Victor Ekpu
Victor is a research economist and consultant with significant experience cutting across Higher Education, Economic Consulting and Financial Services Sectors. He joined Aston University in 2017 as a Research Fellow at the Enterprise Research Centre (a collaborative research centre jointly funded by the ESRC, Department for Business, Energy and Industrial Strategy, the British Business Bank and Innovate UK). He is currently working on research projects in SME growth, business demography, productivity, entrepreneurial ambition and alternative finance for SMEs.
Prior to joining Aston Business School, Victor taught Economics at the University of Glasgow and Kaplan International College (UK). He has also been involved in consultancy work for the Central Bank of Nigeria (CBN) and the West African Institute for Financial and Economic Management. He has trained and advised bank executives, bank examiners, and economic policy makers in Africa on various topics in macroeconomic and financial sector management. His research and consultancy interests have cut across several areas including business lending and bank profitability, bank lending to SMEs, business intelligence and predictive modelling, macroeconomics and financial linkages, financial innovation, monetary and financial stability policies and financial regulation.
Victor obtained a PhD Degree in Economics in 2015 and a Masters Degree in Economics, Banking and Finance (with Distinction) in 2009 both from the University of Glasgow. He also has professional qualifications in management, project management and business analysis. He has several publications in Economics and Finance to his record, including a book on Determinants of Bank Involvement with SMEs (SpringerBriefs in Finance, 2016).
Prior to joining Aston Business School, Victor taught Economics at the University of Glasgow and Kaplan International College (UK). He has also been involved in consultancy work for the Central Bank of Nigeria (CBN) and the West African Institute for Financial and Economic Management. He has trained and advised bank executives, bank examiners, and economic policy makers in Africa on various topics in macroeconomic and financial sector management. His research and consultancy interests have cut across several areas including business lending and bank profitability, bank lending to SMEs, business intelligence and predictive modelling, macroeconomics and financial linkages, financial innovation, monetary and financial stability policies and financial regulation.
Victor obtained a PhD Degree in Economics in 2015 and a Masters Degree in Economics, Banking and Finance (with Distinction) in 2009 both from the University of Glasgow. He also has professional qualifications in management, project management and business analysis. He has several publications in Economics and Finance to his record, including a book on Determinants of Bank Involvement with SMEs (SpringerBriefs in Finance, 2016).
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Papers by Victor Ekpu
This paper examines the distinction between micro-prudential and macro-prudential
perspectives of financial regulation and supervision and why the macro-prudential
perspective needs to be strengthened. In view of the need for a market-wide perspective of risks, the concerns over financial innovation as well as concerns over the procyclicality of the financial system, this paper argues that strengthening the macro-prudential aspect could achieve both the micro and macro-prudential objectives of financial stability, that is, engender the protection of consumers and depositors’ funds and at the same time achieve system-wide stability.
The paper examines the boundaries or perimeters of prudential regulation and the tasks and tools of microprudential and macroprudential regulation and supervision, the former in limiting the failure of individual financial institutions and protecting stakeholders such as depositors and financial consumers, and the latter in limiting system-wide disruptions to the economy. Finally, this paper highlights the conflicts between micro-prudential and macroprudential regulation and the governance challenges faced by authorities in implementing a macro-prudential policy regime.
macroprudential tools as critical elements in determining the stability of the financial system and impact of monetary transmission to the real economy. We employed a two lag VAR to model the interaction between monetary policy and money market rates in a preliminary analysis in search of appropriate macroprudential levers in Nigeria. Time series data on a number of variables and proxies were obtained from 1998 to 2013. Given that Nigeria is a bank-based financial system, this study modelled the interaction between the policy rates and money market rates to ascertain the efficacy of the credit channel (which affects the lending rate) and money channels (which affects the
deposit rate) of monetary policy transmission mechanism in Nigeria. The money market rates used included the 3 months deposit rate (_3MDR), prime lending rate (PLR), maximum lending rate (MLR) and interbank call rate (IBCR). We found that monetary policy has no significant explanatory power for changes in 3 months deposit rate, prime lending rate and maximum lending rate while the policy rate has explanatory power for the interbank call rate. We also found evidence of a bi-directional feedback loop between short-term policy rates and interbank call rates (i.e. they both Granger-cause each other). We also calculated the multiplier effect of monetary policy on
money market rates using the Monte Carlo integration analysis. The result shows that a one unit shock in monetary policy will lead to a 13% change in the deposit rate after the second month while the same shock will result in a 13% increase in lending rate after the 13th month. A practical policy implication of this finding is that when the central bank adjusts the interest rate, banks are unlikely to simultaneously adjust their lending and deposit rates. In other words, sticky-lending and deposit rates may reduce the effects of monetary policy on money market rates.
Design/methodology/approach – The study uses bank level data from BankScope for a total sample of 83 UK banks and building societies. The period under consideration extends from 2005 to 2009. Econometric estimation is by panel fixed effects.
Findings: Our empirical results show that business lending is a statistically significant determinant of bank profits. However, this average effect masks important systematic differences among banks. In particular, we find strong size effects: the profitability of business lending is considerable for small banks but negligible for large banks. In contrast, we could not detect any ownership effects for domestic and foreign banks. These findings persist when the occurrence of the financial crisis is accounted for.
Research limitations/implications: Interestingly, our study relates these findings to the process of financialisation. Yet, the extent of the latter and its impact on various groups of banks (i.e., large, small, domestic and foreign banks) have not been examined. Further research in this area would make an important contribution to the literature.
Practical Implications: Our findings suggest that business lending is not a driving factor of profitability for large banks. One possible policy implication – which may be of interest especially to regulators and policy makers – is that capital injections into the larger banks per se are unlikely to lead to an expansion of credit to business.
Originality/Value: There is very little research in the literature on the questions addressed in this paper, especially for the UK banking system. Moreover, the process of financialisation, which motivates the enquiry of this paper, is a growing area of research. Thus, the contribution of this paper is twofold.
Books by Victor Ekpu
This paper examines the distinction between micro-prudential and macro-prudential
perspectives of financial regulation and supervision and why the macro-prudential
perspective needs to be strengthened. In view of the need for a market-wide perspective of risks, the concerns over financial innovation as well as concerns over the procyclicality of the financial system, this paper argues that strengthening the macro-prudential aspect could achieve both the micro and macro-prudential objectives of financial stability, that is, engender the protection of consumers and depositors’ funds and at the same time achieve system-wide stability.
The paper examines the boundaries or perimeters of prudential regulation and the tasks and tools of microprudential and macroprudential regulation and supervision, the former in limiting the failure of individual financial institutions and protecting stakeholders such as depositors and financial consumers, and the latter in limiting system-wide disruptions to the economy. Finally, this paper highlights the conflicts between micro-prudential and macroprudential regulation and the governance challenges faced by authorities in implementing a macro-prudential policy regime.
macroprudential tools as critical elements in determining the stability of the financial system and impact of monetary transmission to the real economy. We employed a two lag VAR to model the interaction between monetary policy and money market rates in a preliminary analysis in search of appropriate macroprudential levers in Nigeria. Time series data on a number of variables and proxies were obtained from 1998 to 2013. Given that Nigeria is a bank-based financial system, this study modelled the interaction between the policy rates and money market rates to ascertain the efficacy of the credit channel (which affects the lending rate) and money channels (which affects the
deposit rate) of monetary policy transmission mechanism in Nigeria. The money market rates used included the 3 months deposit rate (_3MDR), prime lending rate (PLR), maximum lending rate (MLR) and interbank call rate (IBCR). We found that monetary policy has no significant explanatory power for changes in 3 months deposit rate, prime lending rate and maximum lending rate while the policy rate has explanatory power for the interbank call rate. We also found evidence of a bi-directional feedback loop between short-term policy rates and interbank call rates (i.e. they both Granger-cause each other). We also calculated the multiplier effect of monetary policy on
money market rates using the Monte Carlo integration analysis. The result shows that a one unit shock in monetary policy will lead to a 13% change in the deposit rate after the second month while the same shock will result in a 13% increase in lending rate after the 13th month. A practical policy implication of this finding is that when the central bank adjusts the interest rate, banks are unlikely to simultaneously adjust their lending and deposit rates. In other words, sticky-lending and deposit rates may reduce the effects of monetary policy on money market rates.
Design/methodology/approach – The study uses bank level data from BankScope for a total sample of 83 UK banks and building societies. The period under consideration extends from 2005 to 2009. Econometric estimation is by panel fixed effects.
Findings: Our empirical results show that business lending is a statistically significant determinant of bank profits. However, this average effect masks important systematic differences among banks. In particular, we find strong size effects: the profitability of business lending is considerable for small banks but negligible for large banks. In contrast, we could not detect any ownership effects for domestic and foreign banks. These findings persist when the occurrence of the financial crisis is accounted for.
Research limitations/implications: Interestingly, our study relates these findings to the process of financialisation. Yet, the extent of the latter and its impact on various groups of banks (i.e., large, small, domestic and foreign banks) have not been examined. Further research in this area would make an important contribution to the literature.
Practical Implications: Our findings suggest that business lending is not a driving factor of profitability for large banks. One possible policy implication – which may be of interest especially to regulators and policy makers – is that capital injections into the larger banks per se are unlikely to lead to an expansion of credit to business.
Originality/Value: There is very little research in the literature on the questions addressed in this paper, especially for the UK banking system. Moreover, the process of financialisation, which motivates the enquiry of this paper, is a growing area of research. Thus, the contribution of this paper is twofold.