bank lending have a significant negative effect on exports and can slow entry precision by firms into foreign markets (Patel, 2021; Xu, 2022; International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 625 Calani, 2024). Patel, (2021) capitalize on comprehensive firm-bank relationships to demonstrate that declines in the ability of banks to finance trade have a disproportionately negative impact on exporters compared to domestic activity; the macroand micro-evidence they present reflects the perception that that the health of banks and the availability of trade credit are first-order factors in export performance. This channel is supported by historical and recent quasi-natural experiments (Xu, 2022), which capture continuing trade downturns due to massive sizes of bankshocks. The findings give relevant empirical incentive to investigate the impact of commercial bank credit availability in Nigeria on aggregate trade volumes. Another thread of empirical research studies the role of financial development and bank intermediation more generally. Cross-nation and panel research results indicate that more sophisticated financial regimes are related to high trade volumes and diversification of exports (Leibovici, 2021; Hassan & Yu, 2007, 2022; Manova, 2009). Leibovici (2021) constructs and estimates industry-level models identifying the relationship between financial depth and trade performance and reports that industries that have greater dependence on outside financial resources grow exports in response to financial development gains. In panel settings, Hassan & Yu, (2007) demonstrate that better depth and inclusion in the banking sector is associated with increased trade openness and levels. Combined, these studies have proposed that aggregate credit growth may stimulate trade through working capital relief, and funding fixed exporting costs. At the sectoral and firm scales, empirical work, based on micro-data, reveals heterogeneity: Credit-constrained, small, and young, for instance, respond more strongly to improvements in trade finance or bank credit; Capital-intensive sectors show larger gains in exports in response to improvements in financing (Manova, 2009; Beck et al., 2010). Using firm-bank matched datasets, we find evidence of substitution between bank credit and trade credit: when bank lending tightens, there are changes in trade credit and collateral requirements that bound cross-border transactions (Patel, 2021; Chen, 2019). Because of this micro-heterogeneity, aggregate bank credit growth might be differentially affected by trade on different microstructure credit marketswhich is also significant when targeting policy in Nigeria. There is a sizable empirical literature examining the impact of exchange-rate movements and volatility on trade flows, and its conclusions are subtle. Exchange-rate depreciation has generally been found to stimulate exports via competitiveness mechanisms and discourage trade via volatility (uncertainty) by increasing the cost of contracting and hedging (Panel and International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 626 country studies: Ekanayake and Dissanayake, 2022; Xu et al., 2022; Urgessa, 2023). Empirical evidence tends thus to suggest compensating effects: as much as depreciation has a mechanical effect of enhancing price competitiveness, increased pass-through to domestic costs (and blocked access to foreign inputs financed with bank credit) may dull the benefits. There is some evidence that the exchange-rate-trade relationship may be country-structure sensitive (import intensity, export composition) and trade-finance-available sensitive (Ezuem & Sagbara, 2025; Chua & Safiyanu, 2022). Some empirical studies target African countries in particular and offer evidence relevant to the region. Examining trade financing constraints more stringently in lower-income frontier economies with shallow capital markets and concentrated banking systems, panel analysis and country case studies reveal that these constraints manifest as a lower level of trade participation by the country in exports and a more significant reliance on imports (Fapetu et al., 2022; Sghaier, 2021). Disaggregated studies of trade flows reveal that imports of intermediates and capital goods are especially susceptible to credit restrictions in that firms use bank credit or trade finance to fund purchases of inputs; this fact explains why bank credit in Nigeria seems strongly associated with the aggregate levels of trade (imports and exports) in the empirical findings discussed above. There is variety in the different identification strategies employed in the literature, notably firm-bank matched panels, difference-in-differences exploiting banking shocks, instrumental variables exploiting the health of banks or their exposure to branches, panel cointegration (FMOLS/DOLS), and ARDL/ARDL-type estimators for country time-series. Studies using cointegration and FMOLS/DOLS report sustained long-run relationships between financial variables and trade in a variety of settings, with different degrees of strength for these relationships across countries and time periods (Leibovici, 2021; Rahman et al., 2023). The combined cross-sectional (firm-level) and time-series (country-level) design reflects the multi-scale nature of the finance-trade nexus, and the need to combine long-run estimators (FMOLS) with micro-founded inference in country studies like the one at hand. New dimensions that do not exclude established bank credit channels and are the focus of new empirical work include the rise of fintech, digital trade finance, and regulatory changes. Emerging evidence suggests that fintech and digital payment innovations can reduce transaction costs and partially replace traditional finance for trade, hence facilitating smallfirm entry into exports (Kumari et al., 2024; Calani, 2024). Nonetheless, the penetration and regulatory context of fintech also differ widely among countries; in Nigeria, transactions with International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 627 larger, capital-intensive fintech do not fully displace bank trade finance, but rather complement it. Therefore, expansionary policies. Formal bank credit should be coordinated with support for digital trade-finance solutions to maximize reach. 2.2. Theoretical Framework The theoretical basis on the relationship between commercial bank credit and international trade can be based on the financial intermediation theory, trade-finance models, and the heterogeneous firms’ model of international trade. Financial intermediation theory asserts that financial institutions such as banks play an important role in mobilizing savings and allocating capital to productive investments, and trade flows are affected by banks (Demirgüç-Kunt & Levine, 2009). The commercial banks increase the ability of firms to engage in international markets by lowering the cost of transactions as well as curbing a lack of information and supplying liquidity. Specifically, credit access enables companies to cover working capital needs, address fixed entry barriers, and manage swings in foreign demand (Patel, 2021). The theoretical interconnection lies at the heart of the Melitz (2003) heterogeneous firms’ model, which has been generalised to include financial frictions. In this model, companies will incur a sunken fixed expense F in order to access export markets. Define the profit of firm i in order to export, to be: 𝜋𝑖= 𝑝𝑖𝑞𝑖− 𝑐𝑖𝑞𝑖− 𝐹 (1) where 𝑝𝑖 is the export price, 𝑞𝑖 is the export quantity, and 𝑐𝑖 is the marginal cost. When firms face financial constraints, access to external finance through banks determines their ability to cover 𝐹. If 𝜋𝑖< 0, the firm exits the export market, highlighting the role of credit in facilitating international trade participation. From a financial intermediation perspective, commercial banks supply credit 𝐿𝑡 to firms, which is allocated based on expected profitability and collateral requirements. Following Bernanke and Gertler’s (1989) financial accelerator logic, the supply of credit can be expressed as: 𝐿𝑡= 𝛼𝑌 𝑡− 𝛽𝑟𝑡+ 𝜀𝑡 (2) where 𝑌 𝑡 represents aggregate output, 𝑟𝑡 is the interest rate, and 𝜀𝑡 captures shocks to bank lending conditions. A positive shock to bank credit (𝜀𝑡> 0) reduces borrowing costs and raises firms’ capacity to engage in trade finance. International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 628 International trade can also be modeled through the gravity framework, extended to include financial variables. In the augmented gravity equation, bilateral trade flows 𝑇𝑖𝑗 between country 𝑖 and country 𝑗 depend not only on economic size and distance but also on credit availability: 𝑇𝑖𝑗 = 𝛾 𝑌 𝑖𝜃𝑌 𝑗𝛿 𝐷𝑖𝑗 𝜙 Credit𝑖 𝜆 (3) where 𝑌 𝑖 and 𝑌 𝑗 are the GDPs of the trading partners, 𝐷𝑖𝑗 is the distance, and Credit𝑖 represents the depth of domestic bank credit in country 𝑖. The parameter 𝜆 > 0 implies that an expansion in bank credit facilitates trade by lowering transaction costs and easing liquidity constraints. Moreover, when considering exchange-rate effects, trade financing interacts with currency fluctuations. Let the real effective exchange rate (REER) be denoted as 𝐸𝑡. Export supply 𝑋𝑡 is then a function of both bank credit and exchange rate competitiveness: 𝑋𝑡= 𝜂0+ 𝜂1𝐿𝑡+ 𝜂2𝐸𝑡+ 𝑢𝑡 (4) where 𝜂1> 0 captures the positive impact of bank credit, while 𝜂2 may be positive or negative depending on whether exchange-rate depreciation boosts competitiveness or raises import costs for intermediate inputs. The theoretical expectation is therefore that greater commercial bank credit enhances trade flows by relaxing firms’ financial constraints, consistent with the financial intermediation literature (Leibovici, 2021). However, in economies with exchange-rate volatility, high financing costs, or structural rigidities, the strength of this relationship may be attenuated (Hassan & Yu, 2007). Hence, the theoretical model provides testable hypotheses for the empirical investigation: (i) bank credit expansion increases international trade, and (ii) exchange-rate dynamics condition the magnitude of this effect. 3. Methodology 3.1. Data and Sample Selection This study uses secondary time-series data for the period 1990–2023, extracted from the Central Bank of Nigeria (CBN) Statistical Bulletin and relevant World Bank databases, and includes the following variables: International Trade Volume (INTV), Total Bank Credit to International Trade (BC), Inflation Rate (INF), Exchange Rate (EXR), Gross Domestic Product (GDP), and a Domestic Policy dummy variable (DP) that captures the 2005 banking sector consolidation. These variables were selected based on the existing empirical literature International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 629 on the nexus between banking credit and international trade, which has highlighted the importance of credit availability, macroeconomic stability, and institutional reforms in determining trade performance (Baltagi, 2008; Demirgüç-Kunt & Levine, 2009). Using annual observations is consistent with the economic reporting framework in Nigeria, and the time frame is long enough to capture both structural reforms and business-cycle fluctuations. All variables were converted to their natural logarithmic form (except for the dummy variable), which reduces variance and enables coefficients to be interpreted as elasticities. 3.2. Empirical Models The functional relationship between banking credit and international trade is expressed as: 𝐼𝑁𝑇𝑉𝑡= 𝑓(𝐵𝐶𝑡,𝐼𝑁𝐹𝑡,𝐸𝑋𝑅𝑡, 𝐺𝐷𝑃𝑡, 𝐷𝑃𝑡) (5) The econometric representation of the model is given as: 𝐼𝑁𝑇𝑉𝑡= 𝛽0+ 𝛽1𝐵𝐶𝑡+ 𝛽2𝐼𝑁𝐹𝑡+ 𝛽3𝐸𝑋𝑅𝑡+ 𝛽4𝐺𝐷𝑃𝑡+ 𝛽5𝐷𝑃𝑡+ 𝜇𝑡 (6) where 𝐼𝑁𝑇𝑉𝑡 denotes international trade volume at time 𝑡; 𝐵𝐶𝑡 represents banking sector credit to international trade; 𝐼𝑁𝐹𝑡 is the inflation rate; 𝐸𝑋𝑅𝑡 is the naira-dollar exchange rate; 𝐺𝐷𝑃𝑡 represents gross domestic product; 𝐷𝑃𝑡 is a dummy for policy reform; 𝛽0 is the constant term; 𝛽1… 𝛽5 are the coefficients to be estimated; and 𝜇𝑡 is the stochastic error term. To evaluate the sensitivity of results, additional models were estimated with exports (EXP) and imports (IMP) as alternative dependent variables, in line with established literature that distinguishes trade components in response to financial development and credit allocation (Beck et al., 2010; Musila & Yiheyis, 2015). The definitions and data sources of the variables are summarized in Table 1. Table 1: Definition of Variables and Sources Variable Description Measurement Source INTV International Trade Volume Value of exports plus imports CBN Statistical Bulletin (2023) EXP Exports Value of goods and services sold abroad CBN Statistical Bulletin (2023) IMP Imports Value of goods and services purchased from abroad CBN Statistical Bulletin (2023) BC Bank Credit to Trade Loans and advances to importers/exporters CBN Statistical Bulletin (2023) INF Inflation Rate Annual percentage change in CPI World Bank WDI (2023) International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 630 EXR Exchange Rate Naira per US dollar (end-period average) CBN Statistical Bulletin (2023) GDP Gross Domestic Product Annual real GDP (constant 2010 USD) World Bank WDI (2023) DP Domestic Policy Dummy 0 = pre-2005, 1 = post-2005 consolidation Author’s construct Source: Author (2025) 3.3. Estimation Methods Since the data are time-series, preliminary diagnostic tests were run to determine the order of integration of the variables, which were found to be integrated of order one, I(1), therefore we run the cointegration analysis. The Fully Modified Ordinary Least Squares (FMOLS) estimator was used as the primary estimation technique, which was developed by Phillips and Hansen (1990) and is widely used in empirical trade–finance literature as it addresses endogeneity and serial correlation present in cointegrated systems, yielding asymptotically efficient estimates in small samples and handles mixed regressors (Asteriou and Hall 2021). The long-run FMOLS specification can be expressed as: 𝐼𝑁𝑇𝑉𝑡= 𝛽0+ 𝛽1𝐵𝐶𝑡+ 𝛽2𝐼𝑁𝐹𝑡+ 𝛽3𝐸𝑋𝑅𝑡+ 𝛽4𝐺𝐷𝑃𝑡+ 𝛽5𝐷𝑃𝑡+ 𝜖𝑡 (7) To confirm the robustness of the results, the findings were validated using alternative estimation methods such as Dynamic OLS (DOLS) and Canonical Cointegration Regression (CCR), which are conceptually aligned with FMOLS, and sensitivity analysis was performed by re-estimating the models with exports and imports as dependent variables. Diagnostic tests including the Durbin-Watson statistic, heteroskedasticity tests, and stability tests (CUSUM and CUSUMSQ) were conducted to confirm the validity of the regression results. Postestimation analysis was also conducted to examine the statistical significance and economic plausibility of the coefficients, particularly focusing on the magnitude and direction of the credit–trade nexus. 4. Results 4.1. Discussion of Results As shown in Table 2, the Phillips–Perron (PP) unit root tests for all variables under study, namely BC, EXP, IMP, EXR, INF, GDP, and INTV, suggest that they are integrated of order one, I(1), meaning that the series are non-stationary at their levels but become stationary after first differencing. This result is not surprising because the series are macroeconomic in nature International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 637 stability enhances trade flows in emerging markets (Ezuem & Sagbara, 2025; Chua & Safiyanu, 2022). Finally, the results highlight the need for inclusive financial and trade policies, in which expanding bank credit should not only target large corporations but also the SMEs that constitute the backbone of the Nigerian economy; policies that reduce collateral requirements, strengthen credit information systems, and promote digital financial inclusion will broaden access to trade finance and expand the export base, reduce dependence on oil exports, and enhance resilience against external shocks (Sghaier, 2021; Bonga-Bonga & Phume, 2020). The study confirms that Nigeria’s trade performance is closely linked to financial sector development, macroeconomic stability, and structural reforms, and that strengthening these areas through coordinated financial and trade policies will not only expand Nigeria’s integration into the global economy but also ensure long-term resilience and diversification. Future research could further extend this analysis by examining sectoral-level trade credit dynamics and the impact of digital finance innovations on international trade performance. References Aghion, P., Akcigit, U., & Fernandez-Villaverde, J. (2021). Financial development and innovation-led growth. Journal of Monetary Economics, 122, 35–52. Allen, F., Carletti, E., Cull, R., Qian, J., Senbet, L., & Valenzuela, P. (2014). The African financial development and financial inclusion gaps. Journal of African Economies, 23(5), 614–642. Asongu, S. (2020). Financial access and productivity dynamics in Sub-Saharan Africa. International Journal of Public Administration, 43(2), 1029–1041. Babajide, A., Ishola, L. A., & Bosede, A. V. (2021). Financial sector reform and economic development in Nigeria. Asian Economic and Financial Review, 11(2), 160–172. Beck, T. (2002). Financial development and international trade: Is there a link? Journal of International Economics, 57(1), 107–131. Beck, T., Levine, R., & Levkov, A. (2010). Big bad banks? The impact of U.S. bank deregulation on income distribution. Journal of Finance, 65(5), 1637–1667. Bernanke, B., & Gertler, M. (1989). Agency costs, net worth, and business fluctuations. American Economic Review, 79(1), 14–31. Chen, S. (2019). Bank credit and trade credit: Evidence from natural experiments. Journal of International Money and Finance, 95, 1–18. Chua, S. Y., & Safiyanu, S. S. (2022). Exchange rate volatility and trade in Sub-Saharan African countries: Evidence from augmented mean group estimator. International Journal of Economic Policy in Emerging Economies, 15(1), 1–20. International Journal of Social and Educational Innovation (IJSEIro) Volume 12/ Issue 23/ 2025 638 Demirgüç-Kunt, A., & Levine, R. (2009). Finance and inequality: Theory and evidence. Annual Review of Financial Economics, 1(1), 287–318. Ekanayake, E. M., & Dissanayake, A. (2022). Effects of real exchange rate volatility on trade: Empirical analysis of the United States exports to BRICS. Journal of Risk and Financial Management, 15(2), 73. Ezuem, M. D., & Sagbara, B. V. (2025). Impact of exchange rate on foreign trade in Nigeria. Gusau International Journal of Management and Social Sciences, 8(1), 112–130. Fapetu, O., Oluwole, F. O., Owoeye, S. D., & Balogun, A. A. (2022). Trade openness, capital flows and financial development in Sub-Saharan Africa: A sectorial comparative analysis. FUOYE Journal of Accounting and Management, 5(2). Hassan, M. K., & Yu, J.-S. (2007). Financial development and economic growth: New evidence from panel data. SSRN Electronic Journal. Leibovici, F. (2021). Financial development and international trade. Journal of Political Economy, 129(12), 3405–3446. Levine, R. (2005). Finance and growth: Theory and evidence. In P. Aghion & S. Durlauf (Eds.), Handbook of economic growth (Vol. 1, pp. 865–934). Elsevier. Manova, K. B. (2009). Credit constraints, heterogeneous firms, and international trade. Review of Economic Studies, 80(2), 711–744. Melitz, M. J. (2003). The impact of trade on intra‐industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695–1725. Musila, J. W., & Yiheyis, Z. (2015). The impact of trade openness on growth: The case of Kenya. Journal of Policy Modeling, 37(2), 342–354. Odhiambo, N. M. (2008). Financial depth, savings and economic growth in Kenya: A dynamic causal linkage. Economic Modelling, 25(4), 704–713. Patel, N. (2021). International trade finance and the cost channel of monetary policy in open economies. International Journal of Central Banking, 17(4), 115– 157. https://www.ijcb.org/journal/ijcb21q4a4.pdf Phillips, P. C. B., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I(1) processes. Review of Economic Studies, 57(1), 99–125. Phiri, A. (2018). Nonlinear impact of inflation on economic growth in South Africa: A smooth transition regression analysis. International Journal of Sustainable Economy, 10(1), 1–20. Sghaier, I. M. (2021). Trade openness, financial development and economic growth in North African countries. International Journal of Finance & Economics, 28(2), 1729–1740. UNCTAD. (2021). Economic development in Africa report 2021: Reaping the potential benefits of the African Continental Free Trade Area for inclusive growth. United Nations Conference on Trade and Development. Xu, J., Bahmani-Oskooee, M., & Karamelikli, H. (2022). On the asymmetric effects of exchange rate uncertainty on China’s bilateral trade with its major partners. Economic Analysis and Policy, 73, 211–229.