Determining Sources of Systemic Risk: A Case Study of Nigeria and Its Dependence on Oil

Abstract

I develop a toolkit that examines potential sources of systemic risk in countries. Using the Nigeria as a case study, I examine the effect of volatility in oil price on its economy given its perceived degree of dependence on oil. I find that there seems to have been a diversification away from oil revenue, implying a much lower dependence on oil. This toolkit can be adapted to any country and any variable can be investigated giving governments, regulators, businesses, and potential investors insights into economy wide performance so that decisions made can be as accurate as possible.