CHAPTER ONE INTRODUCTION 1

CHAPTER ONE
INTRODUCTION

1.1. Background of the study
Customer relationship management (CRM) is progressively significant to companies as they chase to recuperate their marketing performance through customer retention, customer acquirement, market share, and sales volume throughout long-term relationships with customers. Now days, many companies have attentive greatly in information technology assets to well manage their alliances with customers before, during and after procurement (Bohling et al., 2006).
However, the reachable returns that were attained from information technology investment programs sporadically increase from a slight courteousness on information technology only, with the maximum successfulparcelsintegration of technology with the productive use of organization of people and their knowledge’s (Bharadwaj, 2000; Piccoli and Ives, 2005).
They also reveal that, the better proficiency about how companieseffectively build and conglomerate their technological and organizational competences, the greater our understanding of how CRM impactcompany’srecital.

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Chastonet al. (2004) find Pragmatic support that the espousal of customer relationship management versus transactional marketing alignment has encouragement on the market recital of small accountancy rehearses. Parvatiyar and Sheth (2001) contemplate CRM is the enduring process of appealing in accommodating and concerted activities and programswithinstantaneous and end-user customers to generate or improvecommunal economic worth atabridged cost.

Banks are struggling with each other to triumph a great wedge of the market share with a globalization upshot. For that purpose, the banks have to searchobstacles to meet the greattumor of customer anticipations (Hinnawi, 2011). In Ethiopia, according to Tsegay and Shifera (2011) the banking sector is painstaking as foremostlegatee in latesteconomicimprovement. Therefore, wellestablishment of strategies in banking sector is the most desired one particularly in the current information technology era.

Moreover, in Ethiopia, the fast expanding of banking andother financialservicesoffer the commercial infrastructure enhances to the economic enlargement& structural alteration.

This is clearly revealed in the progress of assets in the financial division and the involvement of the financial division to gross national product in past ten years (Ibid).

Recently, more than ever before, strong rivalry, disintegration of markets, short life sequences of products and snowballing customer awareness and involvedness are the big difficulties to the banking sector (Tsegay, 2011). In such condition, banks can practice the CRM strategy to generate, sustain, and expand strong relationships with their customers to sustain their market enactment. Therefore, it is significant to empirically inspectfactors that influence on market recital. Such sympathetic will succor in better management of bank-customer relationship and in attaininggreater level of market enactment among (Ndubisi, 2006). This study drive to empirically examine the assessment of customer relationship management practices and its effect on companyperformance with reference to commercial bank of Ethiopiain sevenselected branches (Abaymado, Bahirdar,Bezawit, Donaber,Gishabay, Shimbet&Tana)in bahirdar cityadministration.The selected CBE brancheshave almost 75 % of customers & employees from the total 14 CBE branches found in bahirdar city administration & also they have been established & launched their work early from others CBE branchesdue to this they have more reliable &organized data that isused to conduct theresearch.
1.2. Statement of the Problem
According to Parvatiyar and Sheth (2001), the application of CRM as a device ofcompetitive advantage is swellinguniversal. However, there is no doubt that the realoperation and resourcefulimplementation of CRM is vital to the achievements of a firm.
The majority of the businessessmearing CRM were so far to glowing benefit of it in terms of snowballing profitability, escalating market share, ornamental sales volume, nourishingcustomers, retentive customers and plummeting customer defection by appealingbuddingcustomers, because there are no mincedtactics and practices on adoption;enactment and applies.
As the world has become a global village, rivalry became harsh and strained betweenorganizations and designed a situation of persistentalteration, and holding a customer hasbecome vivacious for the success of any business and Ethiopia is no concession. However, intoday’s world customers have more attentiveness and supernumerary of various products and servicesdue to up-to-date and confounded outlets of communication like internet than ever before.Hence due to upgraded customer alertness, customers are more requesting, and those bankshaving vigorous relationships with their customers have forceful competitive advantage in termsof enlargement profitability, market share, customer holding and appealing new and potentialcustomers over other banks.Customers are becomingstiffer to delightthey are keener, more price delicate, more difficulties, less compassionate, and they areappeared by numerous more contestants with equal or improved offers (Kotler, 2007).

According to Umesh et al. (2006), the prominence and arrangement of banking operation is anecho replication of the economic enlargement anddeterioration in the country. As well as, it is a recognized fact that banking industry by networking the repast savings to fruitful uses and deliveringflexibility to the capitalacting a meaningfulrole in attaining the foreseeable socio economic enlargement of a country. Accordingly, the accomplishment andengagement of the banking industry is anindispensablesituation for the economic enlargement of a country.
However, customers are vigorous for business in general and banking industry in predominantly Ethiopiaalengthy way in meeting the fluctuating needs and enquiring of customers.These prevention have many difficulties from economical to political, thoughts tosophisticated tools for customer gratification, customer holding, customer attaining, salesvolume, market share from legislation toenactment. Thus, one of the difficulties which contributed a lot towards the above drawback could be deficit of knowledge of CRM by the business professionals and deficit of conceptualframework. Moreover, even nevertheless some of the professionals have appreciated the prominence of CRM, they deficitasympathetic of what establishaplentifulset of CRM executes. In this standing, the researcher could barelydiscover studies connectedwith the knowledge and execution of CRM practices as well as their correlation on organizational performance. Therefore the researcher want to study usuallystimulatedCRM practices used in preceding researchers Tsegay (2011), the consequence of customer relationship advertising on customer retaining,Mekelle University and Shifera (2011), the influence of relationship marketing on customer faithfulness that compriseskey customer focus, customer knowledge management, CRM Based technology and CRM organizationirrespective of other superfluous variables that impact positively or negatively the recital of the business.With standing to CRM, studies had been recurrence in most developed countries like USA,Europe and Asia and developing countries like South Africa, Ghana and Nigeria, But, currently it is apparent that Ethiopia is one of the profligategrowingcountries in economy in the World, as such requires the implementation of CRM philosophies forbusinesses to be prominence in the global marketingcontest.
At this time commercial bank of Ethiopia is among the prominent banks in the industry that have pronouncedinvolvement in country’s economy, Although CBE is one of the prominentbanks in the country, there is a difficult in the unceasingexpansion of bank’s recital due to diverse features like deficiency of respectableaffiliation between the bank and its clients, deficiency of innovative skills, deficiency of knowledge about clients and rivalry in the banking industry. As the researcher attempt to indicate local published studies in this arena he seek few such as, Tsegay (2011), the impact of customer relationship marketing on customer preservation, Shifera (2011), the consequence of relationship marketing on customer faithfulness, Addis Ababa University. Consequently, this offers the motivation for this research project to be steered to aid bracketing the literature gap offering.The rationalization of conducting this research project on these seven selected CBE branches (Abaymado, Bahir dar,Bezawit, Donaber,Gishabay, Shimbet; Tana)in bahirdar city administrationto assess the CRM Practice ;its effect on banks performance, as they have almost 75 % of customers ; employees from the total 14 CBE branches found in bahirdar city administration and also they have beenestablished; launchedtheir work early from others CBE branchesin bahirdar city administration.
1.3. Research Objectives
1.3.1. General Objectives
The main objective of this study was to assess customerrelationship management practices and its effect on performance of commercial bank of Ethiopiabranches in bahirdar city administration.
1.3.2. Specific Objectives
In conformity with the above general objective the following specific objectives are set.

To assess the effect of customer relationship management practices namely key customer focus, customer relationship management organizations, customer knowledge management and CRM based technology on company performance of CBE branches in bahirdar city administration.
To investigatethe relationship between key customer focus, customer relationship management organizations, customer knowledge management and CRM based technology and company performance.
To measure the level of implementation of customer relationship management practices ofCBE branches in bahirdarcity administration.
1.4. Research Hypothesis
In order to achieve the purpose of this study, the following hypotheses are considered to be tested.

H1: Key customer focus has positive and significant relationship with company performance.
H2: CRM organization has positive and significant relationship with company performance
H3:Customer knowledge management has positive and significant relationship with company
performance.
H4: Customer relationship management-based technology has positive and significant
relationship with company performance.
1.5. Significance of the Study
Conducting a study on customer relationship management in publicbanks is believed to be adomineeringviewpoint.

The research is prepared for partial fulfillment of the requirements for award of the degree of master of business administration (MBA) in the University of Gonder.
The research results willdeliverassistance to the commercial banks of Ethiopia management to healthiergratify their customers, reply to their desiresproficiently and on sensiblecomportments.
The result of this study offers knowledge how to determine the desires of their customers in conveying advanced technologies to mend the excellence of their services.
The study also bounces a path for banks how to uphold the present customer and entice new customers by providing technology based service in sunny of its contestants.
In addition to this, it may serve as a source of reference and give some highlights for others who would liketo know more about the issue and interested in under takings further research on factors that affecting customer relationship managementpractice.

1.6. Scope of the Study
Conducting a research in all service businesses is not alaidback task; it entails much money, time and sweat. Considering; money, time and inclination of the banks to bouncerequire data for the study. Therefore, this study waslimited to assessment of customer relationship management practices(key customer focus, customer relationship management organizations, customer knowledge management, and CRM based technology) and its effect on the performance of commercial bank of Ethiopia in seven branches (Abaymado, Bahir dar, Bezawit, Donaber, Gishabay, Shimbet; Tana), in bahirdarcity administrations.Beyond the above explaincommercial bank of Ethiopia branches were not be incorporated in this study. Including customers in the study was costly and time consuming,therefore, the study was delimited to collect data only from CBE employees of the selected branches. The study also was delimited to collect primary data using questionnaireand an interview.
1.7. Organizations of the Study
Thethesisis organized into five chapters. The First chapter is introductory part whichconsists of background of the study, statement of the problem, research objectives,and hypothesis of the study, significance of the studyandscope of the study.The Second Chaptercontains a literature review informing the reader of what is already known in this area of study. The Third Chapterdiscuss the research methodology whichdescribe aboutresearch design,research approach, data type ; source, data collection instrument,sampling frame, sampling unit, sampling techniques, target population ; sample size, methods of data analysis; presentationand also limitation of the study.The Fourth Chapter discuss about data presentation, analysis and interpretation, figureand different tables are used in this part to describe and analyze the quantitative data. Finally The Fifth Chapter presents the major conclusion drawn from analysis and findings of the study and possible recommendation for the identified problems also included.

CHAPTER TWO
2. REVIEW OF LITERATURE
2.1. Definition of Customer Relationship Management
The goal of this study is not just to apprise the reader with the practices and know-how of CRM philosophy. The more endeavoringaim of this study is to aid the readers to comprehend the prominence of customer relationship management as indispensable and importantelements of managing every fruitful enterprise. Hence,a firm most respectedasset is its customers, and give the new and performance technological competences todistinguish, measure, and manage relationship with each of those customers in order toflourish, a firm must emphasis in purposelysnowballing the worth of the customer base”(Peppers ; Rogers, 2004,p.6). Therefore, the competitivebenefit for any enterprise can be obtained only by leveraging knowledge of customers’ predictions, choices and conduct, which implicatebuilding an enduringnegotiation with customers and employing the information and mindfulnessattained at every customers touch points (Payne, 2004). Itsvalueuttering that, buildingrespectable life time worth with customers is not a briefduty of the marketing department rather it’s an enduring process which indispensable the engrossment of the whole organization. This is accurate for nonprofit (when the customers may be benefactors or helpers), as well as for-profit, large or small, public or as well as for private business” (Peppers, 2004, p.6).
However, many academics give plentifuldefinition for customer relationship management, among these enlightenments technological and relationship facet of customer relationship management are the important ones. For marketing knowledge focus the marketing side to explain customer relationship management while others anticipate information technology lookout to pronounce CRM. However, from marketing point of outlook, CRM is outline according to (Could well, 1998) as “CRM is anamalgamation of businessprocess and technology that are used to comprehend a company’s customers from the belvedere ofwho they are, what they do, and what they are like”.
But, according to Swift, R.S., (2000,p.11), more stress is given for customer relationship management and is defined as “it is a scheme of business technique that are sympathetic anddeployingcustomer demeanor by managing relationships via fruitful communicationin orderto elevation customer turnover”. In these situations, customer relationship is defined as a multidimensional conceptunruffled of four behavioralingredients:-key customer focus, CRM organization, Knowledge management and CRM -based technology in order to employ the CRM in a fruitful way for snowballing the market recital (Sadek et al. 2011).
2.2. Customer Relationship Management and Information Technology
According to Buttle, F., (2009),customer relationship management sets more courtesy on the advancement of quality service and marketing function, and then fears about cross-selling and offering product or service undeniably at precise time for the precise customers. Differentiate information technology implementation are the vital point and salesforcecomputerization in this extreme. Information proficiency in customer relationship management set upissues related to business sales approaches and effectiveness, crusade management, networkintegration and, snowballing product and management, dedication and preservation, cost minimization, customer service, and after-sales backing. Nowadays, CRM-based informationtechnology with its classification like operational, pinpointing, and cooperativebackingschemesenhance the processesinvolved in all sides of customer-facing connections. It combinesadvertising, customer services, and severalcommunicationnetworks and offers personalize services by showing a customer’s conduct so as to scale up the worth of the enterprise. Information technology through the internet has not only deliver anentirely new communications network, but has persistentlyaltered the role and purpose of customer communication.
2.2.1. Service Automation in Banking Industries
The knowledge of service automation showsanenergetic role in business and it’s the application of high-techscheme used to sustenance service staffs and management in directive to attain their work linked activities. For the moment customer service sections are accountable for managing incoming call focusprocesses, grievancetreatment and steadfastness, command entry and dispensation, providing arena sales sustenance, managing outbound call focusprocesses, and acting as contact to other departments. Communicationhubs are arranged to interconnect with customers crosswaysmanifoldnetworks, including speech telephony, e-mail, SMS, prompt messaging, web alliance and fax.
According to Buttle, (2009), service proxies requisite to be able to access a whole announcement history, irrespective of network when collaborating with customers about service matters. However, call hubs are typically devoted to telephony communications, whether through a community swapped telephone network, cell phone network. But the information counters are usually accompanying with information expertise situations where backing is obtainable to information expertise labors. Many businesses now concession web based personality service to customers, customers can residence instructions, pay, track service concerns, or achieve service analytical online at any time of day or night.
2.2.2. Marketing Automation in Banking Industry
According to Buttle(2009), in totaling to service automation, marketing automation also plays a vital role in service giving industry especially in banks and it can be distinct as “the application of high-techknow-hows to sustenance marketers and marketing management in the attainment of their exertionassociatedpurposes”. Anactualwidevariety of marketing places can make use of marketing automation as well as marketing managers, crusade managers, market predictors, advertising managers, database marketers, and straight marketing managers. Hardware and software are the crucialhigh-techrudiments of marketing automation. Hardware comprises desktop, laptop, and handheld devices whereas software entail of both factresolutions that are intended to backing in a solitary area of marketing or marketing management, and united solutions that offer a variety of functionality.
2.3. Customer Relationship Management Objectives in Banking Industry
In business operation the objective of CRM is that, it aids businesses to use experience and human resources in directive to gain sympathetic into the behaviors of customers and the worth of those customers. In this occasion business can providebetter-quality services, making their activities more proficient, emerging positive and close relationship with staffs, update marketing and selling activities, ascertain new customers, and upsurge customer returns.

According to Semih and Ibrahim (2000), for CRM to be actually effective and fruitfulpredominantly, abusiness must appreciate and ascertain what kind of customer information is permitting for and it is crucial to choice what it intends to do with that information. For illustration, most of banking institutions retaintrack of customer lifetimestages in order to market appropriate banking products like mortgages to them at the accurateperiod to meet their desires. However, the business must look into all of the numerousrealities about customers into a business, where and how this information is warehoused and how it is presently used. For illustration, one business may have a relationship with customers through mail crusades, websites,call hubs, mobile auctionspower staff and marketing and advertisingexertions.

Mehrota (2006) specified that, before the outline of internet era, customers greatest of the time nominated their banks founded on how suitable the place of banking branches was to their homes or office. However, with the outline of new technologies in the business of bank services, such as delivering banking services through internet ‘internet banking” and”ATMs”, now customers are more appreciated and they can effortlessly selections any bank for their dealings. This singularities augmented customer base of banks, and also has enlarge the elections of customers for choosing the diverse banks as per their welfares.
2.3.1. Benefits of CRM in the Banking Industry
Customer relationship management is anattitude that are providing unbelievableprominence any businesses predominantly banking industries since the knowledge’s of CRM improve how to appeal, conquer,retain, and catch potential and new customers for a business in order to contest and endure in stiff rivalry. According to Liyunet al (2008,) the prominence ofCRM is to emphases on keeping and upholding long-term relationship with customers, leading to customer satisfaction and hence generating business recital in the banking industry However , Kalakota and Robinson, (2001); Shani and Chalasani, (1992) highlight that the companies’ purposes from using customer relationship management is to know their modified customers and to offer personalized services, in order to increase both customer gratification and their marketing recital in the long track through keeping customers faithful to them. Nguyen et al (2007), persistent that the customer relationship management if used properly, would mature a bank’s capability to achieve the decisiveaim of holding customers in order to mend a strategic benefit over its contestants. Accordingly, the fruitful management of customer relationship can upsurge customers’ gratification and faithfulness, in order to give hopefulconsequence on indorsing market recital (Liyunet al., 2008).

Furthermore, customer relationships are delightful, particularly significant for banks as market situations get firmer. Race is snowballing, earnings are deteriorating. Customers are becoming more puzzling and the life-cycles of products and services are margarine melodramatically. Allthese issues make it vital for banks to upsurge the relationship with their customers and deliver them the services they requisite via the networks they desire.

2.4. Empirical Findings on Customer Relationship Management
Most of the studysteered on customer relationship management is based on confirmation from majority of previousexperimental studies that are done in countries. Here, in this slice certain experimentalresultssteered based on countries will berevised.
According to Swaminathan, (2004), the connotation of customer relationship management and its clientupshot has been done by considering banks, investment companies, insurance companies and other firms as anillustration study which pigeonholed as high notch of relationship alignment and thus well suitable for analysis CRM framework. Although for the persistence of data collection questionnaire was used and for these case questionnaires were sent directly to general managers and similarly level senior managers. These senior-level respondents were extremelyeducated about CRM application and drill within their companies as designated by their capability to response fully practically all questions. Accordingly, the results displays that concentrating on crucial customers and managing knowledge have importantpossessions on market recital in terms of customer gratification.However, customer gratification is not directly pretentious by organizing around CRM and integrating CRM-based technology. Besides, organizing around CRM distresses customer preservation directly. Correspondingly, managing knowledge has a momentousupshot on customer preservationand sales growth via customer gratification. Integrating CRM-based technology displays no indication of momentousupshot on the recital metrics.
Also another study has been directed on the ultimate role of customer relationship management on customer knowledge and customers ‘satisfaction. For this research the essential data was collected from managers of information technology almost from 300 organizationsoccupied in United States of America. The discovery showed that the solicitations of CRM have a positive consequence as they donate to advance the understanding of the customer and improve the market recital (Mithas and Frow, 2005).
Also studies were showed in Turkey on the customer relationship management method within a business and commend a device or customer relationship management dimension. The criticisms from numerousbusinesses like manufacturing, information technologies, tourism, service, retail, finance, and logistics were gathered. The study permitslacks of information about the connection between the progressions and results of CRM such as CS, CL. As anoutcomeanextensive model can be collected and the connection between CRM results, customer relationship management progressions and other organizational aspects can be examined. The consequence of organizational attitude, preparation and other organizational structures on CRM progressions and outcomes can be investigated (Oztaysi, 2011).
The degree to which customer relationship management underwrites to mend the enactment of banking was recognized by Coltman (2007).The study serene a sample of banks set up in Australia upon the solicitation of know-how and quantity of clients. The aptitude to relate client association management was leisurely using humanoid expertise and involvements, edifice of information know-how and carcass of the business. Enactment was restrained by the getting rate of the venture, the income of new products and the development of trades. The study accomplishes that, aptitude to smear client association management clue to enhancement of enactment in generally banking actions.
Ryals (2005) in his research revealed that the application of CRM actions provide larger incomes. The lifespan tenets of customers in two longitudinal case studies shown that client administration tactics alterations with veneration to the worth of the client. Hence CRM works and a judiciously forthright investigation of the worth of the client can mark a factual alteration. Now the perception of CRM fetches healthier enactment of the business through suitable dimension and management of client associations. The inclusive income and cost documents particular to single clients or client sections outcomes the companies to amend their CRM tactics. The involvement of this artefact is to demonstration that the correlation between the client incomes and morals are satisfactorily great proposing that the worth of client majorly regulates the quantity of income it engenders which again can’t be sweeping as it might be business precise or further explicitly to business associated with monetary facilities.
Payne and Frow (2006) inspected CRM from the standpoint of tactic construction and execution. They anticipated a model that contracts with together CRM tactic and application.
They analytically recognized four apparatuses of fruitful CRM platform i.e. CRM eagerness valuation; CRM alteration administration; CRM scheme administration; and worker rendezvous and scrutinized these apparatuses with five crucial cantankerous purposeful CRM procedure which are tactic enlargement, worth formation, multi-channel amalgamation, information administration and enactment valuation. Additional the consequence of CRM is studied instantaneously with origination and business enactment. The consequence demonstrations the positive influence of CRM on the way to business enactment, a discovery which is dependable with preceding research (Hooley et al., 2005).
Kolis;Jirinova (2013) pronounced in their research a connection between CRM and business’s enactment. Four crucial magnitudes of client association management – clientgratification, faithfulness, worth and evenhandedness were booked into contemplation to undertake this research. Each measurement is verified for correlation with business enactment pointers which pronounced how proficiently the business transmutes trades into income, was preferred as the foremost business enactment. Cengiz (2010) in his employed paper appraised and studied on the prominence of computing client gratification. It has advanced through the study that client gratification in this modest market is must and computing it is not specifically an erstwhile progression. It will ultimately clues to succeeding progressions to get achievement. The gratification will composition a vibrant heroine in client prospects and can generate a modified promotion assortment.
Worker placement is entrenched in the work tradition of a business which is noticeable through its worth rudiments comportment and relics. CRM is grounded on four rudimentary accomplishments: designed scheduling, information, worth formation, and enactment dimension. These rudimentary accomplishments extensively conjecture connotation between CRM achievement and worker alignment and the scheme fundamental this connotation elucidate the boundary of worker placement and Client Association Administration (Plakoyiannaki et. al, 2008). Thus the sympathetic nonfictions studied and occurred all demarcated CRM as client centric and decent CRM applies generates influence on gratification and faithfulness of client. Additional in this research, the researcher will endeavor to authenticate it through quantifiable study that client association administration has positive influence on client gratification and faithfulness.
Amir Mozaheb, Sayyed Mohammad Ali Alamolhodaei& Mohammad FotouhiArdakani (2015)in their research demonstrated in nowadays, the inevitability of enduring actions and preserving the modest benefit is courtesy to clients that due to their straight association with business movements are respected foundation for prospects, intimidations and effective interrogations connected to the business. This study intentions to scrutinize the consequence of customer relationship management (CRM) on the enactment of small and medium size enterprises (SMEs). Arithmetical populace of this study is managers vigorous in Business Park in Mashhad.
Arithmetical sample of this research is 105 managers who were nominated randomly from among themanagers of business green placed in this city. Library technique was used for collecting data. In thisresearch, survey method and questionnaire were used to ascertain the consequence among variables and data analysis was done by SPSS19 software. Outcomes disclosed that CRM has noteworthy outcome on the recital of business. Know-how is a crucial aspect which impacts SMEs and clues to preeminence on contestants. Moreover, for accomplishing extra anticipated enactment, business should emolument courtesy to arcade and clients
EsmaeelRamezanpour, Seyed Mohammad &FatemehSotoudeh (2013) in their research, in adding to the empathy of clients’ association managementmagnitudes, their influences on the monetary enactment of banking facilities are studied. To accomplish the research purposes, information know-how, acquaintance administration, client reply and client interface administration as the client association administration magnitudes were recognized and four hypotheses were reputable to examination the influence of these magnitudes on Mellat bank’s monetary enactment in Rasht. In order to gather data, a standard questionnaire containing 18 questions was used. The questionnaires were disseminated among 203 bank workers as the statistical samples. To examination the hypotheses, the Pearson Correlation Coefficient Method, Simple Linear Regression and MultipleRegression Analysis were used.Examination outcomes disclosed that there is a positive noteworthy associationbetween the magnitudes of client association administration and the monetary enactment. The influence coefficient of all the hypotheses through regression tests was positive in which information know-how has had the extreme consequence. At the end, bestowing to each of these aspects, commendations were delivered in order to intensification the monetary enactment of banks.
Dr. E. B. Khedkar& D .Y Patil (2015)in their research describe the Customer Relationship Management (CRM) is the extremely esteemed in marketplace for standing and contemporary clients. In this research they ascertain the consequence of CRM on aspects such as client gratification and client faithfulness. Subsequently CRM is distinct as an imperative crucial in industry among businesses to preserve and intensification their clients base. In this study they guise for numerous features that are indispensable for an operative CRM. In this research, they distillate on these matters that are attractive prominence to advanced level bureaucrats in a business: is there an association between CRM with client gratification and faithfulness in Indian businesses? If so then how we can narrate CRM with client gratification and faithfulness? With globalization businesses are mounting quickly and with always mounting businesses, race is also snowballing. Additional with suitable arithmetical analysis the hypotheses mounted in this study is authenticated and the consequences displays great positive correlation among the variables painstaking for the study.
In developing countries most of the studies on client relationship management have been finished on the basis of data attained from developed countries.
For illustration, a research was steered on client relationship management and clientalignment on the Hotel industry. Accordingly the study strained to categorize hotels in Ashanti region of Ghana into a classification of low, middle, or high customer relationship management mindful. The fallouts of the findings of the hotels have low alignment to CRM (Hamdallah and Evelyn, 2011).
According to Sayed (2011) research was steered on discovering the theoretical bases of customer relationship management and its relationship to the marketing recital from the numerousviewpoints. However, the population of the study comprises all the financial organizations working in the Arab Republic of Egypt. The Upshot of the research displays that there is animportant correlation between marketing recital and emphasis on the key customers, organizational competence and customer knowledge management.
Besides, the research was steered on how information technology could improve firm performance in the organizations that are delivering services for the customers and in order to improveeffectiveness in the Nigerian insurance industries (Oghojaforet al, 2011).
Accordinglyto the used survey approaches to gather data among insurance companies in Nigeria. Also a sample from Lagos municipal, the commercial focus of the countryis nominated. Lastly according to the upshot of the finding displays, despite the fact that all mostall organizations have anextensive data base of their customers, but not almost createnecessities for their customers to generatemaintrades online because they have not entirelyassimilated their customer relationship management with information technology.
Kapologwe Lugano (2013) described in his research one of the greatest imperative encounters for any institute is to assist and preserve virtuous associations with the king (the client). previous, clients were humble individual and were joyful at whatever invention or facility accessible to them. This altering commercial atmosphere is pigeonholed by monetary liberalization snowballing rivalry, great client optimal, knowledgeable and arduous client who overhaul about superiority and worth procurements (Kotler, 2002). In this study researcher scrutinized the influence of CRM on recital of banks in Tanzania. Precisely the study guises frontward to bump into the succeeding explicit purposes namely; to regulate influence of hominid analytics, industry architecture and IT know-how and groundwork on effectiveness of banks in Tanzania, also to decide encounters that facades banks in executing CRM actions and finally to deliver commendation for cultivating CRM in Tanzania Banking Business In order to achieve the above revealed intents, researcher used case study scheme so as to sort in deepness investigation on crucial notions under examination. Researcher secondhand Exim Bank as an incident study for this exacting study, and sample for this study was acquired by exhausting purposive sampling to attain main squealers. In this research paper, researcher scrutinized the impression of CRM on industry recital expending case study methodology. Succeeding the resource-based observation of the industry, CRM is hypothesized as an endogenously gritty occupation of the organization’s aptitude to hitch and compose lesser command proficiencies that encompass somatic assets. Our outcomes disclose a positive and momentous footpath between a greater CRM competence and industry enactment. In turn, higher CRM competence is positively connected with humanoid analytics and industry architecture. However, outcomes recommend the influence of IT groundwork on greater CRM competence is unintended and entirely interceded by humanoidanalytics and industry architecture.
Zainab Said Abdallaa (2013) in his research demonstrated clients are the principal point in the enlargement of fruitful promotion tactic. Promotion tactics both impact and are predisposed by buyers’ distress and cognizance, comportment and atmosphere. In the banking arena a distinctive ‘association’ happens between the clients and the bank. But because of numerous motives and trepidations like commercial encumbrances, risk of disaster, promotion apathy etc., numerous banks are still succeeding the outdated techniques of advertising and only few banks are creation endeavors to acclimate CRM. It is with this background, the researcher has made a diffident endeavor in the direction of the impression that CRM can be amended homogeneously in the banking business for advancement of banking facilities. The overall dispassionate of this study is to measure the involvement of client association management on PBZ (Peoples banks of Zanzibar) enactment and precise purposes are to regulate if the CRM has any influence on client faithfulness, to discovery out the degree in which the facility delivered clues to client gratification in PBZ and to suggestion relevant recommendations grounded on the outcomes. The study concealments the sample of 45 respondents who were the clients of PBZ and 5 officers from the banks including the IT director, the client facility division, the advertising manager and accountant. The primary and secondary data were gathered and analyzed by means of a statistical package for social science (SPSS) and offered in tabular form, chart and graph. The main outcomes displayed that there is straight positive association between the excellence of facility accessible and client gratification and there is straight positive association between CRM programmers of PBZ on client’s faithfulness. The study also displayed that there is a noteworthy enhancement in bank enactment and it was commended that business should appreciate that CRM is an predictable apparatus of advertising that can be painstaking as Precarious Restraint of Souk with respect to Banks in contemporary situation.
Moreover, additional research has been completed by Hamid (2009). Henceforward the research was not only enchanting a non-traditional technique of assessingachievement; by tactics stakeholders’ prospects as an assessment criterion but also focused a case study from Pakistan, wherever ICT industry and precisely CRM is in the originalphases of implementation. The only recommendation the researcher would like to make is that in its place of reinventing the wheel, stakeholders should acquire from the faults of the western companies. If they have introduced the solution from these developed countries, then those failure teachings should also be introduced and practical in order to avoid injury and financial fatalities. The outcomedisplays that the loyalty card program has important positive outcome on the customers’ loyalty. Although loyalty card program may not be the greatestexcellent for some supplies, also there are many other methods to improve and preserve customer loyalty. Having all the above studies directed by numerous scholars, the dimension of CRM netting can be dissimilar form researchers to researchers, some studies unrushed them through the customer’s satisfaction and loyalty, others studies unhurried them through the return rate on investment and others unhurried it through snowballing sales and profits.
Solomon Amare (2014) in his research examined CRM as a tactic has gained marvelous curiosity among researchers and experts in current periods.Hence, the study attempts to measure the position and techniques CRM has been placed in to rehearsal by nominated Ethiopian isolated banks. In tallying, this research contemplates diverse CRM magnitudes such as faith, mutuality, sympathy, attachment andreceptiveness. To attain the dispassionate of the study, primary data were gathered through questionnaire from sample of 253 bank clients of Wegagen bank, Dashen bank and Bank ofAbyssinia, Mekelle, Ethiopia. These respondents were designated using simple random sampling technique. The data gathered through questionnaire were scrutinized using descriptive statistical analysis method and SPSS as ainstrument of data analysis. The discovery also recommends some actions which can be booked in to contemplation in order to augment CRM performs of the three designated banks. The study also obviously shown that the five CRM magnitudes are sturdily associated. Therefore, from clients as well as management physiques of the three banks standpoint, CRM has a momentous effect on client retaining of the selected banks. Mostly communication the three banks are in prerequisite of undertaking a lot of CRM grounded client fixated applies. Though, in executing CRM in to rehearsal, the designated banks had their own breaches. Paralleling the designated private banks on their aptitude of executing CRM rehearsal, Dashen bank was originate to be healthier executer, trailed by Bank of Abyssinia and Wegagen bank, correspondingly. Grounded on the conclusions of the study, the researcher onwards some commendations as; incessant administration on the superiority of amenities, endowment of drill to employees, and persistent research on client desires may assistance the banks to attain their intentions.
SemiraEwnetu(2015) Customer relationship management shows a key role in the enhancement of firms’ performance. The importance of Customer relationship management is growing due to the challenging business environment faced by organizations throughout the world today. The purpose of this study is to examine the impact of customer relationship management (key customer focus, customer knowledge management, technology based customer relationship management and organizing around customer relationship management) on marketing performance (customer loyalty, customer satisfaction, customers’ perception and service quality and market share) of fourcommercial bank of Ethiopia branches from East and South Addis Ababa district. In this study both qualitative and quantitative approaches were employed. The study used primary and secondary sources to gather data. Primary data were collected through close ended questionnaire and semi-structured interview. The population of the study was employees (customer service officers, customer service managers and marketing managers) of the selected fourbranches commercial bank of Ethiopia branches from East and South Addis Ababa district. The total sample size for the study was 246 among these 233 were customer service officers and managers and the rest 13 are marketing managers. These employees were selected because they are concerned about the customer relationship management practices and marketing performance of the bank. To analyze the collected data correlation, simple linear and multiple regression was used. The findings show that customer relationship management dimensions (key customer focus, customer knowledge management, technology based customer relationship management and organizing around customer relationship management) affects customer loyalty, customer satisfaction, customers’ perception and service quality and market share. Among the problems faced by the bank on implementation of CRM practices, lack of customer centric performance standards, lack of advanced technological facilities and lack of standardized physical facilities are the major ones. To increase employees’ performance, reduceclient waiting time and intensificationfacility Excellency, the bank should establishing customer centric performance standards at all customer touch points and use advanced banking technologies and facilities.
2.5. Conceptual Framework of CRM
According to Langerak, and Peter, (2003) in marketing management the quintessence of customer relationship management attitudeinvents from three thoughts. Those are: -customer orientation, relationship marketing, and database marketing. Due to the improvement of information communication technology, these three marketing outlooksjoint together in the paradigm of CRM. However, CRM may be used to precisevariousviewpoints at diverseclassifiedprocedure of management. For illustration, at the strategic level of management customer relationship management may be associated to data-base marketing or automated marketing; at the tactical level, customer relationship management may be implicit as customer preservation or affiliating with customers (Peppers and Rogers, 1995); whereas at the hypothetical level, it may be realized as evolving research paradigm in advertising most often slacklyconcomitant to prevailingoutlooks.
According to Sayed H. (2011) CRM is a multidimensional construct consisting of four broad behavioral components; those are: “key customer focus, CRM organization, knowledge management, and CRM -based technology”. Also he investigated the four CRM behavioral dimensions on market performance of financial institutions in maintaining current customers, attracting new customers, increasing market share, enhancing the standard of sales growth and adding the net profit standard to sales. Bearing in mind the model, the researcher focuses on the banks among many financial institutions. Performance dimension of CRM considers their performance in terms of combining technology, appropriate handling of key customers, customer knowledge management and organizational efficiency in relation with market performance of the selected banks.
As it has been piercing out in the first chapter of this research, the first objective of this study was to assess the effect of customer relationship management practices & its effect on company performance. In this end, bank’s performance is painstaking as dependent variable which is explicated by customer relationship management and other factors. In order to be able to stipulate the effect of CRM on bank performance, first researcher operationalizes variables appropriate for each model. The sections that trail deliver the elucidation of the variables.

According to the literature review the four CRM practices proposed in this research framework are described as follows:
2.5.1. Independent Variables
Independent variable is an inducement variable or involvement functions either within an individual or within atmosphere to distress his comportment. It is that factor which is restrained, deployed or designated by the alchemist to regulate its association to a detected spectacle. The succeeding are individualities of independent variables namely; they basis for alteration in other variables and they are continually attentive only when they distress another variable.
The dependent variable is reply variable or yield. The dependent variable is that factor which is detected and restrained to decide the consequence of the independent variables. It is the variable that will alteration as a result of disparities in the independent variable. It is painstaking dependent because it’s worth be contingent upon the worth of theindependent variable.
It epitomizes the magnitude of alteration in the person or condition studied. In this specific study, performance of bank is referred as dependent variable. In big businesses, there is a parting between possession and management, and in such businesses growing appears to be the supreme conceivable objective of managers while proprietors are most attentive in income enlargement (Baumol 1997; Penrose 1999).
In this exacting study, customer relationship management can be elucidated by innumerable factors. But CRM the subsequent regulator variables also was recycled in this study to sifter out their consequence on disparities of dependent variable namely; key customer focus, customer relationship management organization, customer knowledge management & customer relationship management based technology.
2.5.1.1. Key Customer Focus
According to Shelthet al., (2000); Vandermerwe,( 2004), key customer focus encompasses a general customer-centric focus and unceasingly offering superior and added value through customized offers to the key customers. According to Armstrong and Kotler, (2004), intoday’s business atmospheres the decisiveaim of any key customer focus is to attain a thoughtful customer relationship that makes an organization anessentialcompanion to its supremeprofitable customers. The whole company sympathetic and support for key customerfocusinspire sales power to adoptive long-term customer relationships by posing morepersonalized services.
Evelyn and Hamadallah (1996) specified that firms are betrothed in plentiful amounts oftransactions with meaningfullyvarious customers in terms of their needs, preferences andprospects. Also they reflect customer relationship management to some degree aschallenging. In order to diminish the CRM encounters, most of the firms have alternative to officialcustomer relationship management programs. CRM programs are mostlycategorized aseither database-driven mentions to distinguishing profitable sections through statistical practicesorcustomer-needs-driven mentions to the use of database to source information that welfares inthe development and retain of long-term relationships with key customers.
2.5.1.2. Customer Relationship Management Organization
The key thoughts in order to effectivelyestablish the whole company around customerrelationship management are as follows: organizational structure, organization-wide commitment of resources, and human resources management. CRM means crucialdiscrepancies in the way that firms are schematized and business advancements are absorbed (Hoffman and Kashmeri, 2000). As a result, firms should take into thought the organizational encountersintrinsic in any customer relationship management benefit (Agarwal et al. 2004).

According to Anderson and Swaminathan (2005), strong focus on key customers intenselyenclosed throughout its CRM scheme, the entire company should be organized around indorsing, inspiring, motivating these appreciated relationships. The organizational procedure and configuration needs to be bendable and, if indispensable, reconvened to produce customer-centric values and improve coordination of customer-focused, cross-functional teams in order to appealpossible pool of customers. They specified that with scrupulousexertions by all organizational functions to persistentlydeliver a stream of value-rich movements and customer results. This permits the organizations and its sales force is safe that they can satisfy customers’ needs and improve customer relationships. The achievement of CRM plansdemand for commitment of resources at all stages and occupations of the firm. In summary, well systematized customer relationship management can be reflected as anoccupation of customers’ personal affection to a retailer, as well as their acuity of the company in relation to its contestants, and their alignment towards a long- term relationship with the retailer.
2.5.1.3. Customer Knowledge Management
According to Salomoun et al, (2005) in today’s modest world, knowledge is wellthought- out as one of the competitive issues in worldwide economy. It is necessary to think and cogitate for a business firms in order to appeal customer as another vitalissue in order to come in today’s energetic market effectively. Despite of this customer knowledge management can be defined as the scheme of achieving, allotting, and snowballing the customer knowledge among employees for creating profit to the organization and customers. With the purpose of refining the organizational efficiency and worth, assure from supplyingrequisite products and services to the customers and attain their gratification, it is obligatory to manage the organization’s knowledge about customers. Consequently, it can be decided that knowledge management is an integrative part of CRM.

In today’s business situation firms are inspiring towards the implement of customer relationship management solicitations to track customer conduct to gain sympathetic into customer tastes, preferences and budding needs (Mithaset al., 2005). CRM solicitations help firms to collect and use customer knowledge through CRM solicitations in order to expedite customer employees to record pertinent information about each customer operation. Later information is occupied from employees can be managed and transformed into customer knowledge on the basis of information dispensation rules and organizational policies and businesses organizations can slice their stockpiled customer knowledge with customers to permit those customers to assist themselves by describing the service and its delivery to outfits their needs. However, a firm cannot be customer focused without knowing the needs and preferences of customers. Customer needs and preferences obsessed CRM tacticsentail unrecognized customer needs and preferences through the scrutiny of customer information.
2.5.1.4. Customer Relationship Management-Based Technology
Accordingto Abbott et al., (2001) to measure the CRM performance effectively, pertinent and consistent customer data is essential. Hence, to exactlycollect customer data technology has anenergetic role in CRM in addition to firm intelligence (Boyle, 2004). Indeed, the expansion and upgrading of information technology deliver the aptitude to collect, examine, and share customer information which will lead to a customer satisfaction, customer loyalty and retaining customers (Bulter, 2000). The CRM stresses for “information-wide strategies” which feat computer technologies in preserving relationships (Harding et al., 2004) such as: computer-aided plan or manufacturing, data warehouses, data mining and CRM solicitationschemes that permit the firms to offer supreme customization with improved quality at lower cost. Moreover, it aids the staff at all interaction points or trace points to aid the customers inanimproved way. Hence, many customerfocus actions would be unbearable without the use of asuitable technology (Sin et al., 2005).
According to Zeblah, (2004), knowledge management is measured as one of CRM oriented actions which cannot be enhanced without manipulatingthe latest technology. And also CRM technology painstaking as one of the organizational resourcescommitments that serves as an input into the CRM process and is envisioned to improve firms’ aptitude to effectivelyphysique and preserve a supreme profit assortment for relationships with customer.
2.5.2 Dependent Variables
2.5.2.1 Company Performance

In today’s world as competition is snowballing at snowballing rate, businessesare able to providetheir offer and services that are personalized for every customer. Surely, these organizations can complete competitive advantage in sale and service marketing through modifying their mass services. At the moment, profitable businessesexertion to relocation their mass services to the individual customer. Market recital refers to the improvement of theorganizational upended in the market, upgrading of the customers’ perception of organization and its products, and upsurge in their loyalty toward organization (Martin, 2005).

Company Performance Comprises of the Following Components:
2.5.2.1.1 Sales Growth

According to Buttle, (2009), purifying profitability at the customer level is adisplay of exertion within the marketing discipline towards a less inclusive view of markets. On the other way, the single customer rather than segments of customers is progressivelyhassled as the unit of scrutiny. This survival has given birth to stickers such as ”one-to-one marketing” and ”micro marketing”. Understood from this perception, customer profitability is increasing as amomentous measurement in which each client can be defined. Astress on customer-level profitability can also be painstaking as a mirror image of marketing’s altering role within the firm. Animportantfeature of the new role is that ”marketing is toosignificant to be left to the marketing department”. For that purpose, in any case in marketingliterature, other departments are invigorated to deal with marketing matters. This can beimplicitprimarily in terms of monitoring cost, in the logic that marketingrecital measures are being announced in cost accounting literature and practice.
However, Reichheld and Sasser (1990) specified that, declining customer defections by 5 percentcan upsurge profits by 25 percent to 85 percent. Lately, although the exact numbers mayfluctuate, experimental findings reliablydisplay anextensivehurdle in income and profits with asmall gain in customer retention (Oliver, 1999; Pfeifer and Farris 2004).

2.5.2.1.2 Customer Retention
According to Ghavami (2006), customer retention has a substantial relation on firmprofitability and they conclude that “1% enhancement in retention can upsurge firm worth by5%”. In this case businesses are attentive in maximizing their lifetime worth in order toappreciate that customer retention is a key to snowballing long run firm profitability. Asympathetic of powers for customer’s defection can help companies in scheming customerrelationship management tactics and interferencesintended toward snowballing customerretention and elongating the lifetime of customers to upsurge market performance better thanbefore. Customer retention is the preservation of incessanttransaction relationships with customers over the long term.

According to Buttle, (2009) optimistic retention tactics are tactics that lock the customer in by satisfying a customer for lasting in a relationship. These optimistic retention tactics include the following:
•Customer delights, when customer anticipation exceeding, this is going further than what would frequentlygratify the customer. It means being reactive of what it usually takes to gratify the customer and what it might take to enjoy or enjoyablyamaze the customer.
•Adding customer apparentworth: – companies can discover ways to generate additional worth without producing additional costs. If cost is agonized accordingly the value-added may be anticipated to recuperate those costs. Worth can be added through programs such as, loyalty systems, customer clubs and sales advertisings.
2.6.5.2.3 Customer Satisfaction
According to Hansemark and Albinsson, (2004), the mainobjective of business organizations is customer satisfaction, since customer satisfaction affects customer retaining and companies’ market share, profitability, sales volume. However, customer satisfaction is amultifacetedconcept which has been defined in numerous ways (Hair, et al 2003: Fournier et al, 1999: Sheth and Sisodia, 2001).
According to Hair, et al (2003), customer satisfaction is defined as” customer’s reply to aproduct or service in terms of the degree to which ingesting meets expectations”. Definitely, customer satisfaction is critical for fruitful application of the marketing perception. Numerous organizations mission statements and marketing tactics are intended around the aim of snowballing customer satisfaction (Fournier et al, 1999). In employing customer relationship management, a firm trails to launch and preserve a long-term relationship with customers based on snowballing full customer satisfaction as contrasting to transaction-specific customer satisfaction.
AccordingtoSheth and Sisodia (2001) fruitful customer relationship managementemploymententails a dedicated organizational wide in order to emphasis on importantcustomers in personalized marketing exertions to fully apprehend and achieve their needs and wants onapersistent basis. The seller’s whole organizational structure should be placed oncustomers, often with customer-focused teams intended to generate fully satisfying customerpractices.
According to Stefanouet al, (2003), fruitful customer relationshipmanagement actions must improve customer satisfaction by unceasinglyacclimatizing to thegrowing needs and wants of customers.

According to Kotler and Armstrong (2004), the greater customer relationship capability will be achieved when the four dimensions of CRM work in coordination.

INDEPENDENT VARIBLE DEPENDANT VARIBLE
CRM Practices in terms of

+

+

+

+

Figure 1. Conceptual frameworks to assess customer relationship management practices and its effect on company performance. Source Sayed H, (2011).

CHAPTER THREE
3. METHODOLOGY OF THE STUDY
3.1. Research Design
The studyused both descriptive and explanatory research design by mixing quantitative and qualitative approaches using structured questionnaires and generating statistics through standard statistical analysis techniques of SPSS-20.The purpose of quantitative research is to make explanations and predictions that can be generalized to other persons. On the other hand qualitative research is used for better understanding of complex situations which is sometimes explanatory in nature.
3.1.1. Quantitative Research Approaches
Quantitative research is grounded in the post-positivism knowledge claim that primarily reflects the scientific method of the natural sciences. The researcher gathers data from the real world setting and then analyses the data statistically to support or reject the hypotheses (Robert K.Yin, 1994). Researchers who adopt a more deductive approach use theory to guide the design of the study and the interpretation of the results. In line with this, the overall objective of quantitative research is to test or verify a theory, rather than to develop one. Therefore, the theory offers a conceptual framework for the entire study, and it also serves as an organizing model for the entire data collection procedure.
Quantitative techniques as an attempt to test a hypothesis by incorporating it into the research design and responding to it by measuring its strength and weaknesses that give numerical measurements to the data collected. They are also capable of being accurately described by a set of rules or formulae which then make their definition (if not always their interpretation) unambiguous and independent of individual judgments. Quantitative researchers put their emphasis on procedures, methodologies and statistics. As a result, it relies on statistical techniques aided by computational algorithms and software packages for analysis the problem under study.
Quantitative research is one in which the investigator primarily uses positivist claims for developing knowledge and its strategies of inquiries are associated with experimental and survey research methods. (Robert K.Yin, 1994) mentioned that experimental research seeks to determine if a specific treatment influence an outcome. This impact is assessed by providing a specific treatment to one group and withholding it from another and then determining how both groups scored on an outcome. Therefore, pure experiment enables the researcher to manipulate an independent variable in order to see the effect on the dependent variable with the random assignment of subjects to treatment conditions. Whereas, survey research provides quantitative or numeric description of research trends attitudes or opinions of a population by studying a sample of population. It includes cross sectional (data will be collected in one point in time) and longitudinal studies (data will be collected through time with different interval) using questionnaires, structured interviews and documentary reviews for data collection, with the intent of generalizing from the sample to the population.
3.2. Data Type and Source
For the appropriate achievement of the objectives of the study; the researcher usedprimary data source. Primary data was collected through structured closed-ended questionnaire from employees of the bank, and through structured interview with branch managers’ of the bank.
The questionnaires aredesigned in such a way that is understandable to respondents, reduce bias and offer data that can be statistically scrutinized. The variables areattitudinal and measured using five point Likert scale with response options ranging from to strongly disagree, disagree, neutral, agree and strongly agree. The Likert scale method waspreferred to make questions interesting to respondents and there by enhance their cooperation, ultimately ensuremaximum response rate (Robson Colin, 2002).
3.3. Data CollectionInstrument
In order to collect the data from respondents, the questionnaire with an introduction which explain the purposes of the study were distributed in person. Additional follow up and clarification wereprovided to some respondents, as require, to ascertainappropriate understanding wasachieved.
Methods of data collection relatively dependence on structured questionnaires prepared bySwaminath (2004) which was prepared in the form of Likert five scales. However, tomeasure CRM dimensions on company performance,itwas attemptedtomodify in relation to thestudy for that matter andatest hasbeen made for the reliability of the instrument by using Cronbach’s alpha and to insure the validity of the instrument the researcher made pre pilot, pilot tests and was consult with two local academicians and three CRM practitionersand also check the dependability.
For thepurpose of data collection, closed-ended structured questionnaires and structured interviewswas used. Closed-ended questionnaires have beenprepared on thebasis of customer relationship management dimensions and banks company performance. Thus closed endedquestionnaires helps to avoid pressure upon the respondents in any direction and better be able to obtain the required data in the study area.
The questionnaire is divided into two sections. The first sectioncontains thedemographic characteristics of the respondents to provide information about their gender, age, year of service or experience and education level.
The second section of the questionnaire hasdesigned to enable to gather information about effectiveness of CRM practices on company performance in selectedCBE branches and also this questionnairewerecontainstotal 35 questions. From these questions , 6 questions were considered to evaluate key customer focus,7 questions wereconsidered to evaluate CRM organization,10 questions were considered to evaluate customer knowledge management,8 questions were considered to evaluate CRM based technology and 4 questions were considered to evaluate company performance. For all questionnaire included in section 2, the respondents was requested to indicate their feeling on a five point Likert scale type to measure weight as follows: 1= strongly disagree, i.e., very much dissatisfied with the case described, 2=disagree, i.e., not satisfied with the case described, 3=neutral, i.e., uncertain with the case, 4=agree, i.e., feeling alright with the case described, and 5= strongly agree, i.e., very much supporting the case described.
3.3.2 Sampling Frame
For this study the sampling frames were the list of 365 target populations of CBEbranches (Abaymado, Bahir dar, Bezawit, Donaber, Gishabay, Shimbet& Tana) employees from which the required number of sample size were drawn, which was available in the commercial bank of Ethiopia branches in Bahir Dar city administration.
3.3.3. Sampling Unit
The sampling units for this study were the individual bank employees comprises in CBE branches of Bahir Dar City administration depending on their responsibility and experience in their bank.

3.4. Sampling Techniques
After identifying the number of respondents by using stratified sampling technique in each seven branches. The researcher dispatched the questionnaires using one of the probabilistic samplingtechniques called simple random sampling technique. Finally supplementary data’s were gathered from branch managers of CBE through an interview.
Therefore, from the selected commercial banks of Ethiopia branches, for interview branch managers and for questionnaire branch employees areassumed to be selected to conduct the research.
3.5. Target Population and Sample size
The population of this study includes all employees of seven branches of CBE inbahirdarcity administration. In the determinations of sample size the three criteriaare veryimportant to gather the required data from sample respondents. Thesewereincluded the level ofprecision, the level of confidence or risk and the degree of variability in the attributes beingmeasured that enable to determineappropriate sample size (Miauous;Michener, 1976). Therefore, the total numbers of employees in commercial bank ofEthiopia in Abaymado branch (39 employees), Bahir dar branch (97 employees), Bezawit branch (43 employees), Donaber branch (35 employees), Gishabay branch (44 employees), Shimbet branch (40 employees) and Tanabranch (67employees),therefore, the total population for this study were365CBE employees. To ensure the validity of the findings, the study intended to use adequate sample size. In order to determine the sample size of the population, the researcher used the following sample size determination formula developed by Taro Yamane (1967)
It is calculated as follows.
n =N/(1+N(e)2)
Where n is sample size, Nis the population size, and e is the level of error term. The researcher determined to accept a 5% sampling error and wanted to be 95% confidential with the findings of this study.The sample size has been attainedas follows:-
n=365/(1+365(0.05)2)
n=191

Proportional sample size from each stratum is calculated by using the following formula:
ni= (n * Ni)/N
Where ni= number of sample size for each branches, Ni= the total number of employees in each branches, N=thetotal number of employees in the selected branches (7branches), n= the total number of sample size forselected branches.
Accordingly, the table below shows the proportionate sampling for each branches based on the above given formula.

Table 1: Proportionate sample distribution for each branches.
No. List of the selected seven
CBE branches in Bahir dar city administration. Total number of employees in each CBE branch Total number of sample size were taken in each CBE branch
1 Abaymado branch 39 20
2 Bahir dar branch 97 51
3 Bezawit branch 43 23
4 Donaber branch 35 18
5 Gishabaybranch 44 23
6 Shimbetbranch 40 21
7 Tana branch 67 35
Total 365 191

By taking the above table into consideration, only 191 respondents have been selected from the total members of these seven selected CBE branches employees using proportionately. Having selected such number of respondents, questionnaires wasdistributed by using simple random sampling to get each respondent from each CBE branch. This sampling technique was chosen as it gives eachmember of population fair or equal chance of being selected.

3.6. Methods of Data Analysis
In this research, raw data was changed into a data structure that enabled to generate meaningful and useful bits of information.All hypotheses was tested with the aid of the statistical package for social science (spss-20) software. In order to analyze the data the two sets of statistics: descriptive and inferential statistics wereused. Descriptive statistics summarized and explained quantitative information in the form of frequency distribution and measures of central tendency, whereas inferential statistics was used to make conclusions.
During the data analysis frequency,table, percentage,histogram, normality ; reliability were used to test for significance between the observed and expected distribution of data. While Pearson correlationwas used to measure the direction and strength of the relationship between the research variables.
Multiple Regression Analysis
Multiple regression analysis was used to investigate the effect of customer relationship management practices (key customer focus, customer relationship managementorganizations, customer knowledge management, and CRM based technology) on company performance.

Regression Functions
The equation of multiple regressions on this study was generally built around two sets of variable, namely dependent variables (company performance) and independent variables (key customer focus, customer relationship managementorganizations, customer knowledge management, and CRM based technology). The basic objective of using regression equation on this study was to make the researcher more effective at describing, understanding, predicting, and controlling the stated variables.
Descriptive statistics in the form of frequencies, arithmetic means and standard deviationswere computed for the various dimensions of demographic profile of respondents and their perception on CRM practices.
The analysis of the data were presented using the following data presentation tools: such as percentages, tables, figure, frequencies, arithmetic means, standard deviations, histogram, normality ; reliability, correlation and inferential statistics along with sufficient interpretations

Independent variables Dependent variables
Key Customer Focus Company Performance
CRM Organizations
Customer Knowledge Management
CRM Based Technology

Regress Company Performance on the Customer Relationship Management Dimensions.

Y = ?0 + ?1X1 + ?2X2 + ?3X3 + ?4X4 + ?
Where Y is the dependent variable- company performance

X1, X2, X3, and X4are the explanatory variables.
?0is the intercept term- it gives the mean or average effect on Y of all the variables excluded from the equation, although its mechanical interpretation is the average value of Y when the stated independent variables are set equal to zero.
?1, ?2, ?3, and ?4refer to the coefficient of their respective independent variable which measures the change in the mean value of Y, per unit change in their respective independent variables.
? is the error tem.
3.7. Reliability and Validity Test
3.7.1. Reliability Test
Reliability is defined as be fundamentally concerned with issues of consistency of measures (Bryman and Bell, 2003). According to Hair, et al., (2006), if ? is greater than or equal to 0.6, it means that it has high reliability and if ? is smaller than 0.6, then it implies that there is low reliability.
To test the reliability of the instrument Cronbach’s alpha was used and the result found were greater than 0.6 for each independent variables namely key customer focus, customer relationship management organizations, customer knowledge management, and CRMbased technology respectively and also dependent variablesnamely company performance.
3.7.2.Validity Test
According to Leedy et al., (2010), validity of a measurement instrument is defined as the extent to which the instrument measures what it is actually intended to measure. Moreover, to insure the validity and reliability of the instrument the researcher made pre pilot, pilot tests and had consulted with two local academicians and three CRM practitioners and adjustments were made accordingly. Pilot test was done for ten respondents of 191 bank employees and the instruments (questions) internal consistency was checked according to their related groups.Therefore, the researcher believed that the adapted instruments have high level of validity and reliability.
3.8. Limitation of the Study
Every research exertion has its own delimitation that limits the solicitation of conclusions to be draw from analysis. There was external or uncontrollable variables that hadan influence on the qualities of the study output in addition to the limitations of the research design it had its own impact. Moreover, lack of adequate variables was limited in the study output, shortage of latest reference books and literature on the area in Ethiopian content was narrowed the study output and also some respondents were not pay more attention to complete filling the questionnaires and to conduct an interviews. Some respondents were not punctual in returning the questionnaireson time. Lastly, in general the most important factor that limited the study output was shortage of time.

CHAPTER FOUR
4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1. Introduction
This chapter presentsanalysis & interpretation of the final results and the process through which the results were obtained. First, background information of respondents are presented. Finally, the statistical methods of analysis are discussed, which included a descriptive analysis, multiple regression analysis and correlation analysis through SPSS version 20.
4.2. Descriptive Statistics and Respondents Profile
Descriptive statistics in the form of frequencies, arithmetic means and standard deviations are computed for the various dimensions of demographic profile of respondents and their perception on CRM practices.
In this study both descriptive statistic and regression analysis wereused to analyze the data. The descriptive statistics utilized in this research used to analyze the demographic data included frequency, percentages,arithmetic means and standard deviations. Inferential analysis is concerned with the various test of significance for testing ofhypothesis, normality, autocorrelation, multicollinearity in order to determine with what validity data can be said to indicate some conclusion(s). The data collection process took about one months,with numerous reminders sent to each of respondents. In order to obtain a larger response rate. One hundred ninety one (191) questionnaires distributed to respondents, all ninety one (191) questionnaires were returned within one month. The data collected from all the returned questionnaire wereentered into SPSS (Statistical package for social science software) version 20 for analysis. The data was sorted to group questions according to applicable constructs under test. Finally correlation and regression analysis were performed. In this study, a multiple regression analysis was performed by using all the discrete variables (dependent and independent)variables available in the dataset. The location of the study was commercial bank of Ethiopia branches (Abaymado, Bahir dar, Bezawit, Donaber, Gishabay, Shimbet& Tana) inbahirdarcity administration.

4.2.1. Descriptive Statistics Result for Respondents
4.2.1.1.Demographic Profile of Respondents

One hundred ninety one (191)questionnaires were distributed to the respondents and allquestionnaires were collected with a response rate of 100%. The demographic characteristics include: sex, age, marital status, level of education and experience. This aspect of the analysis deals with the personal data of respondents to the questionnaires given to them. The demographic profile of the respondents which is considered crucial for this study is presented as follows.
Table 2: Sex Profile of Respondents.
Sex
Frequency Percent Valid Percent Cumulative Percent
Valid Male 139 72.8 72.8 72.8
Female 52 27.2 27.2 100
Total 191 100 100

Source: Own survey datacomputation andoutcomewith SPSS, 2018.

Out of the 191 respondents 139(72.8%) of them are males and 52(27.2%) are females. The data describes that the number of female workers in commercial bank of Ethiopia in seven branches of bahirdar city administration is very few.

Table 3:Frequency of Age of Respondents
Sex
Frequency Percent Valid Percent Cumulative Percent
Valid Less than 25 36 18.8 18.8 18.8
Between 26-30 108 56.5 56.5 75.4
Between 31-40 39 20.4 20.4 95.8
Between 41-50 7 3.7 3.7 99.5
51 and above 1 0.5 0.5 100.0
Total 191 100.0 100.0

Source: Own survey datacomputation andoutcomewith SPSS, 2018.

When we see the age proportion of workers in CBE in seven branches inbahirdar city administration 56.5% of them are between the ages of 26 to 30, 20.4% of them are between the ages of 31 to 40, 18.8 % of them are less than the ages of 25,3.7% of them are between the ages of 41 to 50 and 0.5 % of them are above the ages of 50 from the data we can conclude that the majority of CBE workersin sevenbranches in bahirdar city administration are at their young stage which has a great contribution for companies productivity.
Table 4:Marital Status Profile of Respondents through Frequency Table.
Marital Status

Frequency Percent Valid Percent Cumulative Percent
Valid Married 84 44.0 44.0 44.0
Single 100 52.4 52.4 96.3
Divorced 7 3.7 3.7 100.0
Total 191 100.0 100.0

Source: Own survey datacomputation andoutcomewith SPSS, 2018.
As illustrated from the above table the marital status level of respondents shows that 44.0% of them are married, 52.4% of them are single, 3.7% of them are divorced. From these we can conclude that since most of respondents are single, the bank is changing the employee’s work place in easily way. On another hand as most of the respondents are married it implies that they can understand their responsibility.
Table 5:Level of Education Profile of Respondents through Frequency Table.
Education level

Frequency Percent Valid Percent Cumulative Percent
ValidDiploma 10 5.2 5.2 5.2
Degree 140 73.3 73.3 78.5
Masters and above 41 21.5 21.5 100.0
Total 191 100.0 100.0

Source: Own survey datacomputation andoutcomewith SPSS, 2018.

As illustrated from the above table the educational level of respondents shows that 5.2% of them are completed diploma, 73.3% of them are degree graduates, 21.5% of them are master’s degree holders and above. From these we can conclude that since most of respondents are college and university graduates who are 73.3% and21.5% respectively, the bank is creating employment opportunity for new graduates. On another hand as most of the respondents are educated it implies that they can understand the questions forwarded.

Table 6:Level of Experience Profile of Respondents through Frequency Table.
Experience
Frequency Percent Valid Percent Cumulative Percent
ValidFive Years or Less 137 71.7 71.7 71.7
From 6-10 years 49 25.7 25.7 97.4
From 11-15 years 2 1.0 1.0 98.4
16 and Above years 3 1.6 1.6 100.0
Total 191 100.0 100.0

Source: Own survey datacomputation andoutcomewith SPSS, 2018.

As illustrated from the above table the experience level of respondents shows that 71.7% of them are five years or less, 25.7% of them are from 6-10 years’ experience, 1.0% of them are from 11-15 years’ experience, 1.6% of them are from 16 and above years’ experience. From these we can conclude that since most of respondents are not more experienced employees who is 71.7%, 25.7% most of respondents are more experienced employees. On another hand as less number of the respondents are more experienced it implies that they can understand the questions forwarded and profitable employees.

4.2.2. Questionnaire Result for Likert Scale.
The purpose of this section is to understand the agreement and disagreement of practical implementation of CRM practices in seven CBE branches in bahirdar city administration. Therefore, data related to each of the CRM practices: key customer focus (KCF), customer relationship management organizations (CRMO), customer knowledge management (CKM), and customer relationship management – based technology (CRMBT), company performance (CP) are summarized and the results are presented in the same format as in the questionnaire. A total of 191 copies of questionnaires were sent to bank respondents. From these respondents, 191 usable questionnaires were obtained (100 percent response rate).
Table 7:Descriptive Measures of Respondents are presented in Descriptive Statistics

N Minimum Maximum Mean Std. Deviation
KCF 191 1.50 5 3.9555 0.73642
CRMO 191 2.00 5 3.8983 0.74758
CKM 191 2.00 5 3.8942 0.74863
CRMBT 191 1.50 5 3.8534 0.73355
CP 191 1.75 5 3.9607 0.73298
Valid N (listwise) 191

Source: Own survey datacomputation andoutcomewith SPSS, 2018.

4.2.2.1. Key Customer Focus

Employeesmean responses for all Question1-6 (7 items) were 3.9555 and the standard deviations were 0.73642. The standard deviations (73.64%) for bank employee suggest that there existed variability in ratings of the respondents. The employees’ mean responses were greater than 2.5 (average) in six of the questions indicating that bank employee of respondents viewed the customer focus as high level of support or contribution for bank employee and there is a good relationship between customer and bank employees.
4.2.2.2. Customer Relationship Management Organizations
Q7 – Q13 (7 items) in the questionnaires distributed to bank employee relate to the customer relationship management organization parameter. Employee’s mean responses for all Questions were 3.8983 and thestandard deviations were 0.74758.The mean responses of the employee to the seven questions under customer relationship management organization were generally agree, the seven questions obtained mean responses of greater than 2.00(average) for employee. The standard deviations of the responses were 74.76%, which indicates that the respondents’ perceptions were differing to one another. The mean result implies that there is the customer relationship management organization between the bank employee and they have a sufficient skill for them as well as attractive customer relationship management plan preparation.
4.2.2.3. Customer Knowledge Management
A Q14 – Q23 (10 items) in the questionnaires distributed to bank employees relate to the customer knowledge management parameter. Employees mean responses for all questions were 3.8942 and thestandard deviations were 0.74863.The mean responses of the employees to the ten questions under customer knowledge management were generally agree, the ten questions obtained mean responses are greater than 2.00(average) for bank employees. The standard deviations of the responses were 74.86%, it means that value of the customer knowledge management can deviate from its mean to both sides by 74.86 percent .The majority of respondents mean indicated their agree to the questions provided on the overall customer knowledge management in the CBE. The mean responses of the employees to the questions implying high customer knowledge management and to those questions which referred to as the bank employees are free from other gap of skill.
4.2.2.4. Customer Relationship Management – Based Technology
A Q24 – Q31 (8 items) in the questionnaires distributed to bank employees relate to the customer relationship management – based technology parameter. Employees mean responses for all Questions were 3.8534 and the standard deviations were 0.73355.The mean responses of the employees to the eight questions under customer relationship management – based technology were generally agree, the eight questions obtained mean responses of greater than 2.00(average) for bank employees. The standard deviations of the responses were 73.36%, it means that value of the customer relationship management – based technology can deviate from its mean to both sides by 73.36 percent .The majority of respondents mean indicated their agree to the questions provided on the overall customer relationship management – based technology in the CBE in sevenbranches in bahirdar city administration. The mean responses of the employees to the questions implying high based technology and to those questions which referred to as the employees are free from other traditional system.
4.2.2.5. Company Performance
Q32 – Q35 (4 items) in the questionnaires distributed to bank employees relate to the company performance parameter. Employees mean responses for all Question was 3.9607 and thestandard deviations were 0.73298.The mean responses to those questions in employees groups were greater than 3.00 (average) and the standard deviations (73.3%)were indicated for bank employees suggest that there existed variability in ratings of the respondents. The questionnaire mean responses revealed that the company performance is medium as might be desired to attain a company performance so which indicates that still there is a gap between company performances.
4.3. Reliability Tests of the Instrument
Pilot study (preliminary test) was carried out using convenient sampling method in the CBE in seven branches of bahirdar city administration having the same characteristics with the participants of the main study. The advantage of doing a pilot study include; it helps to detect potential defects in the measurement procedures, it assists in identifying ambiguous items, and it allows the researcher to become aware of nonverbal behavior that may occur due to the wording question. Therefore, the researcher tried to insures the reliability and validity of the questionnaire. To measure the reliability of the questionnaire, the researcher applied a preliminary reliability test of ten respondents from 191 bank employees. According to different statistic book a reliability coefficient exceeding 0.6 for any test or scale was acceptable reliability coefficient. Therefore, as we can see the (Cronbach’s alpha) indicates that the questionnaire administered in this study, four items are reliable and the remaining items are highly reliable.

Table 8:Reliability Analysis
Variables No. Of Items Cronbach’s Alpha
Key Customer Focus 6 0.929
Customer Relationship Management Organization 7 0.924
Customer Knowledge Management 10 0.934
Customer Relationship Management – Based Technology 8 0.890
Company Performance 4 0.788

Source:Own survey datacomputation andoutcomewith SPSS, 2018.

From the above table 8, it is seen that the reliability value was estimated to be ? = 0.788 – 0.934 between the scale. If the above calculated reliability values are compared with the standard value alpha of 0.6 advocated by Cronbach’s, then it can be safely assumed that the scales used by the research are reliable for data analysis.
4.4. Normality Test
Distribution of the data is another issue in this research, whether it is normal/or not. To check the distribution of score is normal, we need to look at the values of skewness in the SPSS output. Positive value of skewness indicates too many low scores in the distribution, whereas negative values indicate a build-up of high scores (Field, 2009).
Skewness measures the degree to which cases are clustered towards one end of an asymmetry distribution. In general, the further the value of skewness is from zero, the more likely it is that the data are not normally distributed (Field, 2009).
In a normal distribution, the values of skewness are 0. If a distribution has values of skew above or below 0 then this indicates a deviation from normal (Field, 2009).
As we have seen from the following table 9, the skewness approaches or around to Zero and it is almost normal. All variables were found to be normal.

Table 9:Tests of Normality
Company Performance
KCF CRMO CKM CRMBT
Skewness -.795 -.521 -.493 -.693
Std. Error of Skewness .176 .176 .176 .176

Source: Own survey datacomputation andoutcomewith SPSS, 2018.

Frequency distributions come in many different shapes and sizes. It is quite important, therefore, to have some general descriptions for common types of distributions. In an ideal world our data would be distributed symmetrically around the center of all scores. As such, if we drew a vertical line through the center of the distribution then it should look the same on both sides. This is known as a normal distribution and is characterized by the bell-shaped curve. This shape basically implies that the majority of scores lie around the center of the distribution (so the largest bars on the histogram are all around the central value).

Figure 2. Normal distribution of the data
4.5. Correlation
Table 10:Correlation between the independent variables (key customer focus (KCF), customer relationship management organizations (CRMO), customer knowledge management (CKM), and customer relationship management – based technology (CRMBT)) with dependent variable (company performance).
Correlations
1 2 3 4 5
CPPearson Correlation 1
Sig. (2-tailed)
N 191
KCFPearson Correlation .822** 1
Sig. (2-tailed) .000
N 191 191
CRMOPearson Correlation .740** .777** 1
Sig. (2-tailed) .000 .000
N 191 191 191
CKM Pearson Correlation .770** .783** .781** 1
Sig. (2-tailed) .000 .000 .000
N 191 191 191 191
CRMBT Pearson Correlation .797** .709** .817** .783** 1
Sig. (2-tailed) .000 .000 .000 .000
N 191 191 191 191 191

**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own survey datacomputation andoutcome with SPSS, 2018.
4.5.1. Correlation between Key Customer Focus ; Company Performance
As indicated in table 10 the statistical result which equals 0.000 is well below the significance value of 0.05.Therefore, there is no evidence to reject the hypothesis1 “there is a positive relationship between key customer focus and company performance in commercial bank of Ethiopia in seven branches ofbahirdar city administration” in favor of the hypothesis1 was supported. Accordingly, it is evident that there is statistically significant relationship between the independent variable (key customer focus) and the dependent variable (company performance).The calculated correlation coefficient 0.822 shows that there was a very strong positive relationship between the key customer focus and company performance in commercial bank of Ethiopia in seven branches of bahirdar city administration, as correlation coefficientsbetween .00 and .40 are considered weak (Diamantopoulos et al., 2000). However, the correlation coefficients are more than .40 which is considered as strong correlations.
4.5.2. Correlation between CRM Organization and Company Performance
From table 10 the statistical result which equals 0.000 was less than the critical value of 5% Significance: as a result, the hypothesis2 “there is a positive relationship between customer relationship management organization and company performance in commercial bank of Ethiopia in seven branches ofbahirdar city administration” was accepted. This implies that there was a significant relationship between customer relationship management organization and company performance. The calculated correlation coefficient 0.740 shows that there was a very strong positive relationship between the customer relationship management organization and company performance in commercial bank of Ethiopia, as correlation coefficients are more than 0.40 are considered strong (Diamantopoulos et al., 2000).
4.5.3. Correlation between CKM and Company Performance
From table 10 the statistical result which equals 0.000 was less than the critical value of 5% significance: as a result, the hypothesis3 “there is significant relationship between customer knowledge management and company performance in commercial bank of Ethiopia in seven branches of bahirdar city administration” was supported. This implies that there was a positive relationship between customer knowledge management and company performance. The calculated correlation coefficient 0.770 shows that there was a very strong positive relationship between the customer knowledge management and company performance in commercial bank of Ethiopia in seven branches of bahirdar city administration, as correlation coefficients are more than 0.40 are considered strong (Diamantopoulos et al., 2000).
4.5.4. Correlation between CRM – Based Technology and Company Performance
From table 10 the statistical result which equals 0.000 was less than the critical value of 5% significance: as a result, the hypothesis4 “there is significant relationship between customer relationship management – based technology and company performance in commercial bank of Ethiopia in seven branches of bahirdar city administration” was supported. This implies that there was a positive relationship between customer relationship management – based technology and company performance.
The calculated correlation coefficient 0.797 shows that there was a very strong positive relationship between the customer relationship management – based technology and company performance in commercial bank of Ethiopia in seven branches of bahirdar city administration, as correlation coefficients are more than 0.40 are considered strong (Diamantopoulos et al., 2000).
4.6.Multicollinearity Test
Multicollinearity exists when there is a strong correlation between two or more predictors in a regression model. Multicollinearity poses a problem only for multiple regressions because it involves more than two predictors. Perfect Collinearity exists when at least one predictor is a Perfect linear combination of the others. According to different statistical books, one way of identifying multicollinearity is to scan the correlation matrix of all of the predictor variables and see if any correlate very highly (correlation of above 0.80 or 0.90).
Another method is to produce a collinearity diagnostics with the use of SPSS, and one of which is the variance inflating factor (VIF). The VIF indicates whether a predictor has strong linear relationship with the other predictor(s). Although there are no hard and fast rules about what value of the VIF should be a cause for concern, Field (2000) suggests that value of 10 is good value at which to worry. Field (2000), and suggest that if the average VIF is greater than 1, then multicollinearity may be biasing the regression model. Related to the VIF is the tolerance statistics, which is a reciprocal of VIF (1/VIF). Such values below 0.2 are worthy of concern. Considering the regression model for this study correlation matrix of all of the predictor variables less than or equal to 0.80 or 0.90 and the tolerance statistics values are all below 1 (see tables 10 and 11) as such no multicollinearity is observed in this model.
4.7. Autocorrelations
Autocorrelation is adjacent residuals of any two observations not being independent of each other or correlated. For any two observations the residual terms should be uncorrelated (or independent). This eventually is sometimes described as a lack of autocorrelation. This assumption can be tested with the Durbin-Watson test, which tests for social correlation between errors. Specifically, it tests whether adjacent residuals are uncorrelated. The test statistics for this can vary between 0 and 4 with a value of 2 meaning that the residuals are uncorrelated (Field, 2009). In our model the value of the test is closer to 2 (1.575). So it can be safely assumed that there is no problem of autocorrelation (see tables 12).
4.8. Multiple Regression Analysis
In this study, multiple regression analysis was carried out to get the predictive value of the constructs considered. Since the model is developed in such a way that each construct is being affected by other constructs, it is necessary to carry out a separate regression analysis against each variable which are considered to be affected by other variables. This was basically made to determine the linear combination of the constructs. The following subsections present the results of multiple regression analysis.

Table 11:Coefficients

Coefficientsa
Model Unstandardized Coefficients Standardized Coefficients t Sig. Collinearity Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) .255 .151 1.687 .093
KCF .491 .062 .493 7.943 .000 .317 3.153
CRMO -.072 .069 -.074 -1.041 .299 .245 4.077
CKM .110 .066 .113 1.680 .005 .273 3.664
CRMBT .419 .066 .419 6.334 .000 .279 3.581

Dependent Variable: CP

Source: Own survey datacomputation andoutcome with SPSS, 2018

Table 11 shows the Beta Coefficients that present the contributions or positive or negative relationship of each variable to the model. The t and p values showed the influence of the independent variables on the dependent variable. From this, it is clear that the key customer focus and customer relationship management based technology had the highest affecting on company performance comparingwithcustomer relationship management organization, and customer knowledge management constructs. According to coefficient results, all predictors, except customer relationship management organizationare positively and significantly related to dependent variables. Thus, the model for predicting perceived company performance becomes:
The result of model is CP = 0.255+ 0.491 kcf – 0.072crmo +0.110 ckm + 0.419 crmbt + ?

Where: CP= Company Performance, KCF= Key Customer Focus, CRMO= Customer Relationship Management Organization, CKM= Customer Knowledge Management,
CRMBT= Customer Relationship Management Based Technology.
The b-values (beta coefficient) tell us about the relationship between the outcome and each predictor. If the value is positive we can tell that there is a positive relationship between the predictor and the outcome, whereas a negative coefficient represents a negative relationship. For these data all predictors, except customer relationship management organization have positive b-values indicating positive relationships. So, there is a positive relationship between the predictors (key customer focus, customer knowledge management and customer relationship management based technology) and an outcome (company performance) since the value of beta coefficient is positive. As key customer focus, customer knowledge management and customer relationship management based technology are good, company performance is also improved; whereas, customer relationship management organizationhas a negative b-values indicating negative relationships to the outcome. As customer relationship management organizationis good, company performance is not improved.

Table 12: Model Summary
Model Summaryb
Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson
1 .879a .772 .767 .35353 1.575

a. Predictors: (Constant), CRMBT, KCF , CKM , CRMO
b. Dependent Variable: CP
Source: Own survey datacomputation andoutcomewith SPSS, 2018.

From Table 12, It can be seen that themultiple R (correlation) value of 0.879 (87.9%) indicates a highly positive relationship between the dependent and independent variables andR Square value for the model showed that 77.2% of the dependent variable in the model can be predicted by the independent variables. The remaining 22.8 % of the dependent variable is explained by other variables which are not depicted in the model. Moreover, adjusted R square value for the model shows that 76.7% of goodness of fit of the model is moderate.

Table 13:ANOVA
ANOVA
Model Sum of Squares df Mean Square F Sig.

1 Regression 78.834 4 19.708 157.690 .000b
Residual 23.247 186 .125
Total 102.080 190

a. Dependent Variable: CP
b. Predictors: (Constant), CRMBT, KCF , CKM , CRMO

Source: Own survey datacomputation andoutcomewith SPSS, 2018

Table 13, Presents the ANOVA report on the general significance of the model. As p is less than 0.05, the model is significant. Thus, the combination of the independent variables (key customer focus (KCF), customer relationship management organizations (CRMO), customer knowledge management (CKM), and customer relationship management – based technology (CRMBT)) significantly predicts the dependent variable (company performance) (F=157.69; p ; 0.05.
4.9.Hypothesis Test
H1: Key customer focus has a positive and significant effect on company performance.

Based on the regression analysis of the above modelin table 11, revealed that key customer focushas a positive and significant effect on company performance with a beta value (beta = .491), at 95% confidence level (p 0.05). Thereby rejecting hypothesis 2. The regression result does not support that hypothesis.
It indicates that customer relationship management organization has a negative and insignificant effect on company performance.

H3: Customer knowledge management has a positive and significant effect on company performance.

Based on the regression analysis of the above modelin table 11, revealed that customer knowledge managementhas a positive and significant effect on company performance with a beta value (beta = .110), at 95% confidence level (p ; 0.05). Hence, hypothesis 3was supported. It implies thatcustomer knowledge management has a positive and significant effect on company performance.

H4: Customer relationship management – based technology has a positive and significant effect on company performance.

Based on the regression analysis of the above modelin table 11, revealed thatcustomer relationship management – based technology has a positive and significant effect on company performance with a beta value (beta = 0.419), at 95% confidence level (p

Chapter one
Introduction
1.1 Aim of the study
The use of more than one language in a community like the internet results in the emergence of new language especially in electronic communication. Additionally, the wide spread of technology all over the world and recently in the Arab World and the vast usage of social network sites, for example (facebook, twitter, and LinkedIn), led to the invention of new discourse amongst electronic participants. In the Egyptian community, the use of this new invented discourse is clearly apparent and highly used particularly amongst adults. This study will focus on the internet language used by Egyptian adults predominately the undergraduates and graduates. It will attempt to highlight the linguistic features of this language. This study will also tackle the influence of this new phenomenon on their handwriting of Standard English.

1.2 Objective of the study
The overall objective of the study is to find an answer to the following questions:
What are salient orthographic characteristics of English used on facebook by Egyptian users especially undergraduates and graduates?
What are some grammatical features of English used on facebook by Egyptian users
What are lexical features of English used on facebook by Egyptian participants?
To what extent is the writing of the Egyptian Facebook users especially undergraduates and graduates influenced by social networking?
Is there any standard way of English used in the social network by the participants?
1.3 Significance of the study

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Although there has been some work on electronic discourse, there has been little, if any, discourse analysis of English used on Facebook. This study is expected to be beneficial for:
Lecturers or teachers as well as parents: to let them understand the kind of language students are using today indicating its probable negative influence and give them needed guidance.

English Department Students: to let them know that the new social networking represented in Facebook generates such new phenomenon in English language. Additionally. It provides them with information about the other used substitutionals of spoken language (paralanguage) and reflects how Facebook is a place where people use this language in a written form to simulate face-to- face communication.
Researchers: to inspire a good alternative to conduct researches in the field of language study and to give the information with the evidence about the contribution of Facebook in the language especially English and its Internet dialect.

1.4 Material and Method
The researcher in this study used the qualitative method because the conclusions have been made considering the purposes users may have for selecting definite linguistic means to express themselves when conversation. Additionally, this study adapted the taxonomy of Ylva Hard af Segerstad (2002) for investigating the linguistic features of the new kind of English used on the social network.

Data collection criteria
In this study, a corpus of 173 posts and comments (average of nearly 9,167 words) was collected in order to examine the characteristics of the new phenomenon in using internet English language in the Arab community. The data for this study was collected from the wall in groups and the wall of users’ profiles because everything written was open for everyone to see. This way increases the number of participants and enables to get more data of writing. Only posts and comments written in English language were collected while posts and comments written in Arabic language were excluded. Additionally, some samples contains Romanized Arabic were also included in the data.

Participants
The participants in this study are undergraduate and graduate students of AUC and BUA particularly Facebook users. As the researcher wanted only English data, only groups of the previous mentioned universities were used in searching for data. This was supposed to enlarge the number of written data. Gender of the participants can be seen from the user’s name and location is also known. It was anyhow not necessary to take gender and location into consideration. As the participants names do not play a significant role in the study, the researcher preferred not to mention them using NN instead.
1.5 Definition of key terms
What is Computer-mediated Communication?
Simpsons (2002) defines CMC as “an umbrella term which refers to human communication via computers”. It refers to any form of communication which carried through the medium of a computer synchronously or asynchronously. Simpsons explains that “synchronous CMC includes various types of text-based online chat, computer, audio, and video conferencing; asynchronous CMC encompasses e-mail, discussion forums, and mailing lists. CMC can take place over local area networks (LANs) or over the internet. Internet CMC, as well as allowing for global communication, also provides for the added dimension of hypertext links to sites on the WWW, and to e-mail addresses” (p.414) .What is World Wide Web?
World Wide Web is often abbreviated to “www” or called “the web”. It is necessary to understand that “the web” which is not a synonym for the internet but it is a subset of the internet consists of pages that can be accessed using a web browser.

What is Internet?
Sometimes called simply “the net”, is a word wide system of computer networks.

Crystal (2001) defines the Internet as “… an electronic, global and interactive medium, and each of these properties has consequences for the kind of language found there.

What are the social network sites?
Social network sires refers to websites that provide their members with services that allow them to create a profile for sharing, controlling a friends’ list, or the list of those who they make contact with, and viewing and communicating with their friends with whom they are connected (Boyd ; Ellison, 2008, p.112). Facebook is the only social network site focused in this study.

What is Facebook chatting?
Facebook chatting is talking to other people who are using the internet at the same time you are. This service enables Facebook users to conduct instant message-based conversations with Facebook friends. Its distinguished feature is that it supports one-to-one chats as well as the ability to chat with multiple friends via the facebook group feature.

1.6 Thesis organization
The present study is organized as follows:
Chapter one: Introduction
This chapter introduces Aim of the Study, Adjectives of the Study, Significance of the Study, Material and Method, and Thesis organization. It also provides definition of the Key Terms presented in the research. In order to give a detailed account about the research, Review of Literature and relevant previous research is also included in this chapter.

Chapter Two: Computer Mediated Communication
This chapter is devoted to Computer Mediated communication in general, definition, types, situations, modes, general features, and computer mediated discourse analysis.

Chapter Three: Data Analysis and Discussion
This chapter covers the analysis and results of the analysis of data using direct examples from Facebook.

Conclusion
A summary of the research results and some suggestion for the future research are provided.
1.7 Literature Review
1.7.1 Related Studies
In computer-mediated communication, writers have to use other manipulation of written signs in order to accomplish pragmatic work that could be achieved through phonological variation, prosody, gesture and other cues in ordinary spoken conversation. Segerstad (2002) examined the linguistic feature in computer-mediated communication found that writers use all capital letters, repetition of words, emoticons, asterisk, symbol replacing words to as paralinguistic cues in the interaction. In addition, Crystal (2011) in his book, Internet Linguistics writes that text abbreviation is actually not a modern phenomenon. Many of these abbreviations are found in chatroom interactions even before the existence of mobile phone and some of them can be dated a hundred years or more. Moreover, the omission of letter as in msg (message) and xlnt (excellent) is not a new phenomenon. According to him, Wric Partridge published his dictionary of abbreviation in 1942 which contains a lot SMS looking examples such as agn ‘again’, mth ‘month’ and gd ‘good’. Internet interactions lack the facial expression, gestures and conventions of body posture that are considered important when expressing ideas and opinions. Therefore writers use various ways to express themselves such as the use of emoticon, bold or block letters. However, despite the creativity of the art, the semantic role of emoticon is rather limited. For example, the basic smile can mean sympathy, delight, amusement and others.
Another prominent linguist in computer-mediated communication, Crispin Thurlow (2003) studied mobile messages among the first year Language and Communication at Cardiff University Students. Participants were asked to retrieve from their phones 5 messages that they had either sent or received. A total of 544 separate messages were recorded and transcribed. The length of the individual messages was calculated using the standard Microsoft word count function. Based from the investigations, Thurlow asserts that each individual does not have one style of language in any environment; instead, she/he will have a repertoire or a range of style to suit different context. The following common patterns were found;
• shortenings (missing end letters), e.g. ‘lang’ for ‘language’.

• Contractions (missing middle letters), e.g. ‘gd’ for ‘good’
• ;g’ clipping (final letter missing, e.g. ‘goin’ for’going’
•Other clippings, e.g. ‘hav’ for ‘have’
• Acronyms and intialisms, e.g. ‘v’ for ‘very’
• Letter/number homophones, e.g. ‘1’ for ‘one’
• Non-conventional spelling, e.g. ‘sum’ for ‘some’
• Accent stylization (speaker tries to represent a particular pronunciation, for example regional speech), e.g. ‘wivout’ for ‘without’
• Non-alphabetic symbol
• Emoticon
Based on the above findings, Thurlow concludes that a number of sociolinguistic maxim or triggering factors are required to explain some of the features above:
• Speed-txters have to speed up their pace of communication, so they need to take short cuts.

• Brevity-txters have only limited space for their communication, so they need to omit any elements that are not strictly necessary for understanding
• Paralinguistic restitution-txters need to find ways to replace the aspect of physical communications such as body language that are absent
• Phonological approximation-txters want to build in ways their readers to ‘hear’ their voice, so try to change the written language to represent this.

Another study on SMS messages was conducted by Anis (2007). A total of 750 French messages were collected from four volunteers. Based from his research, he categorized the corpus into three broad types: phonetic spelling, syllabograms (rebus writing) and logograms (symbols, unilateral abbreviations, acronyms) (page, 97). In the phonetic spelling, he discovered the texters not only substituted, reduced vowels or consonants but also deleted silent letters in their messages. For example, the substitution of ‘z’ for ‘s’ (“pleaze’ for “please”). Another striking feature was syllabogram or rebus writing such as the use of a letter or a number to represent the phonetic sequence that constitutes its realization in spoken language such as ‘b4’ stands for ‘before’. The third finding in his research was logograms which involved not only word signs such as “@”for ‘at’ but also single-letter abbreviations such as “CNN” (Cable News Network) (page, 105). He concludes that such messages are intentional, creative and definitely comprehensible to their recipients. In addition, the messages also reflect common human characteristics.

Norizah Hassan and Azirah Hashim in their studies of the features and language use in electronic English in Malaysia highlight how language has been used creatively online by different ethnic groups in Malaysia. The data was taken from a corpus of 2 million words collected from various electronic genres: blogs which are written for informal readers, chats from Malaysian chatrooms, instant messages, emails and text messages between friends. In their preliminary finding, many features of spoken Malaysian English as well as other varieties of linguistic features are found in the online communication. Intersentential and intrasentential code-switching occur between English and Malay, Chinese dialects, Tamil and Iban. According to the above researchers, the features are commonly found in spoken Malaysian English except the use of symbols like @, the use of emoticons for expressions and use of the Roman script to represent sounds in Chinese. Internet users also establish their identity through the use of features specific to the variety and through the medium that is used. The study offers a general overview of the use English on the Internet.

1.7.2 Social Network Sites
New technologies have been rapidly assimilated in contemporary society. While this includes an array of gadgets, like cellphones, digital camera, computers and laptops, the use of SNS is a particular phenomena that has become increasingly popular (Joinson, 2008). SNS are used by a diverse number of people of different ages, ethnicities and socio-economic backgrounds who have a variety of interests resulting in hundreds of millions of users worldwide. Social Network Sites may be defined as:
Web-based service that allow individuals to (1) construct a public or semi-public profile within a bounded system, (2) articulate a list of other users with whom they share a connection , and (3)view and traverse their list of connections and those made by others within the system (Body ; Ellison,2007)
Social Network Sites allow individuals to present themselves to other users using a variety of formats; including text and video .Just like chat services, SNS incorporate a list of other users with whom individuals share a connection. But unlike any other web services, SNS allow individuals to make visible their list of connections to others and to traverse their social networks (Body ; Ellison, 2007). Hence, more than virtual communities born online, SNS are usually online communities created and maintained to reflect offline relationships. Popular social network sites include Facebook, Twitter, YouTube, Flickr, and LinkedIn.

1.7.2.1 Facebook
Facebook is a social network service launched in February 2004. As of September 2015 it has 1.01 million active users (Nicholas Carlson, 2015). According to WhatIs.com:

Facebook is a popular free social networking website that allows registered users to create profiles, upload photos and video, send messages and keep in touch with friends, family and colleagues. The site, which is available in 37 different languages, includes public features such as:
Marketplace – allows members to post, read and respond to classified ads.

Groups – allows members who have common interests to find each other and interact.

Events – allows members to publicize an event, invite guests and track who plans to attend.

Pages – allows members to create and promote a public page built around a specific topic.

Presence technology – allows members to see which contacts are online and chat.

1.7.2.2 Twitter
According to WhatIs.com, Twitter is a free social networking micro-blogging service that allows registered members to broadcast short posts called tweets. Twitter members can broadcast tweets and follow other users’ tweets by using multiple platforms and devices. Tweets and replies to tweets can be sent by cell phone text message, desktop client or by posting at the Twitter.com website. Unlike Facebook, where users can send messages up to 1000 characters, Twitter allows users to send out messages in short spurts of up to 140 characters per “tweet”, due to the constraints of Twitter’s Short Message Service (SMS) delivery system. Tweets are searchable within the Twitter site and are indexed by Google, whereas Facebook content is usually not visible in search engine results. Users can “follow” other users or communicate by searching for hashtags (e.g. #egypt), user-identified key words that clue readers in to what others think is important. Twitter is based in San Francisco, but it’s used by people in nearly every country in the world, and is available in English, French, German, Italian, Japanese, and Spanish.
Twitter is an extremely personal method of communication. Users must choose whom they follow, and thus create a unique experience that is specific to them.

Like email or the telephone, Twitter is a non-prescriptive communication platform. Each user experiences “Twitter” differently depending on the time of day and frequency she checks her feed, the other people she follows, and the interface(s) she uses to access the network. Because of this flexibility, norms emerge, mutate, collide, and fade away among Twitter users with a fluidity that may not be easily apprehendable to a non-user . . . (Driscoll, 2010).One of the strengths of Twitter is that it can be accessed using computers or mobile phones, making it a lightweight method of communicating during crisis.

1.7.2.3 YouTube
YouTube is a video sharing service that allows users to watch videos posted by other users and upload videos of their own. The service was started as an independent website in 2005 and was acquired by Google in 2006. Videos that have been uploaded to YouTube may appear on the YouTube website and can also be posted on other websites, though the files are hosted on the YouTube server (techterms.com). YouTube allows people to easily upload and share video clips on www.YouTube.com and across the Internet through websites, mobile devices, blogs, and email. YouTube changed the way people share videos because it created a simple way to share otherwise cumbersome and large video files. Before YouTube, it was difficult to share video with a large number of people.

1.7.2.4 LinkedIn
According to WhatIs.com, LinkedIn is a social networking site designed specifically for the business community. The goal of the site is to allow registered members to establish and document networks of people they know and trust professionally. Like Facebook and MySpace, LinkedIn allows user to create a custom profile, which are business-oriented rather than personal. Unlike Facebook, LinkedIn requires connections to have a pre-existing relationship. Moreover, basic membership for LinkedIn is free and network members are called “connections.”
1.7.2.5 Flickr
Flickr describes itself as ” the best online photo management and sharing application in the world – has two main goals:
We want to help people make their photos available to the people who matter to them.

We want to enable new ways of organizing photos and video.”
Flickr is a photo-sharing site that allows users to share photos on www.flickr.com or through embedded apps on other websites. Flickr allows users to tag photos with keywords, which creates communities around common interests or events. As of November 2016, there are 92 million registered users. Because there are different types of social networks, conclusions drawn from one platform cannot be easily generalized to another platform (Hargittai, 2007). This study tackles this limitation by focusing on Facebook only.

1.8 The History of the Social Network Site Facebook
The growth of Web 2.0 has allowed many services to be created that facilitate collaboration in the World Wide Web. They are defined as “web-based services that allow individuals to construct a public or semi-public profile … articulate a list of other users with whom they share a connection and view and traverse their list of connections” (Boyd/Ellison 2008). The affordances and reach of this emergent phenomenon are increasingly attracting the attention of scholars to the study of social networking (cf. Boyd/Ellison 2008).
In the last few years, some social networking sites have disappeared and some others are gaining users day by day. One of the top social networking websites at the moment is Facebook. Created in 2004 “as a cross between a tool for meeting new people and a platform for networking with people you already know” (Baron 2008: 84), Facebook has its origins in the University of Harvard (cf. Boyd/Ellison 2008). This website, privately owned by Facebook, Inc., was quickly transformed from a private club within the University of Harvard to a service open to everyone in 2006. On this social site, users create an online profile by listing personal information and interests, link up with other users and share updates of the information posted on a daily basis (cf. Hargittai/Hsieh 2011). Participants may use this network application to interact with people they already know or to meet new people that are called friends, that is, participants “who can post comments on each other’s pages, and view each other’s profiles” (Ellison et al. 2007).
Facebook was created in February 2004 by Mark Zuckerberg, Dustin Moskovitz and Chris Hughes as a site for Harvard students only. Shortly after, it expanded to any college student with a .edu e-mail account. Between Fall 2005 and Fall 2006, Facebook expanded to high school networks, first, work networks, later, and, eventually, to Internet users in general. Facebook is the second largest social network on the web, behind only MySpace in terms of traffic. Primarily focused on high school to college students, Facebook has been gaining market share, and more significantly a supportive user base. Since their launch in February 2004, they’ve been able to obtain over 8 million users in the U.S. alone and expand worldwide to 7 other English-speaking countries, with more to follow. A growing phenomenon, let’s discover Facebook (Sid Yadav, 2006).

Facebook penetration in the Arab world stands at 81,302,064, according to the Arab Social Media Report, as of May 2014. Egypt alone constitutes about a quarter of all Facebook users in the region (24%) and has gained the highest number of new Facebook users since January 2014, with an increase of over 2.6 million users in that time period. In 2016, there are 32,000,000 active Facebook users, the highest number of users of any Arab state. The largest percentage of Egyptian Facebook users are between the ages 18 and 24 years old.

51181021082000.

Figure 1.1 Africa Internet Statistics
Figure (1.1) shows Africa Top 10 Internet Countries in June 2016. It is clearly apparent that Egypt occupies the second place among African countries with about 34.8 internet users.
The website includes several features, such as communication through private or public messages, a chat, online fora, photos, videos, links, a personal Wall, and News Feed, where friends or participants can post their messages and comment on topics. The company is constantly modifying and improving the services provided, offering more and more online services. Like most social network sites, Facebook provides a formatted web page into which each user can enter personal information, including gender, birthday, hometown, political and religious views, e-mail and physical addresses, relationship status, activities, interests, favorite music and movies, educational background and a main personal picture. After completing their profile, users are prompted to identify others with whom they have a relationship, either by searching for registered users of Facebook or by requesting their contacts to join Facebook (usually by e-mail). Once someone is accepted as a “friend,” not only the two users’ personal profile but also their entire social networks are disclosed to each other. This allows each user to traverse networks by clicking through “friends'” profiles. This capability is the backbone of Facebook and other SNS and what attracts millions of users around the globe.

In addition, Facebook allows users to designate “friends.” An individual who is invited to be a member’s Facebook friend may either accept or reject the offer, thus providing individual control over one’s list of friends. The user can control how much information to post and who can view this information by editing their privacy settings. Specific groups of people (a network or friends) may be granted limited access to specific parts of the profile. Facebook members can upload digital pictures into virtual photo albums. A user can be “tagged” in these pictures so that his or her name appears in the caption as a link to his or her profile. If the individual does not want to be associated with the picture, he or she can “untag” it, thereby removing the name and the link (though this does not remove the picture). Members are able to post comments on photos, which appear as messages below the picture. Similarly, it is possible to post links to videos.

Facebook offers several options for communicating with others. Users can interact by sending private messages, similar to emailing. Members who are “friends” may post public messages on each other’s “walls,” which are personal message boards on their profiles. Communication may also occur in groups, which Facebook members can create and join. Offline social interactions can be facilitated through Facebook by creating invitations to events, or online notifications for meetings, parties, and other gatherings. Users may also post “notes” or blog-like entries that are linked to their profile pages.
The “headline” news in one’s Facebook account is captured by “news feed” and “mini-feed” functions. The news feed, which appears on the user’s homepage upon log-in, provides a list of actions that friends have recently undertaken, such as posting on walls or changing their relationship status. In addition, each user’s personal list of actions appears in his or her own profile as the mini-feed. A user’s mini-feed tracks “stories” that will appear about him or her in friends’ news feeds. Users may restrict the types of stories broadcast about them by these applications.

The most interesting characteristic of this site is that it enables a great variety of online genres to be accessed through the same platform; these genres being both synchronous and asynchronous. They are easily identified and can be organised and customised in the way the user of the site desires, some services can be visible to the whole online community and some cannot. Battner/Fiori (2009) put forward that it is a tool that goes beyond synchronous and asynchronous technologies; as part of Web 2.0 principles, it is a participatory platform where users can add information or modify the information already online, for example, a user can tag the pictures uploaded by adding the names of the people or a description. Any user can create a group and this can be open to other users, or restricted to a pre-selected community (cf. Battner/Fiori 2009). It is also interesting to point out that the original platform designed to keep in touch effectively with former classmates has evolved into a more diversified online tool. Now, Facebook is used as a platform for online communities that share interests in many fields: these being political, sportive, educational, scientific, commercial, or entertainment, among others. The typical user spends more than 20 minutes daily and logs on at least once a day (cf. Ellison et al. 2007).
As for the research carried out on Facebook, most scholars have analysed the use of Facebook from a sociological or pragmatic approach identifying the sense of community in the relationship between participants in social networking (cf. Ellison et al. 2007; Baron 2008; Papacharissi 2011; Yus 2011). It has also been studied as a platform to enhance learning (see for example, Blattner/Fiori 2009). In contrast, little is known about the linguistics of this online social networking website. Literature on the study of the linguistic aspects of the social networking website Facebook is very scarce; the reason for this may not only be because of its novelty but also because of the fact that it is very complex to study, as several genres are concurrent on one social networking website. In research about the use of this site as a teaching tool, Blattner/Fiori (2009: 24) point out that participants on the social networking website Facebook use more colloquial language in their speech acts and the tool “exposes learners to language varieties … that language departments and textbooks cannot match”.
The use of Facebook in the university is more and more important: while emails are the most popular online genre for academics and administration, students now prefer to use social networking websites to communicate with other students; they are Internet “natives” who make competent daily use of these services (cf. Kuteeva 2011). Hargittai/Hsieh (2011) point out that Facebook was the most popular social networking site in their survey carried out at the University of Illinois, Chicago, during 2006–2007, where 79% of the students interviewed used it. Recently, Facebook has undergone a spectacular increase in users. Facebook itself estimates that there are 1.86 billion monthly active users and its use is increasing all over the world (Facebook Inc. 2016). The current relevance of Facebook has raised some voices of a possible competition between networking tools and, for example, email, however, as Cho (2010: 1) indicates, “evidence is inconclusive as to whether social networking services compete or facilitate email usage”.
1.9 Why Facebook?
The Facebook SNS provides a convenient environment for the development of discourse communities with its varied participatory mechanisms. On Facebook users create their personal profile page allowing them to list interests and activities they share with others. They also belong to a ‘Network’ defined primarily by the educational institution with which they are, or have been, affiliated. Communication with others within Facebook takes place via a range of tools including email, discussion boards, uploaded videos and picture galleries that include a space for comments and a ‘wall’ in which users can exchange messages with nominated friends. Other popular features include status updates, ‘poking’ friends (an ambiguous tool but one of the many phatic uses of Facebook) and gift?giving (fish, flowers etc.). Facebook users can also set up their own groups which they make public or else invite others to join, thereby creating highly fluid and open ‘community’ spaces for learning. Facebook is currently the platform for various discourse communities; it is not the space for a single monolithic one. To date, thousands of groups exist with a range of common interests and discoursal expectations or norms.

Moreover, Facebook is a good environment for undergraduates to express their interests in all fields of life. According to Stutzman (2005), undergraduates use Facebook to ‘hang out’, to shoot the breeze, waste time, to learn about each other or simply as a directory. Students often use Facebook as a means of managing their social lives; staying in touch, organising nights out and the like. However, Guy Merchant’s writing on the culture of SNS, influenced by sociologists like Anthony Giddens and Zygmunt Bauman, has drawn attention to the use of sites such as Facebook to produce and perform “an ongoing narrative of the self” (2006, p.238). So, Facebook pages and communications are as much about the construction of a dynamic story of the self as that self interacts with various social contexts as they are about arranging going out clubbing. Hugh Liu’s work is an interesting addition to this line of inquiry and highlights the role of SNS profile pages as the location for ‘taste performances’ (2008) that define and distinguish social identity.

Neil Selwyn’s study of undergraduate uses of Facebook deploys its extensive data to argue that undergraduates use Facebook for particular forms of identity performances at variance with ‘official’ academic identities:
On Facebook students could rehearse and explore resistance to the academic ‘role set’ of being an undergraduate (Merton 1957) – i.e. the expected and ‘appropriate’ behaviours towards their subject disciplines, teachers and university authorities. Students who were facing conflicting demands in their roles as socialites, minimum-wage earners and scholars could use Facebook as an arena for developing a disruptive, challenging, dismissive and/or unruly academic identities. Thus Facebook was acting as a ready space for resistance and the contestation of the asymmetrical power relationship built into the established offline positions of university, student and lecturer (Bourdieu and Passeron 1977). This was perhaps most clearly evident in the playful and often ironic rejection of dominant university discourses throughout the posts, with the students certainly not conforming to the passive and silenced undergraduate roles of the seminar room or lecture theatre. (2007)
Facebook is especially interesting due to its widespread use and the importance it is gaining in everyday life. Hence, Facebook SNS creates a suitable environment for undergraduates to share different interests, experiences, information, or social issues.
1.10 Facebook Chatting
This is a means of engaging in online conversation through the networked computers, dedicated applications on mobile phones or pc tablets via the Facebook social networking website. Individuals who have online access to Facebook websites interact with the other subscribers by sending text messages to each other. This process could be synchronous or asynchronous depending on the timeframe taken to respond to a particular text message.
In Facebook chatting, the users see a list of their friends who are online and thus potentially ready to chat at the moment. At the start of the conversation, an animated icon appears on the screen to inform the partner about the keyboard activity of the other partners (Jucker and Durcheid, 2012).

1.11 The Internet and the Language of Facebook Chatting
Facebook chatting is a synchronous communication in which individuals interact in one-to-one conversation. It is a form of instant messaging situation that allows individuals to engage in online ‘talking’. The spontaneous nature of facebook chatting presents some constraints to the chatters by the nature of the hardware needed to access the Internet and also the short timeframe taken to respond to conversation (Crystal, 2008). Consequently, this generates distinctive linguistic features which are referred to as ‘written speech’.

Cvjecovic (2010) observes that, in online chatting, people write differently from the way they would in ideal context. This is to establish that the linguistic features of facebook chatting are distinctive from the conventional writing form. Crystal (2008) opines that in online chatting, we are actually involved in talking. In corroborating this, Cvjecovic further explains that the nature of the language variety in Internet chatting could be attributed to time factor in passing the message across in real-time engagement which is often simultaneous. Therefore to adapt the language to the context of real-time online communication, it is simplified, compressed, shortened and conditioned to fit into the communication situation. Syntactically, the clauses are usually fragmented and abbreviated, usually involving ellipsis of the pronominal items at the subject position. The linguistic features displayed by the language of the online chatters are unique and restricted to the online context (Jucker and Durscheid, 2012). For example: the following online conversation between speakers ‘A’ and ‘B’ as written bellow demonstrates the structural characteristics of facebook chatting.

A: IKR !! It was our pleasure broo. Btw couldn’t find ur name on fb to tag u idk why..!
B: Miss u too bro hope all’s going well at beirut 1
The example above displays the nature of the language of facebook chatting as it is juxtaposed with the conventional structures.
1.12 Facebook Chatting and Egyptian Young People
Facebook is one of the social networking websites that emerged in the world of electronic communication in the year 2004. It has the unique characteristic of combining virtually all the Internet communication situations which are recognized by Crystal (2008), that is, e-mail, chatgroups, blogging, virtual worlds, instant messaging, etc. This observation posits that facebook combines both synchronous and asynchronous communication situations. The use of Internet medium for communication grew rapidly in Egypt as a result of the development in the information communication technology (ICT) in the country. According to Wikipedia, Egypt’s Internet penetration rate grew from less than one percent in 2000, to 5% in 2004, 24% in 2009, and 54.6% in 2014. Consequently, the emergence of internet in Egypt could be traced to the year 2000.

Since then, telecommunication companies followed a wider strategy to dominate Egypt’s internet market by providing both internet service and content to customers. Hence, this rapid development facilitated the utility of computer-mediated communication among the Egyptian youths. Due to the cheap and versatile nature of facebook, together with its ability and versatility to connect people around the globe, it is widely accepted and popular, mostly, among youths. The technology of facebook gives individuals the opportunity to connect, interact, and share photos and videos with their love ones across the world, even if they are widely separated geographically.
The emergence of Facebook social networking websites in the country creates a fascinating platform for the youths to explore the Internet resource in order to reach out to the world through the networked computers or dedicated applications on smart phones, pc tablets, etc. Through Facebook, users could build up their own personal space, exchange messages, and participate in any online social group (Goertler, 2009). Therefore, this makes Facebook website the most highly accessed social networking in Egypt.

Reference
Boyd,D.M.,&Ellison,N.B.(2008).Social network sites;definition,history,and scholarship.Journal ofComputer-Mediated Commjunication,13(1)210-230.

Simpson, J. (2002). Computer-mediated communication. ELT journal, 56(4), 414-15.English in Egypt
Towards the end of the nineteenth century, English was only the fourth largest of the European languages in Egypt, after French, Greek and Italian. English spread rapidly in the public schools during British occupation, but French was still the first choice of the Egyptian aristocracy (Schaub, 2000, p.227). Today learning a foreign language is mandatory in schools, and English, French and German are most common. The Egyptian government is trying to promote more foreign language teaching in schools, especially English (Mahrouse, 1994, p. 1946).

Haeri (1997, p. 161), interviewing diplomats and physicians and others from the upper class, discovered that they had, with few exceptions, received all their education in a foreign language. In the language schools, maybe as little as a few hours per week are spent learning Arabic. All other classes are taught in the foreign language of each school. In public schools, English is of course only taught in English classes, and the quality of this teaching is thought to be poor (Schaub, 2000, p. 230). Ever since Sadat opened up the Egyptian economy, more and more students are learning English in the hope of getting employment in a foreign company operating in Egypt (Elkhatib in Schaub, 2000, p. 228). English language schools are now much more common than French (Imhoof in Schaub, 2000, p. 230). This is one of the reasons why I chose for this thesis to assume that English forms the basis when chatters on the Internet do not use Arabic or romanize it.

2.8 The Internet in Egypt
Internet penetration while still low has skyrocketed from around five million users in early 2006 to 30.94 million in 2012 reaching a penetration rate of 37.92 percent. With Internet penetration rate on the rise, it was becoming harder to suppress freedom of expression or hold information from the public. Even with an estimated six million users in 2007, citizens were able to influence the media and policy agendas by reporting police brutality and mass sexual harassment incidents on the internet within the same year. Egypt’s mainstream media denied the mass sexual harassment incidents at first but when the news leaked to the world through the internet, the media later admitted the incidents and reported the events. Similarly, Egyptian blogger Wael Abbas exposed in 2007 an incident of police brutality and posted the video of policemen torturing a minibus driver on YouTube. The video sparked a “media feeding–frenzy that ultimately forced the government to prosecute the kind of conduct that has long been condoned.” 1 The policemen were accused of torture and were sent to prison, which was considered a great victory for activists in Egypt. Social media became a powerful tool used by citizens to uncover corruption, mobilize for protests, and act as real watchdog over the mainstream media and the government.

After the revolution, the number of Facebook users went up to 6.65 million from 4.7 million (Mubarak, 2011), soaring to 10.7 million by May of the same year (Egypt’s Facebook users double: Ministerial report, 2012). “A common feeling of resentment towards the coverage of the revolution in both state–owned and private media has led young activists to launch their alternative media outlets using social networks” (Solayman, 2011). Due to the fact that state–owned media misled Egyptians during the revolution depicting and portraying protestors as paid enemies trying to disrupt social peace, social media became a popular alternative for seeking the truth in the absence of media credibility. State–owned television often hosted celebrity guests who insisted that foreign hands are playing a role in the revolution by paying protestors $100 along with a Kentucky meal on a daily basis to keep going (El–Wardani, 2011). The former intelligence chief Omar Suliman was quoted by the media as saying the protestors had “foreign agendas.” Privately–owned media was mixed as some were biased depending on ownership and the integrity of the presenters. However, the revolution clearly demonstrated to the people that they cannot expect “independent unbiased media” that is controlled by businessmen close to the Mubarak regime. Opposition media reflects the interests of special groups as well. Such a dilemma added and poured into the popularity of social media despite serious issues that have to do with lack of credibility and spreading rumors on SNSs (El–Wardani, 2011).

Prior to the revolution, a few pages appeared on Facebook nominating Gamal Mubarak, for presidency (Morozov, 2012). The same techniques were employed after the revolution with pages launched by anonymous people in support of the army in general, members of SCAF in particular, or even ousted President Mubarak himself. A famous page(s) created for Mubarak after the revolution carried the name “We are Sorry President.” Official Facebook pages and Twitter accounts representing government figures or entities, political opposition figures, and even activists are on the rise (Ghannam, 2011). Political parties also maintain a strong presence on social networking Web sites.

The current Islamist regime and its supporters have joined the social media competition building a strong presence on Facebook and Twitter. Rassd played a major role before, during and after the referendum over the new Egyptian constitution. The network heavily mobilized in favour of the draft constitution which was eventually passed with a majority ‘yes’ vote, but without societal consensus. Rassd glorified the constitution framing it as fair and socially just. The network also tarnished opponents of the constitution portraying them as remnants of the old regime, adopters of foreign agendas, and disloyal to Egypt. While Rassd portrayed the constitution as flawless, the April 6 youth movement criticized the constitution as indicative of a failed democratic transition. New news networks covering events in Egypt are being launched on Facebook and Twitter. Two famous Facebook pages ‘Rassd — R.N.N’ and ‘M 6 April’ describe themselves as news networks. The former is known to be associated with the ruling Muslim Brotherhood although it doesn’t formally identify itself as a media arm of the brotherhood. The latter is operated by the April 6 movement. Interestingly, the social media Rassd news network was launched one day before the revolution on 24 January 2011. Rassd which describes itself as network “to the people from the people” has two million likes while April 6 has 200k likes. Social media has become a hub for political polarization and propaganda in Egypt.

CHAPTER ONE
INTRODUCTION
1.1Background of the Study
In the world today, exchange rate is a major determinant of international world trade among various economies and nations, the role of which can never be overemphasized for the growth of any economy. This is because international trade provides opportunities to expand both the production possibilities as well as the consumption basket available to a nation (Adewuyi, 2005). Exchange rate as defined by the Business dictionary is the price of a nation’s currency that can be exchanged for a foreign or another country’s currency. Exchange rate has also been defined as the rate at which one currency exchanges for another (Jhingan, 2005). In other words, a country’s exchange rate is an important determinant of the growth of its cross-border trading and it serves as a measure of its international competitiveness (Bah and Amusa, 2003).

In light of the above, Edwards (1994) stated that it is not an overstatement to say that exchange rate behavior now occupies a central role in policy evaluation and design. Exchange rate is a vital macroeconomic variable in economic policy making and as such its fluctuations leads to adverse changes in all other macroeconomic variables. Mordi (2006) also argued that the exchange rate movements have effects on inflation, price incentives, fiscal viability, competitiveness of export, efficiency in resources allocations, international confidence as well as balance of payment equilibrium. Exchange rate is one of the key barometers of the economic performance of a nation indicating growth in terms of output, demand conditions, the levels and trends in monetary and fiscal stance (Afolabi, 1991). The role and effect of exchange rate on macroeconomic performance has continued to generate a lot of interest among economic scholars. Many economists argue that exchange rate stability facilitates production activities and economic growth, they are also of the view that misalignment in real exchange rate could distort production activities and consequently hinder export growth and generate macroeconomic instability (Mamta Chowdhury, 1991). Exchange rate policies guide investors on the best way they can strike a balance between their trading partners and investing at home or abroad (Balogun, 2007).

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Agu, 2002 stated in his work that the main aim of an optimal exchange rate policy is to assist in attaining Real Exchange Rate in order to maintain both the internal and external balance of a nation. Solely or in combination with Real exchange rate, the Nominal exchange stands as a vital policy tool in every economy, this is due to the fact that it influences to a great deal the resource allocation as well as international and structural changes in every economy. The concept of Real Exchange Rate (RER) stems from the awareness that changes in prices as well as inflation is what results in Nominal exchange rate movements. Over the years, the federal government of Nigeria has implemented various exchange rate policies in their bid to promote the nation’s trade and economic growth (Adewuyi, 2005). Before the year 1986, the Nigerian Government was functioning under a fixed exchange rate regime in which the British Pound was the key determinant of the Nigerian Naira exchange rate which was subsequently substituted with the American Dollar.The fixed exchange rate system was implemented and maintained from 1960 up until the collapse of the Bretton Woods System in the early 1970s. With the end of the Bretton Woods System, there followed a strict adoption of the floating exchange rate regime in Nigeria. Under this regime, the Nigerian Naira (Exchange Rate) was allowed to float and its value with respect to the value of an American Dollar was determined solely by the market forces of demand and supply.After this period, the pegged arrangement was adopted and subsequently the various free floating regimes in 1986 following the implementation of the Structural Adjustment Programme (SAP) (Sanusi, 2004). Some of the other exchange rate policies implemented by the Nigerian Government include; the Dutch Auction System (DAS), the Interbank Foreign Exchange Market (IFEM), the Second-Tier Foreign Exchange Market (SFEM), the Autonomous Foreign Exchange Market (AFEM), the Enlarged Foreign Exchange Market (FEM), Wholesale Dutch Auction System (WDAS), to mention but a few.
According to Organization of Petroleum Exporting Countries (OPEC), Nigeria is the second largest Oil Producer and Exporter in the world today and as such depends greatly on its crude oil export earningswhich makes up about 95% of the country’s foreign exchange and export earnings and about 80% of government revenue and its annual budget. (EIA, 2010). In light of this, such countries as Nigeria are bound to experience an appreciation in exchange rate when oil prices rise and a depreciation when it falls. For instance, from the periods of 1980 to 1985, after an increase in oil prices Nigeria experienced an upward trend in its exchange rate which in turn led to the loss of competitiveness for the Nigerian Economy, subsequently in 1986 the Nigerian Economy experienced an acute depreciation in its exchange rate which was as a result of decrease in oil prices and which in turn led to the adoption of the Structural Adjustment Programme (SAP) and eventually to the devaluation of the Nigerian Naira as a last resort to make the Nigerian Exchange Rate favourable for the economy.

Although there have been several exchange rate regimes implemented by various governments, the extent to which these reforms and policies have positively affected the Nigerian Exchange Rate has remained unascertained. Since the implementation of the Structural Adjustment Programme (SAP) in 1986, with one of its objectives being to restructure the production base of the nation in favor of an increased production of agricultural export goods, the Nigerian Naira Exchange Rate has barely experienced some level of stability and has continued to depreciate thus marring the economic performance of the country.The problems caused by the combination effect of high and increasing oil prices and exchange rate fluctuations on the economic stability and growth of an oil producing nation such as Nigeria has been extremely felt. As a result of this,Exchange Rate Fluctuations and its effect on price and output has attracted the attention of many studies. Several explanations and theories have been developed by economic scholars for the lead factors that cause exchange rate fluctuations and hinder the beneficial outcomes of efficient macroeconomic policies and strategies in determining exchange rate.

The effects of the changes in nominal and real exchange rates among all other macroeconomic variables on macroeconomic conditions has become crucial because of financial markets integrations and capital flows accelerations. In international trade, there are mainly two sources of risks and these include; fluctuations in world prices and exchange rate instabilities as such studying the behavior of the exchange rate as well as its key determinants is vital for several reasons. One of these reasons is that the relationship between a nation’s rate of exchange and its economic growth attained through international trade is very important in policy decision making. This research aims to study the key determinants of the exchange rate in the Nigerian Economy in an attempt to understand and eliminate the causes of these instabilities.

1.2Statement of the Problem
Foreign Exchange Rate has been established as an inevitable ingredient for the economic growth and development of every developing nation. Foreign Exchange Policies have a great impact on the economic activities of a nation and a greater effect on the direction of all of its other macroeconomic variables. The mechanisms of exchange rate determination varies among systems, countries and economies and this must be effectively carried out in a manner that would bring about the efficient allocation of scarce resources so as to achieve sustainable growth and development, (Udoye, 2009). Jhingan, 2005 opined that to maintain both internal and external balance, a country must control its exchange rate.
It has also been made clear that when an optimal exchange rate is combined with other macroeconomic variables enables an economy to attain its macroeconomic goals of full employment, sustainable economic growth, increased standard of living, price stability, equilibrium balance of payment, etc. On the other hand with a least optimal exchange rate these macroeconomic goals would be unattainable. There have been various types of exchange rate regimes practices in countries all over the world, with nations adopting regimes ranging from fixed exchange rate regimes to free floating regime or a combination of other various types of exchange rate regimes that include but are not limited to the Adjustable Peg Exchange Rate Regime, Target Zone Exchange Rate Regime, the Crawling Peg Exchange Rate Regime, the Managed Float Exchange Rate Regime etc. all in line with a nation’s economic requirements and needs, (Udoye, 2009). Over the years this has been synonymous with Nigeria as exchange rate regimes have moved from the Fixed Exchange Rate Regime to the Pegged Exchange Rate Regime and subsequently to the varying types of Floating Exchange Rate Regimes, (Sanusi, 2004). But still the act of determining an economically appropriate and tenable exchange rate in Nigeria has been a difficult one as it is the goal of every economy to have a sustainable and stable exchange rate. One of the main characteristic of the fixed exchange rate regime in Nigeria was that it induced the overvaluation of the Nigerian Naira and was further propelled by exchange control regulations that caused a large degree of distortions in the Nigerian Economy. Subsequently this caused an increase in the rate of importation with adverse ramifications on local productions, external reserves as well as Balance of Payment positions. Also the period of fixed exchange rate was plagued by extreme practices committed by end users and foreign exchange dealers. These and many more problems informed the adoption of a more flexible exchange rate regime in the context of the Structural Adjustment Programme (SAP) adoption in 1986, (Sanusi, 1988).

The attempt to attain an optimal and stable exchange rate led to the implementation of the purchasing power parity model by the Central Bank of Nigeria, (CBN). This model was set as an avenue to gauge nominal exchange rate movements while determining deviations from the equilibrium exchange rate. Although the model which functions basically as a relative price, does not give a concise criterion for choosing a base period and has been noted for its insensitivity to short run policy decisions, it however gives a reasonable framework for a comparative analysis of the performance of trading partners.

An optimal Real exchange rate causes international competition among the local producers of tradable goods and services and also prevents imports from being artificially cheaper than their comparable domestic alternatives. Exporters are also not disadvantaged by the exchange rate when the Real exchange rate is right, (Maciejewski, 1983), however, in Nigeria this has not been so. According to Williamson (1994), a country’s optimal real exchange rate is determined by some key macroeconomic variables and that the long-run value of the optimal real exchange rate is determined by suitable permanent values of these macroeconomic variables. The actual factors that determine the exchange rate in an economy such as the Nigerian economy (i.e. an open economy) is one of the most prolonged economic problems in global economics. According to Amatya et al, 2004, the single most influential idea in this context has been the Mundellian prescription that if shocks facing a country are mainly monetary in nature then fixed exchange rates are optimal whereas flexible rates are optimal if the shocks are mostly real. The main criticism of Mundell’s findings was the assumption of sticky prices in the goods market, (Udoye, 2009). Subsequent to the collapse of the Bretton-Woods regime and with the implementation of the floating exchange regime, exchange rates in Nigeria have over time become highly unstable and with no substantial cause-effect relationship to changes in other macroeconomic variables and as such the Nigerian exchange rate has been a constant topic of discussion among scholars, policy decision makers and relevant authorities in both the monetary and development sectors.
With the historical proof of the various exchange rate regimes that have been implemented in Nigeria over the years, it shows that the federal authorities have invested a lot in achieving the optimal exchange rate regime. Sanusi 2004 informed the importance of maintaining a realistic exchange rate for the Nigerian Naira and also the need to minimize distortions in production and consumption, increase the inflow of non-oil export receipts and attract foreign direct investment in order to prevent the overvaluation of the Nigerian Naira while ensuring that the competitiveness of the external sector remains intact. In the 1960’s and early 1970’s Nigeria operated a fixed exchange rate, this was replaced with the pegged exchange rate system and subsequently shifted to the various types of exchange rate regimes since the introduction of the Structural Adjustment Programme from 1986 till present. (Sanusi, 2004)
With the adoption of all these varying exchange rate regimes over the years, the Nigerian economy has still been unable to maintain a balance internally as well as externally thus leading to the problems this study seeks to solve.

1.3Aims and Objectives of the Study
The main objective of this study will be to examine the determinants of exchange rate in the Nigerian economy.

The specific objectives of this study would be;
to examine the trends in Real Exchange Rate (RER), Gross Domestic Product (GDP), Inflation (INF) and Trade Openness (TOP) in the Nigerian economy from 1984 – 2016.

to ascertain the relationship between Exchange Rate and GDP in Nigeria.

to examine the relationship between Exchange Rate and Inflation in Nigeria.

to investigate the relationship between Exchange Rate and Trade Openness in Nigeria.

to make appropriate recommendations on the key determinants of Exchange Rate based on the findings of this study.

1.4Research Questions
In view of the above highlighted problem, the following research questions have been raised to guide this study;
What are the determinants of exchange rate in Nigeria?
What are the trends in Real Exchange Rate (RER), Gross Domestic Product (GDP), Inflation (INF) and Trade Openness (TOP) in the Nigerian economy from 1984 – 2016?
What is the relationship between exchange rate and GDP in Nigeria?
What is the relationship between exchange rate and Inflation in Nigeria?
What is the relationship between exchange rate and Trade Openness in Nigeria?
1.5Research Hypothesis
In accordance with the research questions, the following null hypotheses have been developed for testing in this study;
H2: There is no significant relationship between exchange rate and GDP in Nigeria?
H3: There is no significant relationship between exchange rate and Inflation in Nigeria?
H4: There is no significant relationship between exchange rate and Trade Openness in Nigeria?
1.6Scope of the Study
This study would be limited to a time period of 1984 to 2016 giving this research a total period of 32 years. The reason for the selection of the above mentioned period was made on the bases of ensuring sufficient data availability and also as a result of the various exchange rate regimes that have been implemented in Nigeria over these years. The intended scope of this is not too large but large enough to ensure that data meets the criteria for time series analysis while ensuring that every element involved in the accuracy of the outcome of this research is duly investigated.

1.7Significance of the Study
The purpose of this study is to identify the main determinants of exchange rate in Nigeria. One objective of the National Economic Empowerment and Development Strategy (NEEDS) Policy Thrust Document is to determine the Nominal exchange rate using the Retail Dutch System (DAS) and adopt the Wholesale Dutch Auction System (WDAS) in the medium to long term, (NEEDS, 2004). This objective concurs with the ultimate goal of the monetary arm of the federal government of Nigeria which is to ensure stability in prices of goods and services as well as exchange rate. In view of the above, the economic significance of identifying the determinants of exchange rate cannot be overstated, and as such this research would be of relevance to the Nigerian Economy in the following ways; Firstly, the findings of this research will serve as a future guideline to the monetary policy decision makers in terms of ensuring the formulation of better and more appropriate financial sector reforms in their bid to resuscitate the Nigerian economy and its international advantage by maintaining an optimal exchange rate. Secondly, this research would be immensely useful to the overall Nigerian economy as it would attempt to provide various measures of ensuring increased exportation, decreased importation, efficient resource allocation, attainment of full employment and increased investments both in the private and foreign sectors all via optimal and stable exchange rate systems/regimes. Lastly, the findings of this research study would seek to contribute more information to the already existing knowledge on this subject matter and in turn assist economic planners in necessary developmental decisions for the sustainable growth of the economy.

1.8Organization of the Study
This research work would comprise of 5 chapters. The chapter one – Introduction is the introductory aspect of this research that seeks to give background knowledge of the past and present state of the subject matter. The Chapter two – Literature review attempts to investigate the findings of all other previous studies that have been carried out on the subject matter in order to see if there are certain existing gaps in the knowledge of the research topic. The chapter three – Methodology attempts to suggest the types and sources of data that would be used in this research study and also how these data would be analyzed using varying econometric and statistical tools. The chapter four – Discussion of results seeks to explain in the details the findings from the data obtained and analyzed while showing the existing economic relationships between the variables involved in this research. The chapter five – Summary, Conclusion and Recommendations would give a summary of all findings of this research and would then attempt to make appropriate recommendations based on these findings.

CHAPTER TWO
LITERATURE REVIEW
This chapter provides an overview of previous research works that have been carried out on this topic. It intends to introduce the framework for the subject matter. This chapter will focus on establishing all previous works carried out on exchange rate determinants in Nigeria, the findings and conclusions and would act as a base for the work that is to be carried out in this research. In this chapter all conceptual clarifications and definition of terms would be made, it would also attempt to expose the various types of exchange rate, exchange rate determination models as well as reviewing both theoretical and empirical literature on exchange rate determination in Nigeria.
2.1Conceptual Clarifications
In conceptual terms, an exchange rate refers to the price of one nation’s currency expressed in terms of another nation’s currency. Exchange rate can also be said to be the ratio between a unit of one currency and the amount of another currency for which that unit can be exchanged at a particular time (Ngerebo-a andIbe, 2013). Also Exchange rate as defined by Mordi, (2006) is the price of one currency vis-à-vis another and is the number of units of a currency required to buy another currency. The Exchange rate of one particular currency shows the connection between local and foreign prices of goods and services of an economy. Exchange rate also can either rise or fall. A rise in exchange rate can occur when lesser units/values of a nation’s local currency exchanges for a unit of a foreign currency while a fall in exchange rate can occur if a greater unit/value of a nation’s local currency exchanges for a unit of a foreign currency.
2.1.1Types of Exchange Rates
In line with Economic history, there exists two main concepts of exchange rate; the real exchange rate and the nominal exchange rate. The nominal exchange rate (NER) is a monetary concept which measures the relative price of two countries’ moneys or currencies, e.g., naira in relation to the U.S. dollar (e.g., #198.00: US$ 1.00) and vice versawhile the real exchange rate (RER), as the name implies, is a real concept that measures the relative price of two goods-tradable goods (exports and imports) in relation to non-tradable goods (goods and services produced and consumed locally) (Obadan, 2006). Also, the nominal exchange rate is the number of unit of domestic currency that must be given up to get a unit of foreign currency, in other word, nominal exchange rate is the price of domestic currency in term of foreign currency while The real exchange rate is the relative price of foreign goods in term of domestic goods, in other word, it is the exchange rate adjusted for price.

More complex measurements of exchange rates go beyond bilateral comparisons to include multilateral comparisons and a good example in this direction is real effective exchange rate. The real effective exchange rate is a weighted average of the bilateral real exchange rates taking into consideration the trade share of its partners in the country’s total trade. There is also the need to look at the issue of currency convertibility. Convertibility of a currency simply means the currency can easily be converted to other currencies without government imposing any restrictions
Devaluation
Devaluation refers to the reduction in the value of a nation’s currency in terms of a specified unit of gold, devaluation is simply the reduction of the value of a nation’s currency in terms of a selected nation’s foreign currency. Subsequently after the IMF ceased the measurement of currencies in gold terms in 1984, these terms are interchangeably used.
Overvaluation
Overvaluation refers to a condition that occurs when the supply of a currency is disrupted by over demand resulting in an increase in its value beyond the accepted market exchange rate. Typically the result of a central bank’s intervention into its money supply in which it buys excess supply of its own currency. An overvalued exchange rate implies that a nation’s currency is too high for the state of the economy. An overvalued exchange rate means that the nation’s exports will be relatively expensive while imports would be cheaper. Overvaluation of a nation’s currency tends to depress domestic demand and encourage imports. An overvalued exchange rate is particularly a problem during a period of sluggish growth. In a booming economy, an overvalued exchange rate can help to reduce inflationary pressure but in a recession, an overvalued exchange rate can cause further deflationary pressures.

2.1.2Exchange Rate Determination Models
Theoretically, there are four (4) general models of exchange rate determination which include; the Traditional Flow Model, the Monetary Model, the Purchasing Power Parity Model and the Portfolio Balance Model. These models would be discussed briefly in this chapter.

The Traditional Flow Model
In this model of exchange rate determination, exchange rate is said to be determined solely by the market forces of demand and supply of foreign exchange. In the Traditional Flow Model, the forces of supply and demand of foreign exchange carry out active responsibilities in determining an equilibrium exchange rate that equates the demand for and the supply of foreign exchange. The Traditional Flow Model was based on the assumption that there are two (2) basic variables whose interactions constitutes the main determinant of exchange rate, and these variables include; variations in interest rates and variations in relative income level. According to Udoye, (2009), this assumption can be justified by the fact that foreign demand for domestic goods is a function of foreign income and vice versa and also asset demand depends on the difference between domestic and foreign interest rates.

However, capital flows plays a vital role in sustaining the equilibrium that the Traditional Flow Model seeks to attain. According to Ogun, (2012), capital flows achieves this with an outflow moderating current account surplus and an inflow financing of the current account deficit. In an attempt to avoid outrageous changes in exchange rates under the Traditional Flow Model, focus is placed more on the factors that bring about variations/changes in the current account such as relative prices and relative income. He further added that a situation of current account deficit which tends to depreciate the exchange rate calls for concerted efforts at reducing both the domestic price level and income while raising the interest rate. Although the implications associated with using capital flows to ease disequilibrium is the unassertive assumption that the asset market obeys only the policy decisions of the country in deficit.

The Portfolio Balance Model
The Portfolio Balance Model of exchange rate determination conceptualizes exchange rate as the result of substitution between money and financial assets in the domestic economy and the substitution between the domestic and foreign financial assets, (CBN, 1998). This model expresses the exchange rate as a function of the resulting process of monetary equilibrium in an economy. According to Ogun, (2012), such financial equilibrium results from a simultaneous equilibrium in the individual financial asset markets, that is when the amount of each asset desired to be held is the exact amount of asset that is actually held.
In this model, there are three (3) vital markets which are assumed to an important role in exchange rate determination and they include; the Domestic Money Market, the Domestic Bonds Market and the Foreign Bonds market and thus three (3) separate equilibrium prices are drawn from the achievement of this financial equilibrium namely; the equilibrium price of each asset, the equilibrium interest rate in the economy and the equilibrium exchange rate. Hence, this model is referred to as the Asset Pricing Approach of exchange rate determination. The exchange rate emerges from this model because any portfolio switches between the domestic and foreign assets necessitates new demand for foreign exchange, (Appleyard et al, ).

The notion here lies in the fact that all economic players have a portfolio choice decision between domestic and foreign assets. Those instruments (either money or bonds) have an expected return that could be arbitraged, this arbitraged opportunity is what determines the process of exchange rate, (Bornbusch, 1988). However, it has been noted that the approach disregards the fundamentals of trade in its calculations, (Ojo, 1998) and this may indeed be a cause for the unexplainable variations in exchange rate, hence its shortfalls.

The Monetary Model
The Monetary Model shares certain similarities with the Traditional Flow Model in that both models depend solely on the Money Market forces of demand and supply to determine the equilibrium exchange rate. This model was developed as a result of the shortcoming of the Portfolio Balance Theory. This model basis importance on money as a unit of exchange and as such views exchange rate as a resultant function of relative shifts in domestic output, money stock and rate of inflation between two (2) trading partners. For instance, according to Ogun, (2012) monetary expansion which could produce an excess supply of money would also cause price levels to rise leading to exchange depreciation. However, the wealth level also increases as a result of this thus leading to an increase purchase of financial asstes. (both domestic and foreign) thus causing an increase in the demand for and supply of money. Inevitably, the excess supply of money would be mopped up and exchange rate returns to its original level in the long run (Frenkel et al, 1978).

Frankel, (1978), stated that this model of exchange rate determination attains equilibrium when existing stocks of money in the two countries are willingly held. The Monetary Model in line with a flexible exchange rate can be viewed from two (2) perspectives; the asset market approach and the monetary approach and it focuses on money as well as other assets as key determinants of exchange rate. In light of the above, it is safe to say that given a situation of a flexible exchange rate, disequilibrium in the money market is short lived and thus exchange rate only changes to support these short run imbalances. Thus, Obioma, (2000), opined that the Monetary Model ascribes changes in exchange rate to income expected rates of return and other factors that influence the demand and supply of money in an economy. As a result, on the basis that supply and demand for money is influenced by the income level, the monetary model speculates three (3) determinants of exchange rate; relative money supplies, relative income and variations in interest rates. The major shortcomings of this model is the assumption that domestic and foreign financial assets can perfectly substitute each other and this may lead to persistent disequilibrium in exchange rate.

Purchasing Power Parity (PPP)Model
The Purchasing Power Parity Model to exchange rate determination has presented and will continue to present a unique view of exchange rate. This model suggests that the exchange rate between two currencies would be equal to the relative national level prices. The PPP Model is based on the assumption that there is a “Law of One Price” in the world. The assumption/law states that all identical goods should be sold at identical prices. According to Investopedia, (2018), the law of One Price is the economic theory that states that the prices of a given security, commodity or asset has the same price when exchange rates are taken into consideration. The law of one price exists due to arbitrage opportunities. The law of One Price implies that exchange rates should adjust to compensate for price differentials across countries (Hoontrakul, 1999). The PPP Model seeks to identify the true equilibrium rate that would ensure simultaneous attainment of current and capital account balances, (Ogun, 2012).

There are two (2) main aspects of the PPP Model; an Absolute version and a Relative version. The Absolute PPP Model states that the absolute level of the exchange rate is that which causes traded commodities to have the same price in all countries when measured in the same currency while in the Relative PPP Model, the equilibrium rate equals a base period exchange rate multiplied by the ratio of the price indices of the domestic and foreign countries, (Ogun, 2012). However, there is very little empirical support for the Absolute PPP Model due to the rather strong influence of transportation costs and trade barriers at keeping prices from equalizing across geographical locations and the effect of the differences in the composition and relative importance of various goods in each country’s price level determination, (Appleyard et al, ). On the other hand, the Relative PPP Model only makes allowance for an implicit rate, the real exchange rate and as such proves less useful in analyzing the trends in explicit rate, nominal exchange rate.

Balance of Payment Approach
Among other existing theories on exchange rate determination is the Balance of Payment Approach. The Balance of Payment Approach of exchange rate determination implies that there is the existence of an internal and external equilibrium in every economy. By internal equilibrium, it assumes that a country has attained full employment and therefore there exists a natural rate of unemployment. By external equilibrium, it assumes that there is a balance of Payment equilibrium. This approach broadens the key deviations of the PPP Model. The major shortcoming of this approach is that it is hard to determine the natural rate of unemployment in general or the exchange rate at which balance of payment attains equilibrium. However, the model can determine where the exchange rate has to converge to, thus providing very little guidiance to the short term exchange rate fluctuations, (Hoontrakul, 1999).

Interest Rate Parity Model
Another popular partial equilibrium exchange rate theory is the Interest Rate Parity Model. This theory attempts to examine how exchange rates are determined in financial markets. Considering that interest rates vary frequently in the short run, the Interest Rate Parity Model is viewed as the short run exchange rate theory. Interest Rate Parity Model is also of two (2) approaches; the Covered Interest Rate Parity and the Uncovered Interest Rate Parity both of which assume the lack of existence of arbitrage and also that asset markets are frictional. This theory however lacks the required empirical evidence to support it as a forward exchange rate determining model.

The Mundell – Fleming Model
The Mundell-Fleming Model is an extension of a closed IS-LM model. However, as opposed to the IS-LM model in which prices are assumed to be flexible, the Mundell-Fleming model assumes that prices are fixed in the short run. Also as opposed to the IS-LM model in which the internal equilibrium in the money market, commodity market as well as the external equilibrium conditions are considered, the Mundell-Fleming Model incorporates the balance of payments. In light of this, the Mundell-Fleming Model is often referred to as a general equilibrium model of exchange rate determination. The Key assumption of this model is that perfect capital mobility, monetary policy, independence and a fixed exchange rate regime can never be attained simultaneously due to the fact that in the long term the level of exchange rate correlates perfectly to the level of money supply and payment monetary policy might only lead to a decrease in economic growth. Also a continuous devaluation may lead to difficulties in the management of Balance of Payments thus causing serious economic problems.

The Dornbusch Model
The Dornbusch Model assumes that prices could be reviewed and used in the determination of exchange rates. In line with the above the Dornbusch Model is generally recommended for gradual price adjustment programs. This indicating that there could exist an overshooting in prices when determining long run equilibrium when there is money shock. At such a point, fixed rates could be an advantage thus implying that in the presence of an economic dislocation business tend to move towards equilibrium and this can be achieved through flexible market or price adjustments. The difference between the two is that in the case of price, adjustments may consume more time and may be less risky than in the case of market. If prices are relatively flexible and inflation is controllable in a medium range, then a fixed exchange rate regime can be favourable.

2.1.3Nigerian Naira Exchange Rate Administration Review
Prior to the implementation of the structural adjustment programme (SAP) in 1956, the Nigerian Naira exchange rate was fixed, that is the rate was settled opposite the US dollar and UK Pound sterling. Despite the fact that this was in accordance with the worldwide practice on exchange rate determination at that point, the framework was observed to be loaded with large twists that prompted wastefulness and misallocation of resources. It also observed that the Nigerian exchange rate did not turn into a policy instrument till 1988 unlike other developing countries. The naira exchange rate was pegged introductory to the British Pound Sterling and in this manner to the United States dollar as a major aspect of international exchange rate administration under the Bretton Woods Framework. Thus the naira exchange rate could be changed just because of a drawn out disequilibrium.

The Nigerian Pound Parity was spelt out in June, 1962 in terms of gold at one Nigerian Pound to 2.48828 grams of gold. This remained same till August 14, 1971, where the Exchange rate of the Nigerian pound of the utilization dollar was dictated by its gold parity. The Naira supplanted the pound as Nigerian money in 1973, and its parity was set at half a pound. Consequently the Exchange rate against the dollar moved toward becoming US $ 1.52 to the Naira. In a month of this the US dollar was the devalued by 10 percent and Nigeria suit with a 10 percent coordinating devaluation, thus keeping up the current Naira-dollar exchange rate. Amid the greater part of 1973, the grapple monetary forms, the dollar and sterling debilitated significantly, managed shortcoming brought into sharp concentration the predicament, characteristic in the strategy for deciding the exchange rate of the Nigerian money.
Be that as it may, in September, 1986, the Second Tier Foreign Exchange Market (SFEM) started as a double Exchange rate framework which created the official first tier rate and the SFEM rate. The previous was authoritatively decided and steadily depreciated. The free market rate which was applicable to different exchanges was dictated by the market powers of demand and supply inside the structure of a foreign exchange auction framework. The quintessence of the double exchange rate framework was to prevent a uniform and sizeable devaluation of the Naira while enabling it to deteriorate in the SFEM while in the meantime, the financial experts proceeded with a descending change of the first tier rate until the point where the two rates unite to deliver a sensible Exchange rate.
This joining which Ojamenaye (1991) has portrayed was accomplished on July 2, 1987 at an exchange rate of N3.74: $1.00. And in line with this improvement, the first teir market was destroyed and unified exchange market (FEM) with a solitary rate that appeared. The FEM additionally grasped the autonomous market, which was permitted to develop. The self-governing section of the FEM was required to be in competition with the parallel foreign exchange market and therefore be appealing to exporters to repatriate their returns.
The presentation of the autonomous market prompted the presence of three trade rates – FEM, rate independent and the parallel market rate which neglected to demonstrate any inclination toward merging. What’s more, as Akinmoladun (1990) has contended the merger of the first teir rate and the SFEM rate was more specialized than genuine as not long after the gap between the auction rate and those of the independent market rates started to develop at a certain point, there was an excess of over 50 percent differential between the two rates and this turned into a wellspring of worry for the monetary authorities. The value differential had the impact of making the auction funds kind of subsidized. The operations of the autonomous market later became destabilizing arising from the tendency towards high arbitrage premium and accusations of authorized dealers of diverting official funds making substantial gains effortlessly (Ojo, 1991).

Different acts of malpractices additionally sprung up as the market authorities or approved merchants were blamed for debasement and apportioning foreign exchange to favored clients. In view of this, the autonomous market was converged with the official segment in January 1989 and the Inter-Bank Foreign Exchange Market (IFEM) was presented. The IFEM involved a day by day bidding framework under which the Apex Bank infused official assets into the market by method for guiding direct sales to the banks as and when reserves were accessible. Different however particular strategies were utilized (single or joined) to decide rates. The daily bidding framework was portrayed by misleading requests for foreign exchange and it reached an end on the 13th December, 1990. The next day, the Central Bank of Nigeria reintroduced the Dutch Auction System (DAS) on a week after week premise.
The framework proceeded all through 1991. Recalling that the Dutch auction system was first presented in 1988, yet was later supplanted by IFEM. The DAS was initially implemented to improve professionalism in the FEM and avoid incredible rate which constantly prompted a steady devaluation of the naira. The system did not achieve this goal. For example, the naira showed heavier deprivation in 1991 compared to the relative stability of the exchange rate in 1990 (Obadan, 1992). The Exchange rate management framework seemed to have been predicated on different techniques that are yet to accomplish the coveted objective. Not just has there been a transformation of the institutional structure from SFEM to FEM to IFEM, there have been steady changes in the operational rules. Other than the Dutch Auction System, the market has tested the different strategies and operational techniques among which are the average and marginal Exchange rate determination or fixed techniques, the week after week, fortnight and every day bidding framework.
In January 1999, Nigeria’s dual exchange rate administration was deserted as the official N22 to a dollar Exchange rate was rejected. Before then, the official rate existed together with the rates on the Autonomous Foreign Exchange Market (AFEM) and was utilized for specific government transactions including external debt services. From that point, the common rate on the AFEM was applied to all foreign trade exchanges. The end of the dual exchange rate framework presented consistency of price in foreign exchange transactions and brought to an end the arbitrage openings made by having an exaggerated official rate next to a market decided rate. It likewise brought more straightforwardness into the government’s money related transactions as just the President had the privilege at that time to figure out which transactions were to be carried out at the official rate. In October 1999, a day by day Inter-Bank Foreign Exchange Market (IFEM) supplanted the AFEM. Under the IFEM regime, the Central Bank of Nigeria’s (CBN) restraining infrastructure on the supply of foreign exchange was expelled as oil companies were permitted to supply foreign exchange to banks directly as opposed to doing so through the Central Bank of Nigeria CBN. The Central Bank of Nigeria’s CBN however remains the chief supplier of foreign exchange in the market and applies impressive impact on the determination of the Exchange rate. In July, 2002, Nigeria reintroduced a bi-weekly Dutch auction system (DAS) as an operational framework for its foreign exchange market to supplant the interbank foreign exchange market (IFEM).
The DAS is a technique for Exchange rate determination via auctions in which bidders pay as indicated by their bid rates and the decision rate is set in line with the last bid rate that clears the market. To put it plainly, as opposed to the old IFEM framework, where supply of currency was flexible at some given rate, leave or take some room for depreciation when request was seen to be too much, under the DAS the Exchange rate is for the most part dictated by bids made by commercial banks in the interest of their customers. So the move back to a DAS demonstrates that Nigeria is by all accounts longing for more, instead of less, flexibility in the Exchange rate and leads one to surmise that Nigeria gives off an impression of wanting to adopt the last monetary administration arrangement: stable prices and a free floating Exchange rate.

2.1.4Exchange Rate Regimes
There are varying options open to nations in terms of adopting and implementing a desired exchange rate regime and these ranges from the fixed regimes to the floating regimes to the other regimes in between them, including the target zones, pegs and the fixed but adjustable regimes. Considering that the adoption of any exchange rate regime is aimed at attaining exchange rate stability, more relevance is placed on the fixed exchange rate and its variants. A fixed exchange rate regime is a system in which the exchange rates of a country are maintained at certain fixed levels. Nigeria implemented and maintained a fixed exchange rate regime from the achievement of its independence in the 1960’s up until the collapse of the Bretton Woods system in the early 1970s. There are two (2) key reasons why fixed exchange rates are considered as more favourable; firstly because they aid the promotion of foreign exchange markets and secondly they promote the possibilities of certainty in international transactions. A few of some of the variants of the fixed exchange rates that would be discussed include;
Crawling Peg Exchange Rate
The crawling Peg exchange rate regime is a middle course between the fixed and the flexible exchange rate regimes. This variant of the fixed exchange rate is more suitable for countries with significant inflation rates as when compared with that of their trading partners. Under this regime, the government fixes the exchange rate on a particular day but adjusts the rates in a pre-announced fashion over time, while taking into consideration the inflation differentials between itself and its trading partners. In general, the Peg can be passive, i.e. the exchange rate is altered with reference to past inflation, i.e. the country announces in advance the exchange rate adjustments it tends to make. The main advantage of the Crawling Peg is that it makes room for the combination of the flexibility required to accommodate different trends in inflation rates between countries while maintaining relative certainty about future exchange rates relevant to exporters and importers. Its disadvantage is that it leaves the currency open to speculative attack because the government is committed on any day or over a period of time to a particular value of exchange rate.

Adjustable Peg Exchange Rate
The Adjustable Peg exchange rate refers to the exchange rate regime in which a country’s currency is pegged to a key currency for instance the US dollar, however, the Peg level could be adjusted occasionally or periodically but within a limited range. According to Udoye, (2009), this regime offers a strong exchange rate commitment and its adherents before the currency crisis of the mid and late 1990s included Brazil, Mexico and Thailand. In these emerging market economies, where capital mobility increased steadily during the 1970s and 1980s and up to a high point in the 1990s the authorities had difficulties in maintaining the peg, (Corden, 2001). However, the Adjustable Peg regime is still favourable for nations with low capital mobility which can be attributed to either the fact that they are not integrated with the capital markets or the fact that they have effective capital controls.

Currency Peg Exchange Rate
In the currency Peg exchange rate regime, a local currency is pegged to an external currency which could either be the currency of a dominant trading partner or a basket of currencies with weights reflecting the shares of the countries in foreign trade. Pegging to a single currency may bring about certain advantages amongst which is the reduction in the exchange rate fluctuations between the focus country and the country to which it is pegged. This in turn favours/encourages trade and capital flows between the two countries. One main shortcoming of the currency peg is that when the currency of a nation is pegged to a floating currency, e.g. the US dollar, the domestic currency will float along with the USD and other currencies as well. Another disadvantage is that movements in the exchange rate in relation to the currencies of other countries may interfere with domestic macroeconomic objectives. In the need to ensure a stable exchange rate, any developing country might decide to peg its currency to a basket of other foreign currencies. Usually, this involves making use of the weighted average of different currency values and pegging the exchange rate at the total trade-weighted (either export or import). A key benefit of this currency peg exchange rate is that it can enable an economy prevent extreme exchange rate instabilities via operating under the currencies of several other trading partners. Also using this currency peg exchange rate a country is better equipped to ensure its nominal effective exchange rate remains stabilized, also it helps in reducing the extent of instable prices which is usually triggered by fluctuating exchange rates. The currency peg however has a disadvantage which is the fact that determining the optimal exchange rate using this method without adequately referring to the local policies of the pegging policy makers. Another disadvantage is that a basket-weighted exchange rate which by definition moves against all major currencies, might reduce confidence on the part of foreign investors and reduce capital inflows (Udoye, 2009).

Target Zone Exchange Rate
This type of exchange rate lies in between the floating exchange rate and the fixed yet adjustable exchange rates and it is well known for its popularity. In this regime, a central exchange rate that can be fixed, made to crawl or to be flexible is set within certain band limits in which the central exchange rate is permitted to roam thus enabling a country to be flexible with its macroeconomic policy objectives. The key advantage of this regime is that it hinders volatility in exchange rate movements.

2.2Review of Theoretical Literature
Exchange rate refers to the rate at which one currency exchanges for another (Jhingan, 2005). The exchange rate of a country can also be defined as the price of its currency relative to the currencies of other countries. According to Mankiw (1997), it can also be defined as the price at which exchanges between two countries takes place. The process of determining the optimal exchange rate in a country is an undeniable matter at the forefront of finance and global economics in the world today. In Nigeria, the monetary authorities are constantly seeking to attain an optimal, non-volatile and favorable exchange rate in their bid to ensure the attainment of all macroeconomic goals, which is due to the fact that exchange rate instabilities and volatilities would inevitably exert a strenuous influence on private and foreign investments, prices of goods and services as well as export and import decisions. Ojo (1998) opined that a realistic exchange rate is one that reflects the strength of foreign exchange inflow and outflow, the stock of resources as well as ensuring an equilibrium in the balance of payments that is consistent with the cost and price levels of all trading partners.

The effects of exchange rate on output changes has long been established in several economic literatures on this subject matter however, there has been a lack of consensus to show the direction of these effects. According to the traditionalists, a fall in exchange rate is likely to enhance trade balance, prevent balance of payments deficits and subsequently increase output and employment as long as the Marshall-Lerner conditions are fulfilled. The Marshall-Lerner condition states that depreciation would lead to expansion in output if the sum of price elasticity of demand for export and the price elasticity of demand for imports is greater than unity, (Investopedia, 2018). According to Taye (1999), the mechanism behind these positive effects, is that devaluation switches demand from imports to domestically produced goods by increasing the relative prices of imports and making export industries more competitive in international markets thus stimulating domestic production of tradable goods and inducing domestic industries to use more domestic inputs. On the other hand, the monetarists believe that exchange rate changes do not impact macroeconomic variables on the long run. They believe that exchange rate devaluation affect real magnitudes mainly through real balance effect in the short run but leaves all real variables unchanged in the long run (Domac, 1977). This belief is only valid on the assumption that the purchasing power parity (PPP) holds. It inevitably shows that a rise in the exchange rate causes an increase in output in the short run thereby enhancing the balance of payment. However, devaluation although increases output and improves BOP also leads to a rise in prices in the long run.
Having established the likely influences exchange rate has on investment (private and foreign) balance of payment equilibrium, interest rate and inflation, the act of establishing a decent exchange rate is very vital in the successful attainment of all developmental plans and programs in an economy. According to Chuka, 1990, the objectives of exchange rate policies are to increase output and ensure its optimal distribution. One constant requirement for the successful achievement of a nations objectives is an exchange rate that is stable. He also opined that stability permits viability of the rate in response to changes in relative prices, international terms of trade and growth factors.
The whole concept of exchange rate policy had to do with determining an exchange rate regime and choosing a specific rate to guide all foreign transactions. Exchange rate policy influences the growth of an economy by ascertaining capital flow, direct and foreign investment as well as its external balance. A lack thereof in foreign exchange leads to difficulties in the development of a nation. In attaining development, the growth rate of a country’s output as well as its demand for imports tend to outweigh its export based volume hence causing a clash between advancing its internal development while conserving its external balance. This clash is usually solved by appointing a favorable exchange rate policy.

Exchange rate policies that involve either a devaluation or an over valuation of a country’s currency always comes attached with certain consequences. Overvaluation of foreign exchange enhances external borrowing, balance of payment deficit and economical disintegration while according to Sodersten, (1997), undervaluation leads to income distortions and bias which is detrimental to labour, trade, current account surpluses, standard of living and the growth of the economy. On the other hand, devaluation enhances external competition via a reduction in imports or an enhancement of exports which on the long run favours both consumption and investment decisions.

The key requirement of an efficient exchange rate regjme is the assumption that exchange rate reflects the relative productivity of an economy, (Obadan, 2003). On the long run, the devaluated currency in this case the Naira helps to barricade all local industries while facilitating an increased local production, a decreased cost of all imported raw materials thus enhancing the competitiveness of locally made goods. There are various elements that guide the selection of a specific exchange rate regime of a nation, one of which is a nation’s intricate economic conditions or foundations, its external economic fundamentals as well as the responsive effects of all random shocks on the local economy. In other words, an economy such as the Nigerian economy where there is high vulnerability to an unstable internal financial environment as well as external shocks (i.e. Shocks from terms of trade or excess debts) always seeks to implement an exchange rate system that can be easily maneuvered. It is generally believed that the fixed exchange rate regime is favorable if an economy is prone to internal shocks while a flexible exchange rate system is favorable if an economy is prone to external shocks, it is nonetheless becoming increasingly recognized that whatever exchange rate regime a country may adopt, the long term success depends on its commitment to the maintenance of strong economic fundamentals and a sound banking system, (Sanusi, 2004).

According to Meese and Rogoff, (1990), the floating exchange rate was adopted in developing countries from 1973 and the question of whether exchange rate uncertainties have independent adverse effect on the transactions of a country has attracted a lot of literature. They also opined that the introduction of adjustment programs by many of these countries and the attendant liberalization of exchange rates have brought the discussion of this work farther into global focus. Udoye, (2009) stated that economists are divided over whether government’s arguments for managing exchange rates rest on one of the following key notions; first, that the government can determine the fundamental equilibrium exchange rate; secondly, floating exchange rate has been too volatile; and third, under-floating exchange rate currencies can become significantly over valued or undervalued. Williamson, (1994), opined that supporters of the floating exchange rate point out that exchange rate volatility may or may not have adverse effect on favorable terms of trade depending on its effect on import. Therefore exchange rate volatility or fluctuation can be positive or negative.

According to the work of Taylor, (1995), in which he categorically opined what is now popularly referred to as the Purchasing Power Parity theory that the value of a foreign currency in terms of another depends mainly on the relative purchasing power of the two currencies in their respective countries, i.e. the exchange rates settles at the level which makes the purchasing power of a given unit of currency the same in another country in which it is spent. He debated that the theory fails in certain areas, for example; a change in the exchange rate may originate independent of the price level thus stipulating that the Purchasing Power Parity does not, as believed give a total understanding of what determines the exchange rate but notwithstanding the fact that the theory holds certain truths.

According to Krueger, (1983), stated that in a completely free exchange market, exchange rate would fluctuate freely in response to varying demand for the different currencies. With fluctuating demand for currencies, greater savings in foreign exchange rate can be achieved due to the fact that capital movement directly impacts exchange rate like in the case of exports and imports. Conversely, as far as demand for and supply of other different currencies remains in balance, stable exchange rate would prevail under free exchange markets. Krueger, (1983), also added that how the exchange rate is determined depends on whether the rate is a fixed exchange rate or a floating exchange rate. Recall that a fixed exchange rate is one in which the exchange rate is set according to the stipulations or decree of the government usually within a limited variance range while a floating exchange rate is one that is solely (freely) left to be determined by the market forces of demand and supply.

2.2.1Review of Existing Literature on Exchange Rate and GDP
Several studies have been carried out in attempt to understand the relationship between Exchange rates and economic growth (GDP). Aliyu (2011) opined that appreciation of exchange rate results in increased imports and reduced export while depreciation would expand export and discourage import. It is important to note that depreciation (a fall) of exchange rate leads to a movement from foreign goods to domestic goods thus leading to movement of income from the importing nations to the nations exporting via a shift in terms of trade, which subsequently impacts positively on the exporting nations’ economic growth and negatively on the importing nations’ economic growth.
With the same concept, Hossain (2002) supported that exchange rate helps to connect the price systems of two different countries by making it possible for international trade and also effects on the volume of imports and exports, as well as country’s balance of payments position. Rogoffs and Reinhartl (2004) also suggested that developing countries are relatively better off in the choice of flexible exchange rate regimes. Also, Edwards and Levy Yeyati (2003) discovered evidence to prove that nations with a more flexible exchange rate grow faster. Faster economic growth is significantly associated with real exchange rate depreciation (Hausmann, Pritchett, and Rodrik 2005).
Rodrik (2009) also opined that real undervaluation promotes economic growth, increases the profitability of the tradable sector, and leads to an expansion of the share of tradable in domestic value added. He argues that the tradable sector in developing countries can be too small because it suffers more than the non-tradable sector from institutional weaknesses and market failures. According to him, a real exchange rate undervaluation works as a second-best policy to compensate for the negative effects of these distortions by enhancing the sector’s profitability. A Higher profitability encourages investment in the tradable sector thus leading to its expansion and subsequently encourages economic growth. Other past researches on the effects of exchange rate on economic growth has failed to reach an agreeing summary. There are empirical evidences to show that real exchange rate instabilities has a large effect on growth outcomes. Asher (2012) investigated the impact of exchange rate fluctuation on the Nigeria economic growth for period of 1980 – 2010. His findings revealed that real exchange rate has a positive effect on the economic growth. In the same vein, Akpan (2008) examined foreign exchange market and economic growth in an emerging petroleum based economy from 1970-2003 in Nigeria. He discovered that positive relationship exists between exchange rate and economic growth. In their work, Obansa et al (2013) also studied the relationship between exchange rate and economic growth in Nigeria between 1970 – 2010. Their findings revealed that exchange rate has a strong impact on economic growth. They summarized that exchange rate liberalization was good to Nigerian economy as it promote economic growth. Azeez et al (2012) also examined the effect of exchange rate volatility on macroeconomic performance in Nigeria from 1986 – 2010. Their findings revealed that exchange rate is positive related to Gross Domestic Product.
Adebiyi and Dauda (2009) applying the error correction model stated in contrast that trade liberalization promoted growth in the Nigerian industrial sector and stabilized the exchange rate market between 1970 and 2006. According to them, there was a positive and significant relationship between index of industrial production and real export. A one per cent rise in real export increases the index of industrial production by 12.2 per cent. Thus implying that the policy of deregulation impacted positively on export through exchange rate depreciation.

Ghosh et al (1997) carried out a descriptive analysis of the growth performance under alternative regimes in 145 IMF-member countries for 30 years after 1960 and discovered a slightly higher GDP growth under a float (1.7% under floating compared to 1.4% under a peg). They concluded that as investment rates contributed two percentage points of GDP, then the lower output growth under a peg must be a result of a slow productivity growth and that higher productivity growth under a float also supported the growth of external trade. However, the growth showed to be the higher (2%) under an intermediate regime (soft pegs of managed float) and highest (an extra 1%) under a floating regime.
2.2.2Review of Existing Literature on Exchange Rate and Inflation
Inflation is defined as the rate at which general prices of goods and services persistently rise over a specific period of time with adverse consequent effect of an increase in the demand for goods and services which is relative to limited supply of these goods and services, (Investopedia, 2018). Therefore, inflation is the persistent rise in the general price level over a period of time. Inflation has fatal consequences on the function of money as a medium of exchange and store of value. Hence a persistent increase in general price level equals that each unit of the currency can only purchase a less than required amount of goods and services.
According to Nnamocha (2002), inflation is a sustained rise in the general level of prices. Inflation impacts on an economy by raising the opportunity cost of demand for money, in other words, the uncertainty people have over future rise in prices is likely to discourage savings and investment. High inflation is in most cases accompanied by an increased money supply however, money supply does not categorically lead to inflation just as long as it increases in the same proportion as output. The monetary and traditional flow theories both provide a theoretical basis for this subject matter. The monetary approach to exchange rate determination suggests that the relative supply of and demand for money between two trading partners is the basis for the determination of exchange rate. It opines that an increase in the supply of money is able to generate inflation, hence, resulting in exchange rate depreciation.
The model suggests that a case of falling prices with a given money supply leads to exchange rate depreciation, while the traditional flow model is essentially based on the principle of the interplay of demand and supply. The forces of the market (interaction between demand and supply) determine the rate of exchange. However, when there is speculation or expectation of a change in the rate of exchange, this could lead to the disequilibrium even without any change in the initial determined factors. Ettah, et. al (2012) in their study of the effects of price and exchange rate fluctuations Agricultural exports in Nigeria observed that exchange rate fluctuations and Agricultural credits positively affect cocoa exports in Nigeria. They also showed that the relative prices of cocoa are insignificantly related to quantity of export, but however carried a negative sign which is in line with a priori expectation. The implication of this is the volatility on cocoa export in Nigeria.
Asher (2012) stated that exchange rate is used to determine the level of output growth of the country. Although, with already existing exchange rate policies, a constant exchange rate has been the key uncertainty in the trade transaction. Thus leading to declines in standard of living of the population as well as increase in costs of production thus resulting in cost-push inflation. Ndung’u (1993) carried out an estimation of a six-variable VAR—money supply, domestic price level, exchange rate index, foreign price index, real output, and the rate of interest—in an attempt to explain the inflation movement in Kenya. He observed that the rate of inflation and exchange rate explained each other. A similar conclusion was also reached in the extended version of this study (Ndung’u, 1997).

2.2.3Review of Existing Literature on Exchange Rate and Trade Openness
One of the main aim for determining an optimal exchange rate is to promote the greater openness of economies. Thus, it highly is likely that there is a causal relationship between these two variables. One of the studies focusing on these factors was carried out by Hau (2002). In his study, he carried out an analysis of the openness of an economy and its impact on real exchange rate movements. He argued that trade integration and real exchange rate volatility are structurally linked and that there is a negative correlation between them. In his research, he employed a small open economy model with a tradable and a non-tradable sector. According to his findings, he concluded that economies which are more open have a more flexible aggregate price level. This flexibility in turn reduces the effect of unanticipated money supply shocks thus resulting in lower real exchange rate volatility for countries with greater openness of the economy. Hau further supported his argument with an empirical study using a sample of 48 countries over a 19-year time period. As a proxy for openness he employed an import vs. GDP ratio. With Real exchange rate volatility measured as the standard deviation for the percentage changes of the effective real exchange rate over intervals of 36 months, his findings confirmed the impact of an economy’s openness on exchange rate determination as openness explained almost half of exchange rate variations. However, Hau’s results did not categorically state the particular countries used as each country was represented by arithmetic mean values.

Stancik (2007) examined the sources of exchange rate volatility among European Union members’ countries. The study employed the threshold autoregressive conditional heteroscadasticity (TARCH) model it’s method of analysis. His results showed that economic openness, information and flexible exchange rate regimes have positive and statistically significant impact on exchange rate volatility and determination.
Also, Al-Samara (2009) examined the determinants of real exchange rate volatility in Syria over the period of 1980 to 2008. The specific objective of his research was to identify the principal factors suggested in many theoretical literatures, which includes relative productivity, government expenditure, terms of trade, trade openness and net foreign assets. His results revealed that there was a high causality relationship existing between trade openness of the economy and its exchange rate instabilities.

2.3Review of Empirical Literature
Jimoh, (2006) analyzes the Nigerian information from 1960 to 2000 to understand what backing it offers to the traditional theory of real exchange rate. He utilized the notable Johanson’s (1992) techniques for assessing models whose variables were non-stationary yet co-integrated, the investigation discovered that the definitive trade liberalization program of 1986 – 1987 prompted upto about 13% depreciation in the Nigerian real exchange rate and made the real rate more receptive to changes in its terms of trade. He likewise discovered that less definitive changes in trade administration created no tangible changes in the real exchange rate.
Shehu and Aliyu, (2006), in their study sought to assess the long run behavioral equilibrium exchange rate in Nigeria. They utilized quarterly information from 1984Q1 to 2004Q4 and came up with a Behavioral Equilibrium Exchange Rate (BEER) and a Permanent Equilibrium Exchange Rate (PEER). Regression results demonstrated that a large portion of the long-run behavior of the real exchange rate could be explained by real net foreign assets, terms of trade, index of crude oil volatility, record of monetary policy outcomes and government fiscal position. Based on these basics, four scenes each of overvaluation and undervaluation were recognized and the forerunners portraying the scenes were similarly followed to the archive of exchange rate in the nation within the survey period. Among others for example, expansive inflow of oil incomes into the nation and stable macroeconomic performance were found to account for undervaluation of the real exchange rate in the vicinity of 2001Q1 and 2004Q4 in Nigeria. The results additionally recommended that deviations from the equilibrium point are eliminated within one to two years.
According to Agnès and Coeuré (2001), in their paper indicate how the traditional trade off amongst adjustment and disinflation can deliver soft pegs as ideal exchange rate administrations notwithstanding if the monetary fragility and the cost of administration switches in terms of credibility are considered. The ideal level of exchange rate flexibility relies upon the structural qualities of the nation and on the inclinations of monetary authorities. Their findings is affirmed by cross-section logit estimation for 92 nations before and after the 1997-1998 developing markets crisis relating exchange rate administration decision with the nations structural patterns. The model effectively predicts up to 86% of the studied administrations and a portion of the current ones move towards the hard pegs.
Devereux and Engel (1988) specifically analyze how price setting influences the ideal decision of exchange rate system. They discover that when prices are set in consumers’ currency, floating exchange rates dependably rule fixed exchange rates. At the point when prices are set in producer’s currency, there is a trade-off amongst the floating and the fixed exchange rates. Exchange rate modifications under floating rates takes into account a lower variance of consumption, however exchange rate unpredictability itself prompts a lower average level of consumption. The conclusion from the basic analysis of their study shows that, if the exchange rate is unstable, fixing exchange rates to both US dollar and Japanese Yen is superior to floating, in light of the fact that both US and Japanese exporters set their prices in producer’s currency.
Also, Devereux and Engel (2000) examined the decision of exchange rate systems – fixed or floating in a changing, inter-temporal general equilibrium structure. They utilized a broadened Devereux and Engel (1998) framework to researching the ramifications of internationalized production. They looked at the part of price setting – whether prices are set in the producer’s currency or the consumer’s currency – in deciding the optimality of exchange rate systems in an environment of instabilities caused by financial shocks. They found that when prices are set in producer’s currencies, floating exchange rates are suitable when the nation is sufficiently expansive, or not highly prone to risks. Then again, floating exchange rates are always suitable when prices are set in consumer’s currencies because floating exchange rates enable local consumptions to be protected from foreign financial shocks. The benefits from floating exchange rates are more prominent when there is internationalized production in this case.
Engel (2000) examined the ideal exchange-rate policy arrangement in two-nations, he utilized sticky-price general equilibrium models in which household units and firms improve over an interminable horizon in an environment of instabilities. The models are in the vein of the “new open-economy macroeconomics” as exemplified by Obstfeld and Rogoff (1995). The conditions under which fixed or floating exchange rates yield higher welfare, or the ideal foreign exchange mediation rule, rely upon the precise nature of price stickiness and on the level of risk sharing avenues. The investigation gives some preliminary empirical evidence on the behavior of consumer prices in Mexico that indicates short comings on the side of the law of one price are crucial. The proof on price setting and risk sharing opportunities isn’t sufficiently refined to influence authoritative decisions about the ideal exchange rate administration fit for that nation.
Amartya et al (2004) revisited the issue of the optimal exchange rate system in a flexible price environment. The key development is that he broke down the inquiry with regards to situations where just a small amount of agents partake in asset market transactions (i.e., resource markets are divided). He demonstrated that flexible exchange rates are ideal under financial shocks and fixed exchange rates are ideal under real shocks. These discoveries are the correct inverse of the standard Mundellian findings inferred under the sticky price worldview wherein fixed exchange rates are ideal if financial shocks rule while flexible exchange rates are ideal if shocks are for the most part real. This outcome subsequently recommends that the ideal exchange rate administration ought to depend not just on the kind of shock (financial versus real) but additionally on the type of rubbing (goods market versus financial markets).

In his study, Chuka, (1990) revealed that there is no such thing as ”the” ideal or best exchange rate policy. Everything relies upon the basic fundamentals, which might be either local or foreign. How nations respond to them won’t be the same by any means. Floating the currency would, obviously, be esteemed to be preferable to alternate methodologies yet answers should still be provided as to, among others, whether the nation has an adequate resource reserve to mediate in the market consistently when it is required. On account of Malawi, this has turned out to be exceptionally troublesome since the accessibility of foreign exchange is exceedingly occasional. He summarized that Malawi additionally faces another issue in that public trust in the floating administration is taking rather long to stabilize with the consequence that the kwacha is constantly under speculative attacks.
El-Mefleh (2004) examined the correct exchange rate regime that serves primary macroeconomic objectives while expanding incorporated worldwide financial markets. The significant discoveries of the examination were; (1) It is implausible to expect that one exchange rate system is the best for all conditions and for all nations; (2) The decision of pegging the currency of a nation to the currency of another nation or to a basket of currencies relies upon the level of trade concentration with another nation (nation B) and the currency in which the nation’s (nation A) foreign debt is mostly denominated; and (3) The manage or free float regime is more optimal for a nation exceptionally incorporated into worldwide financial markets.
Barnett and Kwag (2005) incorporated the aggregation and index number theory into fiscal models of exchange rate determination in a way that is internally coherent with money market equilibrium. Divisia financial totals and user-cost are concepts utilized for money supply and opportunity-cost factors in the monetary models. They estimated a flexible price monetary model, a sticky price monetary model, and the Hooper and Morton (1982) model for the US dollar/UK pound exchange rate. They compared forecast results using mean square error, direction of change, and Diebold-Mariano statistics. They discovered that models with Divisia indexes are preferable to the random walk assumption in explaining the exchange rate fluctuations.
Leo (2006), investigated the welfare ramifications of a small nation’s exchange rate system, for the small nation itself, and additionally for a substantially larger nation, the currency of which the small nation potentially pegs its currency to. A two-nation dynamic stochastic general equilibrium model was created for the analysis. Floating Exchange rate systems were modeled as Taylor type interest rate rules, with various feedback coefficients on inflation and output. He demonstrated that contrasted with a fixed exchange rate system, the two nations would be worse off if the small nation adopts an interest rate rule with a large feedback coefficient on inflation. He additionally demonstrated that it is critical for the small nation not to react to output changes in its interest rate rule, as it will produce exorbitant fluctuations of inflation.
Batini and Levine (2006), in their investigation of Optimal Exchange Rate Stabilization in a Dollarized Economy with Inflation Targets demonstrated that First, dollarization complicates the conduct of monetary policy; however monetary policy can in any case be successfully carried out and with low expenses in terms of real activity under dollarization if the national bank commits to an inflation target. In this way, introducing an inflation target in somewhat dollarized economies can decrease the cost of price stabilization. Secondly, regardless of whether the level of dollarization depends endogenously on the reaction of monetary policy from the exchange rate, it is as yet attractive to ‘smooth’ the exchange rate, in addition to correcting deviations of expected inflation from target. In this sense, an ideal straightforward rule for a partially dollarized economy varies from that of a non-dollarized economy, in that in the previous economy there are significant benefits from including an exchange rate term in the rule, in opposition to regular discoveries on similar rules for non-dollarized economies. Abstracting from the numerous other unfavorable outcomes of dollarization, the discoveries demonstrate that nations with no credibility may profit from partial dollarization in that it hinders monetary policies from being conservative. Thirdly, exchange rate smoothing diminishes the odds of multiple equilibrium under dollarization.
Faia, (2005) studied the optimal choice of exchange rate systems in a two nation model with sticky prices and matching frictions in the labour market. Currency fluctuations by influencing the price of tradable goods have a tendency to intensify movements in and out of the labour market and the volatility of vacancy creation which in turn tends to increase overall macroeconomic instabilities. Consequently and in spite of the popularly known protecting properties of currency fluctuations, monetary authority (Faia, 2005) can accomplish domestic stabilization and increase welfare by having exchange rate as an independent target in the monetary policy rule. The examination additionally demonstrated that the model presented is compatible with well-known stylized facts of both the international transmission of shocks (such as positive co-movements of output and employment) and of the labour market (such as the Beveridge curve, the pro-cyclicality of labour market tightness and the high volatility of labour market variables).
Benigno and Benigno, (2004) proposed a theory of exchange rate determination under interest rate rules. They demonstrated that simple interest-rate feedback rules can determine a unique and stable equilibrium without any explicit reaction to the nominal exchange rate in their two-country optimizing model with sticky prices. They portrayed how the behavior of the exchange rate and the terms of trade depend vitally on the monetary policy chosen, though not necessarily on monetary shocks. They gave a simple account of exchange rate volatility in terms of monetary policy rules; they provide an explanation of the relation between nominal exchange rate volatility and macroeconomic variability in terms of the monetary regime adopted by monetary authorities.
Bruno and Pugh (2006) investigated the trade impacts of exchange rate variability on international economies for the past 30 years. The study applied meta-regression analysis (MRA). They discovered that, on average, exchange rate variability exerts a negative impact on global trade. In addition, MRA helped to explain the wide variation of results in this literature ranging from significantly positive to significantly negative effects and suggests new lines of enquiry. In particular, their results suggested a regime effect, whereby the trade effect of exchange rate variability is conditioned by the institutional environment.
Kandil (2004) examined the effects of exchange rate fluctuations on real output growth and price inflation in a sample of twenty-two (22) developing countries. The analysis introduced a theoretical rational expectation model that decomposes movements in the exchange rate into anticipated and unanticipated components. The model demonstrates the effects of demand and supply channels on the output and price responses to changes in the exchange rate. In general, exchange rate depreciation, both anticipated and unanticipated, decreases real output growth and increases price inflation. The evidence confirms concerns about the negative effects of currency depreciation on economic performance in developing countries.

2.4Summary of Literature Reviewed
From the vast pool of literatures reviewed, it was observed that;
First, most studies on exchange rates either focused on the impact of exchange rate volatility on trade or on growth with very few focused on the key variables and factors that determine exchange rates.Second, majority of the studies were carried out outside the shores of Nigeria. Thus confirming the need to carry out this research.
Third, a vast majority of the studies on the determinant of exchange rate did not consider the possibilities of periodical/terminal relationship (long run and short run) between exchange rate and their macroeconomic variables that determinant it, although, Shehu and Aliyu (2006) estimated the long run behavioral equilibrium exchange rate in Nigeria using quarterly data from 1984Q1 to 2004Q4. It is quite safe to say that this period is too short a time to access the long run behavior of exchange rate and its macroeconomic variables since most time series analysis require a minimum of 25 years observation for time series data.
CHAPTER THREE
METHODOLOGY
This chapter seeks to identify and explain the stages with this research work would follow, from the research design to be implemented when carrying out this study, to the types of data required as well as the sources of these data. This chapter would also seek to investigate the econometric and statistical tools that would be used to analyze the data obtained while justifying the reason for such tools.

3.1Research Design
The research design that would be applied to this study is the Quasi-experimental design. This particular design was chosen based on the fact that this study seeks to ascertain the key determinants of exchange rate and the relationships existing between such variables. Also, the variables intended to be analyzed would be sourced only from secondary (i.e. already existing data) and as such would not require the use of other research designs such as the survey design.

This research would implement a simple linear specification of the multivariate time series function applying the partial adjustment approach to estimate known parameters of a model. In this vein, the Autoregressive Distributed Lag Model (ADLM) would be employed because previous values of exchange rate tends to influence the present value and also there is the tendency that the existing relationship between the exchange rate in Nigeria and its macroeconomic determinants have a dynamic nature.
In order words, these variables that determine the exchange rate in Nigeria may influence other than the present period. However, The ADLM model employed would account for the joint estimation of relationships between exchange rate in Nigeria and its determinants. In addition, there might be a need to transform the model into an Autoregressive Distributed Lag Error Correction (ADL-ECM) Model should there be proof of the presence of co-integration among the determining variables. The ECM would help to reveal both the long run and the short run relationships existing between exchange rate in Nigeria and its determining variables.
3.2Model Specifications
According to Williamson, (1994) a nation’s ideal exchange rate’s determinants are basically its macroeconomic variables (i.e. the key macroeconomic variables) and also that the long-run value of the real exchange rate is determined by the permanent values of these variables, and as such the model specification to guide this study is formulated as follows;
RER = F(GDP, INF, MPR, OILP, TOP,)……………….(1)
Long-run expression of the model
lnRERt=?0+?1lnGDPt+?2INFt+?3lnMPRt+?4OILPt+?5TOPt+?t (1) The general expression of a short-run dynamics model is specify as follows
?lnRERt=?0+i=1m?1?lnRERt-1+i=1n?2?lnGDPt-1+i=1o?3?INFt-1+i=1p?4?MPRt-1+i=1q?5?lnOILPt-1+i=1q?6?lnTOPt-1+?7ECMt-1+?t (2)Where;
RER = Real Exchange Rate
GDP = Gross Domestic Product
INF = Inflation Rate
TOP =Trade Openness
OILP = Crude Oil Prices
MPR = Monetary Policy Rate
Where;
?0 = the constant term
?1, ?2, ?3 and ?4 = the parameters to be estimated
µ =error term
The effects of the explanatory variables on the dependent variable in the model specified above might not be automatic, i.e. it is hardly instantaneous. Gujarati, 2004 opined that sometimes the dependent variable responds to the explanatory variables over a period of time. Therefore, equation (2) when transformed into a dynamic model becomes:
3.2.1Model Justification
There are different models available to economic scholars during model specifications. However the choice of a particular model is often based on its reliability, effectiveness and adequacy. Thus among the numerous rival models, the Autoregressive Distributed Lag Error Correction Model (ADLMECM) is chosen for this research and this is due to the fact that, apart from the efficiency of the ADLM, it would also help to draw inferences about dynamic behavior of the variables since it has been established that it takes into account the lapses of time for the dependent variables to respond to the explanatory variables when modeling. Also, the ECM will be most appropriate and efficient model that can capture the long run behavioral pattern of variables under co-integration situation (See Enders, 1995). Lastly, the model is intended to solve the problem of the so-called “spurious” regression associated with non-stationary data.

3.3Data Required
The data needed for this study would be secondary in nature. Secondary data on the following variables would be required;
Oil price (1980 – 2016)
Monetary Policy Rate (1980-2016)
Inflation (INF) (1980- 2016)
Trade Openness (TOP) (1980-2016)
Exchange Rate (EXR) (1980-2016)
3.4Data Collection and Sources
All the data employed in this study are secondary in nature and as such would be obtained from Secondary Sources. These secondary sources would include the Central Bank of Nigeria(CBN) Statistical Bulletin and Annual Reports, journals and text books are also to be consulted.

3.5Method of Data Analysis
In this research study, the Ordinary Least Square method would be employed to estimate the relevance variables stated in the model. The OLS method has been successfully used in a large number of economic researches involving relationships. This method makes use of a sound statistical technique required for empirical problems; also the method has become standard enough to ensure that all estimates are presented as a reference point even at times when results from any other estimation techniques are used. In addition, the accuracy of this method depends on the fact that it is efficient, consistent and unbiased thus its error term has a minimum and equal variance. The conditional mean value is zero and normally distributed (Gujarat, 2004).
3.5.1Unit Root Test
The global assumption in creating, specifying and analyzing economic models is that all underlying variables are stationary; however this has been proven to be generally untrue. Before proceeding to estimate the model as specified in equation (3) above, there is a need to test for the time series properties of the data obtained. This is required as time series economic scholars in the likes of Granger and Newbold, (1974); Dickey and Fuller, (1981) Eagle and Granger, (1987),; Enders, (1995); Pindyck and Rubinfeld, (1998), etc., have overtime discovered that results obtained from most macroeconomic variables tend to be spurious in nature and to prevent this the time series properties of time series data must first be examined. Therefore, the time series properties of the data used in this research would be tested by employing the Augmented Dickey Fuller (ADF) test as well as the Engle-Granger co-integration procedure. The testing procedure for the ADF is specified as follows:
?RERt=?0 +?t +??RERt?1+?1?RERt?1 +…+?p?RERt?p+Ut………(4)
Where 0= constant,
t = the coefficient on a time trend
p = lag order of the autoregressive process
? = the difference operator.
The unit root test would then be carried out under the null hypothesis (= 0) against the alternative hypothesis (< 0). If the test statistic is greater (in absolute value) than the critical value set at 5% or 1% level of significance, then the null hypothesis (= 0) is rejected and no unit root is present.
From the above, the model specified in equation (3) becomes;
?RERt=?0+ ?1?RERt?i + ?2?GDPt?i + ?3?INFt?i + ?4?DOPYt?i + ?5?TOPt?i +µ………….(5)
Where,? = the difference operator.
3.5.2Co-integration test
The test for possible long-term relationship between the dependent variable and the explanatory variables are carried
?1ut?1 = Error Correction Representation
?1 = Coefficient measuring the degree of error corrected
Hence, the model in equation (6) is the Autoregressive Distributed Lag Error Correction Model (ADLECM) that needs to be estimated if there is evidence co-integration among the variables. On the other hand, if there is no co integration among the variables Autoregressive Distributed Lag Model specified in equation (5) would be estimated.

This research would employ three basic criteria in evaluating the results obtained from the model (s) specified above, these criteria include; economic (a priori expectations), statistical and econometric criteria. The economic criteria would inform if the signs of the variables coefficient conform to standard economic theories. While the Statistical criteria would focus on testing the significance of the variables using the T-test and also the F-statistic will be used to assess the joint significance of the overall regression in order to ascertain whether the model is well specified. Also, the econometric criterion would involve such tests as autocorrelation and multicollinearity. The autocorrelation test would help to check for the existence of serial correlation among the variables, while the multicollinearity test would help to check if the variables are collinear.
CHAPTER FOUR
RESULTS AND DISCUSSIONS
We presented data and discusses results in this section of the project. The section is climax with the discussion of findings.

YEAR RER RGDP
(N’ Billions) INF TOP OILP
($’ US) MPR
1981 0.6100 15,258.00 20.81282 16.47636 34 6.00
1982 0.6729 14,985.08 7.697747 12.24487 32.38 8.00
1983 0.7241 13,849.73 23.21233 10.06517 29.04 8.00
1984 0.7649 13,779.26 17.82053 9.547196 28.2 10.00
1985 0.8938 14,953.91 7.435345 9.769117 27.01 10.00
1986 2.0206 15,237.99 5.717151 7.362417 13.53 10.00
1987 4.0179 15,263.93 11.29032 19.3323 17.73 12.75
1988 4.5367 16,215.37 54.51122 16.43266 14.24 12.75
1989 7.3916 17,294.68 50.46669 21.19088 17.31 18.50
1990 8.0378 19,305.63 7.3644 31.14093 22.26 18.50
1991 9.9095 19,199.06 13.00697 35.40399 18.62 14.50
1992 17.2984 19,620.19 44.58884 38.33388 18.44 17.50
1993 22.0511 19,927.99 57.16525 30.53042 16.33 26.00
1994 21.8861 19,979.12 57.03171 20.92383 15.53 13.50
1995 21.8861 20,353.20 72.8355 58.91781 16.86 13.50
1996 21.8861 21,177.92 29.26829 49.53967 20.29 13.50
1997 21.8861 21,789.10 8.529874 50.76755 18.86 13.50
1998 21.8861 22,332.87 9.996378 34.63236 12.28 14.31
1999 92.6934 22,449.41 6.618373 38.65359 17.44 18.00
2000 102.1052 23,688.28 6.933292 42.49008 27.6 13.50
2001 111.9433 25,267.54 18.87365 39.66164 23.12 14.31
2002 120.9702 28,957.71 12.87658 28.73985 24.36 19.00
2003 129.3565 31,709.45 14.03178 38.8535 28.1 15.75
2004 133.5004 35,020.55 14.99803 38.04465 36.05 15.00
2005 132.1470 37,474.95 17.86349 45.11631 50.59 13.00
2006 128.6516 39,995.50 8.239527 36.40021 61 12.25
2007 125.8331 42,922.41 5.382224 37.04067 69.04 8.75
2008 118.5669 46,012.52 11.57798 5.157526 94.1 9.81
2009 148.8802 49,856.10 11.53767 4.56252 60.86 7.44
2010 150.2980 54,612.26 13.7202 3.705615 77.38 6.13
2011 153.8616 57,511.04 10.84079 3.21027 107.46 9.19
2012 157.4994 59,929.89 12.21701 2.822627 109.45 12.00
2013 157.3112 63,218.72 8.475827 2.523924 105.85 12.00
2014 158.5526 67,152.79 8.057383 2.270862 96.29 14.00
2015 193.2792 69,023.93 9.017684 2.149895 52.65 14.00
2016 253.4923 67,931.24 15.69685 2.001879 43.55 14.00
Source: CBN Bulletin, 2016.
Explain the trend
Table 4.2: Unit Root Results and Order of Integration
Variables ADF PP Decision
Level 1st_diff. Critical Values Level 1st_diff. Critical Values L(d)
InRERt-1.934 -5.022*** -2.9484 -2.0818 -5.022*** -2.9511 I(1)
lnGDPt0.0973 -3.229** -2.9511 1.2121 -3.045** -2.9484 I(1)
lnMPRt-3.088** – -2.9484 -3.034** – -2.9484 I(0)
lNFt-3.836** – -2.9484 -3.836** – -2.9484 I(0)
lnOILPt-1.1158 -5.659*** -2.9484 -1.1370 -5.656*** -2.9484 I(1)
TOPt-1.6204 -7.261*** -2.9484 -1.4882 -7.340*** -2.9484 I(1)
Note: The lag order (k) was selected using the Schwarz Bayesian information criterion. T-statistics or Critical values are reported. *, ** and *** denote rejection of the null hypothesis at Significant of 10%, 5% and 1% level, respectively for ADF and PP.

Table 4.2 shows the summary statistics of the unit root results and order of integration of the variables in the model. We observed that it was only inflation rate and monetary policy rate that was stationary and integrated at their level forms, that is, I(0). Whereas, real exchange rate, trade liberalization, economic growth and international crude oil price are not stationary but are integrated at order I(1). The summary statistics reveals that the variables in the model are not of the same order of integration, hence they are I(0) and I(1) series. The results necessitate the use of the bound cointegration technique for the test of any possible long run relationship among the variables in the model.

Table 4.3: Cointegration Test result
Critical Value Bounds
Significance Lower Limit Upper Limit
5% 3.23 4.35
1% 4.29 5.61
2.5% 3.69 4.89
Critical Value Number of Regressors
F-statistic  5.8576 3
The summary statistics on table 4.3 is the result of possible long-run relationship among the variables in the model. We used international crude oil prices and monetary policy rate as strictly exogenous variables in the model. The null hypothesis implies that there is no cointegration among the variables in the model. The F-statistic is reported to enable know the level of cointegration. The result shows that the value of the f-statistics is greater than the upper limit at 5%, implying a cointegrating relationship or long run relationship among the variables in the model.

Table4.4A: Model for Long-run determinants of Exchange Rate in Nigeria
Variable Coefficient Prob.

C -15.6893 0.1917
LOG(RGDP) 1.896295* 0.0956
LOG(INF) -1.276706* 0.0814
TOP 0.037815*** 0.0147
LOG(MPR) 1.911625** 0.0489
LOG(OILP) -0.395685 0.4473
R2 = 0.9958; Adjusted R2 = 0.9919 F-Stats =254.16***; DW-Stats = 2.3520
Table4.4B: Model for Short-run determinants of Exchange Rate in Nigeria
Variable Coefficient Prob.

DLOG(RGDP) -3.914297** 0.0146
DLOG(RGDP(-1)) 2.047722* 0.0605
D(INF) -0.218859*** 0.0043
D(INF) 0.382473*** 0.0004
D(INF) -0.108320 0.1328
D(TOP) 0.003653 0.3435
D(TOP(-1)) 0.001241 0.7016
D(TOP(-2)) -0.004489 0.2122
D(TOP(-3)) -0.009110** 0.0368
DLOG(MPR) 0.410557** 0.0294
DLOG(OILP) -0.084981 0.4507
ECM(-1) -0.614769** 0.0488
The model is estimated with the ARDL techniques. The lag lengths are selected automatically with Schwarz Information Criteria (SIC). Oil price and monetary rate are treated as strictly exogenous in the model; this is because oil price is determined by the Organization of petroleum Exporting Countries (OPEC) and MPR are determined by the Monetary Policy Committee (MPC) in at least six times a year. Hence their values are not affected by endogenous factors or not determined within the system.

The model has an R2 of 99.58 percent which is not 0.2 greater than the adjusted R2 of 99.19 percent, this implies that the model is an appropriate model for interpretation. Also, it was revealed that the overall model is statistically significant given the higher values of F-statistics that is significant at the 1% and that the residuals from the model is free from 1st order Markov scheme or autocorrelation.

Table4.5 Summary of Diagnostic Reports
Test/Hypothesis Tested(hypothesis are in null form) Test type Test-stats. Prob. Decision
Residual Normality
(Residuals are Normally Distributed) Jarque-Bera 0.2737 0.8735 Accept
Serial Correlation
(there is no serial correlation) Breusch-G LM Test
Q-Stat (lag length = 4) 1.2143
7.3456 0.4516
0.119 Accept
Accept
Heteroskedasticity
(there is Homoskedasticity) Harvey Test
Glejser Test 0.9639
1.0488 0.5262
0.4611 Accept
Accept
Functional form
(Model is Correctly Specified) Ramsey RESET Test 2.6858
0.1030 Accept

Table 4.5 shows the summary of diagnostic analysis of the second other test. The second order test of economic analysis states that the residual from the regression results should be normally distributed; the variance of the residual should be constant although the regression analysis; the residual should not be autocorrelated and that the model should be correctly specified for avoidance of specification bias. Results on table 4.5 show that the residual is normally distributed with a constant variance and are not serially correlated. Also the table reveals that the model is correctly specified since the null hypotheses were accepted in all.
4.3 Discussion of Findings
Real Exchange Rate and Economic Growth: economic growth as proxied as real GDP determined foreign exchange of the naira to a US dollar positively in the long-run. The result shows that this impact is elastic and insignificant at the 5%. The elastic impact implies that one percent increase in economic growth will lead to a more one percent depreciation of the naira to the US dollar. We reject the null hypothesis and concluded that economic growth is not a major determinant of the foreign exchange rate of the naira to a US dollar in the long-run. The short-run determinant of economic growth of the foreign exchange of the naira to a US dollar was negative and statistically significant at the 5%. This implies that a percentage increase in economic growth in the short-term will lead to more than one percent appreciation of the naira to the US dollar within the period of the review. Base on the above result we concluded that economic growth is a short-term determinant of foreign exchange rate in Nigeria.

Real Exchange rate and Inflation: inflation rate as proxied as domestic price stability determined foreign exchange of the naira to a US dollar negatively in the long-run. The result shows that this impact is elastic and insignificant at the 5%. The elastic impact implies that one percent increase in inflation will lead to a more one percent appreciation of the naira to the US dollar. We reject the null hypothesis and concluded that inflation is not a major determinant of the foreign exchange rate of the naira to a US dollar in the long-run. The short-run determinant of inflation of the foreign exchange of the naira to a US dollar was negative and statistically significant at the 5% in the current period but positive in the 1st lag period. This implies that a percentage increase in inflation in the very short-term will lead to more than one percent appreciation of the naira to the US dollar within the period of the review. The model revealed that previous values have inflation in Nigeria leads to the depreciation of the naira to a US dollar. Base on the above result we concluded that price stability is a short-term determinant of foreign exchange rate in Nigeria.

Foreign Exchange and Trade Liberalization: the result shows that trade liberalization, that is, openness of the economy determined foreign exchange of the naira to a US dollar positively in the long-run. The relationship is inelastic and statistically significant at the 5% implying that a percentage increased in the openness of the economy will lead to less than one percent depreciation of the naira to the US dollar in the long-run. The short-term coefficient shows that it will take at least three years for trade openness of the economy to affect foreign exchange rate in Nigeria, this is because it was only the third lag that was statistically significant at the 5%. Base on the above result we concluded trade liberalization determined of foreign exchange rate in Nigeria both in the short-term and the long-term. But the long-term impact is more pronounce than the short-term impact according to the model.

Foreign Exchange and Monetary Policy Rate: the result shows that MPR determined foreign exchange of the naira to a US dollar positively in the long-run. The relationship is elastic and statistically significant at the 5% implying that a percentage increased in the MPR will lead to more than one per cent depreciation of the naira to the US dollar in the long-run. The short-term coefficient shows that MPR affected foreign exchange rate in Nigeria positively and significantly. Base on the above result we concluded MPR determined foreign exchange rate in Nigeria both in the short-term and the long-term.
Foreign Exchange and Crude Oil Price: the result shows that OILP determined foreign exchange of the naira to a US dollar negatively in the long-run. The relationship is elastic and statistically insignificant at the 5% implying that a percentage increased in the OILP will lead to less than one percent appreciation of the naira to the US dollar in the long-run. The short-term coefficient shows that OILP affected foreign exchange rate in Nigeria negatively but insignificant. Base on the above result we concluded OILP is not a major determinant of foreign exchange rate in Nigeria both in the short-term and the long-term. Though the negative sign agrees to theoretical evidence and empirical evidence that pointed to the fact increased in oil price will lead to appreciation of oil exporting countries to the US dollar.

The short-term dynamics shows that it take up to a speed of 61.48 to correct the short-term disequilibrium as shown by the Error Correction Mechanism of the model.

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Work
We examine the determinants of foreign exchange rates in Nigeria within the periods of 1980 and 2016. The study particularly concentrated on the determinants of the exchange rate of the naira to the US dollar. The study examines selected macroeconomic variables and indicators that have affected the exchange rates in literatures as the major determinants of exchange rate in Nigeria. Five macroeconomic variables and indicators were selected as the determinants of exchange rate in Nigeria; they include economic growth as aggregate of the real sector performance, domestic price stabilities to account for domestic prices of good and service in the local economy, trade linearization to account for the degree of openness of the economy to trade, Monetary Policy Rate to account for monetary policy instrument and international crude oil price since oil account for over 80% of foreign exchange earning in Nigeria. The international crude oil price and Monetary Policy Rate were treated as strictly exogenous in the model because the both series are determined outside domestic economic activities. Oil price is determined by OPEC whereas Monetary Policy Rates is determined by the MPC. The model was estimated with the AutoRegressive Distributional Lag (ARDL) estimation technique. The technique was used because the variables in the model were of different order (I(0) and I(1)) of integration and cointegrated with the bound test method. The study is divided into five chapters.
Chapter one – Introduction is the introductory aspect of this research that seeks to give background knowledge of the past and present state of the subject matter.
Chapter two – Literature review attempts to investigate the findings of all other previous studies that have been carried out on the subject matter in order to see if there are certain existing gaps in the knowledge of the research topic.
Chapter three – Methodology attempts to suggest the types and sources of data that would be used in this research study and also how these data would be analyzed using varying econometric and statistical tools.
Chapter four – Discussion of results seeks to explain in the details the findings from the data obtained and analyzed while showing the existing economic relationships between the variables involved in this research.
Chapter five – Summary, Conclusion and Recommendations would give a summary of all findings of this research and would then attempt to make appropriate recommendations based on these findings.

5.1.2 Summary of Findings
Based on the results the following findings were summarized:
The variables in the model were of different order of integrations. There were I(0) and I(1) series and non were I(2). the proxies of exchange rate, economic growth, trade liberalization, and international crude oil price were I(1) while the proxies of domestic prices and monetary policy variable were I(0);
The variables in the model were highly cointegrated at all levels of significance. That is, there is a possible long-run relationship among the variables in the model; implying that any shocks in the short-run can be corrected in the long-run;
It was observed that economic growth is a short-run determinant of exchange rate in Nigeria. Although, increase in economic growth encourages domestic currency appreciation against the US dollar in the short-run;
Domestic prices is a short-run determinant of exchange rate in Nigeria, and it impact encourages domestic currency appreciations against the US dollar;
It was noticed that trade liberalization and monetary policy rate are the major determinants of the exchange rate. The both macroeconomic indicators determined the exchange rate of the naira to the US dollar in the long-run and in the short-term. The impact of the both series encourages the depreciation of the naira to the US dollar.

The model revealed that oil price is not a determinant of exchange rate in Nigeria.

The model was properly check and was also robust.

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APPENDIX
Null Hypothesis: LOG(RER) has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -1.934273  0.3134
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(LOG(RER)) Method: Least Squares Date: 07/30/18 Time: 13:05 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
LOG(RER(-1)) -0.049723 0.025707 -1.934273 0.0617
C 0.332869 0.096449 3.451245 0.0015
R-squared 0.101831     Mean dependent var 0.172275
Adjusted R-squared 0.074614     S.D. dependent var 0.301862
S.E. of regression 0.290382     Akaike info criterion 0.420205
Sum squared resid 2.782613     Schwarz criterion 0.509082
Log likelihood -5.353589     Hannan-Quinn criter. 0.450885
F-statistic 3.741410     Durbin-Watson stat 1.867424
Prob(F-statistic) 0.061692
Null Hypothesis: D(LOG(RER)) has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -5.022240  0.0002
Test critical values: 1% level -3.639407 5% level -2.951125 10% level -2.614300 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(LOG(RER),2) Method: Least Squares Date: 07/30/18 Time: 13:05 Sample (adjusted): 1983 2016 Included observations: 34 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
D(LOG(RER(-1))) -0.882281 0.175675 -5.022240 0.0000
C 0.154518 0.060731 2.544308 0.0160
R-squared 0.440783     Mean dependent var 0.005090
Adjusted R-squared 0.423308     S.D. dependent var 0.406516
S.E. of regression 0.308709     Akaike info criterion 0.544188
Sum squared resid 3.049643     Schwarz criterion 0.633974
Log likelihood -7.251201     Hannan-Quinn criter. 0.574808
F-statistic 25.22289     Durbin-Watson stat 1.993590
Prob(F-statistic) 0.000019
Null Hypothesis: INF has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -3.346479  0.0062
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(INF) Method: Least Squares Date: 07/30/18 Time: 13:06 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
INF(-1) -0.388239 0.137846 -2.816479 0.0081
C 7.507826 3.650097 2.056884 0.0477
R-squared 0.193796     Mean dependent var -0.146171
Adjusted R-squared 0.169365     S.D. dependent var 15.81789
S.E. of regression 14.41629     Akaike info criterion 8.230040
Sum squared resid 6858.374     Schwarz criterion 8.318917
Log likelihood -142.0257     Hannan-Quinn criter. 8.260721
F-statistic 7.932552     Durbin-Watson stat 1.600938
Prob(F-statistic) 0.008133
Null Hypothesis: INF has a unit root Exogenous: Constant Bandwidth: 5 (Newey-West automatic) using Bartlett kernel
Adj. t-Stat   Prob.*
Phillips-Perron test statistic -3.689943  0.0059
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Residual variance (no correction)  195.9535
HAC corrected variance (Bartlett kernel)  169.8345
Phillips-Perron Test Equation Dependent Variable: D(INF) Method: Least Squares Date: 07/30/18 Time: 13:08 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
INF(-1) -0.388239 0.137846 -2.816479 0.0081
C 7.507826 3.650097 2.056884 0.0477
R-squared 0.193796     Mean dependent var -0.146171
Adjusted R-squared 0.169365     S.D. dependent var 15.81789
S.E. of regression 14.41629     Akaike info criterion 8.230040
Sum squared resid 6858.374     Schwarz criterion 8.318917
Log likelihood -142.0257     Hannan-Quinn criter. 8.260721
F-statistic 7.932552     Durbin-Watson stat 1.600938
Prob(F-statistic) 0.008133
Null Hypothesis: MPR has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -3.087558  0.0368
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(MPR) Method: Least Squares Date: 07/30/18 Time: 13:09 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
MPR(-1) -0.400248 0.129632 -3.087558 0.0041
C 5.431108 1.765810 3.075704 0.0042
R-squared 0.224132     Mean dependent var 0.228571
Adjusted R-squared 0.200621     S.D. dependent var 3.494216
S.E. of regression 3.124109     Akaike info criterion 5.171620
Sum squared resid 322.0819     Schwarz criterion 5.260497
Log likelihood -88.50336     Hannan-Quinn criter. 5.202301
F-statistic 9.533017     Durbin-Watson stat 2.164607
Prob(F-statistic) 0.004072
Null Hypothesis: MPR has a unit root Exogenous: Constant Bandwidth: 3 (Newey-West automatic) using Bartlett kernel
Adj. t-Stat   Prob.*
Phillips-Perron test statistic -3.034323  0.0414
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Residual variance (no correction)  9.202339
HAC corrected variance (Bartlett kernel)  8.452594
Phillips-Perron Test Equation Dependent Variable: D(MPR) Method: Least Squares Date: 07/30/18 Time: 13:09 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
MPR(-1) -0.400248 0.129632 -3.087558 0.0041
C 5.431108 1.765810 3.075704 0.0042
R-squared 0.224132     Mean dependent var 0.228571
Adjusted R-squared 0.200621     S.D. dependent var 3.494216
S.E. of regression 3.124109     Akaike info criterion 5.171620
Sum squared resid 322.0819     Schwarz criterion 5.260497
Log likelihood -88.50336     Hannan-Quinn criter. 5.202301
F-statistic 9.533017     Durbin-Watson stat 2.164607
Prob(F-statistic) 0.004072 Null Hypothesis: TOP has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -1.620411  0.4618
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(TOP) Method: Least Squares Date: 07/30/18 Time: 13:11 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
TOP(-1) -0.166664 0.102853 -1.620411 0.1147
C 3.605497 3.016475 1.195268 0.2405
R-squared 0.073703     Mean dependent var -0.413557
Adjusted R-squared 0.045634     S.D. dependent var 10.39670
S.E. of regression 10.15671     Akaike info criterion 7.529591
Sum squared resid 3404.237     Schwarz criterion 7.618468
Log likelihood -129.7678     Hannan-Quinn criter. 7.560271
F-statistic 2.625731     Durbin-Watson stat 2.261235
Prob(F-statistic) 0.114662
Null Hypothesis: D(TOP) has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -7.260763  0.0000
Test critical values: 1% level -3.639407 5% level -2.951125 10% level -2.614300 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(TOP,2) Method: Least Squares Date: 07/30/18 Time: 13:12 Sample (adjusted): 1983 2016 Included observations: 34 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
D(TOP(-1)) -1.242524 0.171129 -7.260763 0.0000
C -0.403456 1.780614 -0.226582 0.8222
R-squared 0.622279     Mean dependent var 0.120102
Adjusted R-squared 0.610476     S.D. dependent var 16.62209
S.E. of regression 10.37416     Akaike info criterion 7.573536
Sum squared resid 3443.942     Schwarz criterion 7.663322
Log likelihood -126.7501     Hannan-Quinn criter. 7.604155
F-statistic 52.71868     Durbin-Watson stat 1.995721
Prob(F-statistic) 0.000000
Null Hypothesis: TOP has a unit root Exogenous: Constant Bandwidth: 3 (Newey-West automatic) using Bartlett kernel
Adj. t-Stat   Prob.*
Phillips-Perron test statistic -1.488239  0.5277
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Residual variance (no correction)  97.26392
HAC corrected variance (Bartlett kernel)  84.10008
Phillips-Perron Test Equation Dependent Variable: D(TOP) Method: Least Squares Date: 07/30/18 Time: 13:12 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
TOP(-1) -0.166664 0.102853 -1.620411 0.1147
C 3.605497 3.016475 1.195268 0.2405
R-squared 0.073703     Mean dependent var -0.413557
Adjusted R-squared 0.045634     S.D. dependent var 10.39670
S.E. of regression 10.15671     Akaike info criterion 7.529591
Sum squared resid 3404.237     Schwarz criterion 7.618468
Log likelihood -129.7678     Hannan-Quinn criter. 7.560271
F-statistic 2.625731     Durbin-Watson stat 2.261235
Prob(F-statistic) 0.114662
Null Hypothesis: D(TOP) has a unit root Exogenous: Constant Bandwidth: 6 (Newey-West automatic) using Bartlett kernel
Adj. t-Stat   Prob.*
Phillips-Perron test statistic -7.339915  0.0000
Test critical values: 1% level -3.639407 5% level -2.951125 10% level -2.614300 *MacKinnon (1996) one-sided p-values. Residual variance (no correction)  101.2924
HAC corrected variance (Bartlett kernel)  92.66489
Phillips-Perron Test Equation Dependent Variable: D(TOP,2) Method: Least Squares Date: 07/30/18 Time: 13:13 Sample (adjusted): 1983 2016 Included observations: 34 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
D(TOP(-1)) -1.242524 0.171129 -7.260763 0.0000
C -0.403456 1.780614 -0.226582 0.8222
R-squared 0.622279     Mean dependent var 0.120102
Adjusted R-squared 0.610476     S.D. dependent var 16.62209
S.E. of regression 10.37416     Akaike info criterion 7.573536
Sum squared resid 3443.942     Schwarz criterion 7.663322
Log likelihood -126.7501     Hannan-Quinn criter. 7.604155
F-statistic 52.71868     Durbin-Watson stat 1.995721
Prob(F-statistic) 0.000000
Null Hypothesis: LOG(RGDP) has a unit root Exogenous: Constant Lag Length: 1 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic  0.097324  0.9609
Test critical values: 1% level -3.639407 5% level -2.951125 10% level -2.614300 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(LOG(RGDP)) Method: Least Squares Date: 07/30/18 Time: 13:21 Sample (adjusted): 1983 2016 Included observations: 34 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
LOG(RGDP(-1)) 0.001376 0.014143 0.097324 0.9231
D(LOG(RGDP(-1))) 0.502945 0.172824 2.910157 0.0066
C 0.008073 0.141235 0.057157 0.9548
R-squared 0.262058     Mean dependent var 0.044454
Adjusted R-squared 0.214449     S.D. dependent var 0.042327
S.E. of regression 0.037515     Akaike info criterion -3.644043
Sum squared resid 0.043629     Schwarz criterion -3.509364
Log likelihood 64.94874     Hannan-Quinn criter. -3.598114
F-statistic 5.504356     Durbin-Watson stat 1.887415
Prob(F-statistic) 0.009002
Null Hypothesis: D(LOG(RGDP)) has a unit root Exogenous: Constant Lag Length: 0 (Automatic – based on SIC, maxlag=9)
t-Statistic   Prob.*
Augmented Dickey-Fuller test statistic -3.229346  0.0268
Test critical values: 1% level -3.639407 5% level -2.951125 10% level -2.614300 *MacKinnon (1996) one-sided p-values. Augmented Dickey-Fuller Test Equation Dependent Variable: D(LOG(RGDP),2) Method: Least Squares Date: 07/30/18 Time: 13:22 Sample (adjusted): 1983 2016 Included observations: 34 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
D(LOG(RGDP(-1))) -0.489413 0.151552 -3.229346 0.0029
C 0.021788 0.009240 2.358020 0.0246
R-squared 0.245793     Mean dependent var 6.15E-05
Adjusted R-squared 0.222224     S.D. dependent var 0.041875
S.E. of regression 0.036930     Akaike info criterion -3.702561
Sum squared resid 0.043642     Schwarz criterion -3.612775
Log likelihood 64.94354     Hannan-Quinn criter. -3.671942
F-statistic 10.42868     Durbin-Watson stat 1.898813
Prob(F-statistic) 0.002867
Null Hypothesis: LOG(RGDP) has a unit root Exogenous: Constant Bandwidth: 2 (Newey-West automatic) using Bartlett kernel
Adj. t-Stat   Prob.*
Phillips-Perron test statistic  1.212148  0.9976
Test critical values: 1% level -3.632900 5% level -2.948404 10% level -2.612874 *MacKinnon (1996) one-sided p-values. Residual variance (no correction)  0.001656
HAC corrected variance (Bartlett kernel)  0.002657
Phillips-Perron Test Equation Dependent Variable: D(LOG(RGDP)) Method: Least Squares Date: 07/30/18 Time: 13:22 Sample (adjusted): 1982 2016 Included observations: 35 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
LOG(RGDP(-1)) 0.023187 0.013825 1.677166 0.1030
C -0.193708 0.141116 -1.372687 0.1791
R-squared 0.078544     Mean dependent var 0.042668
Adjusted R-squared 0.050621     S.D. dependent var 0.043018
S.E. of regression 0.041915     Akaike info criterion -3.450913
Sum squared resid 0.057976     Schwarz criterion -3.362036
Log likelihood 62.39098     Hannan-Quinn criter. -3.420233
F-statistic 2.812884     Durbin-Watson stat 1.022439
Prob(F-statistic) 0.102959 Null Hypothesis: D(LOG(RGDP)) has a unit root Exogenous: Constant Bandwidth: 3 (Newey-West automatic) using Bartlett kernel
Adj. t-Stat   Prob.*
Phillips-Perron test statistic -3.044705  0.0407
Test critical values: 1% level -3.639407 5% level -2.951125 10% level -2.614300 *MacKinnon (1996) one-sided p-values. Residual variance (no correction)  0.001284
HAC corrected variance (Bartlett kernel)  0.001017
Phillips-Perron Test Equation Dependent Variable: D(LOG(RGDP),2) Method: Least Squares Date: 07/30/18 Time: 13:22 Sample (adjusted): 1983 2016 Included observations: 34 after adjustments Variable Coefficient Std. Error t-Statistic Prob.  
D(LOG(RGDP(-1))) -0.489413 0.151552 -3.229346 0.0029
C 0.021788 0.009240 2.358020 0.0246
R-squared 0.245793     Mean dependent var 6.15E-05
Adjusted R-squared 0.222224     S.D. dependent var 0.041875
S.E. of regression 0.036930     Akaike info criterion -3.702561
Sum squared resid 0.043642     Schwarz criterion -3.612775
Log likelihood 64.94354     Hannan-Quinn criter. -3.671942
F-statistic 10.42868     Durbin-Watson stat 1.898813
Prob(F-statistic) 0.002867
ARDL Cointegrating And Long Run Form Dependent Variable: LOG(RER) Selected Model: ARDL(1, 2, 3, 4) Date: 07/30/18 Time: 13:23 Sample: 1981 2016 Included observations: 32 Cointegrating Form
Variable Coefficient Std. Error t-Statistic Prob.   
DLOG(RGDP) 0.021788 1.429835 0.015238 0.9880
DLOG(RGDP(-1)) 2.047722 1.014018 2.019414 0.0605
D(INF) -0.218859 0.065922 -3.319971 0.0043
D(INF) 0.382473 0.085649 4.465569 0.0004
D(INF) -0.108320 0.068398 -1.583682 0.1328
D(TOP) 0.003653 0.003742 0.976214 0.3435
D(TOP(-1)) 0.001241 0.003180 0.390119 0.7016
D(TOP(-2)) -0.004489 0.003455 -1.299331 0.2122
D(TOP(-3)) -0.009110 0.004000 -2.277369 0.0368
DLOG(MPR) 0.410557 0.171625 2.392181 0.0294
DLOG(OILP) -0.084981 0.109917 -0.773137 0.4507
CointEq(-1) -1.489413 0.100691 -14.791950 0.0000
    Cointeq = LOG(RER) – (-1.3548*LOG(RGDP) -0.1841*LOG(INF) + 0.0055
        *TOP + 0.2757*LOG(MPR) -0.0571*LOG(OILP) -2.2623 )
Long Run Coefficients
Variable Coefficient Std. Error t-Statistic Prob.   
LOG(RGDP) -1.354803 0.356699 -3.798171 0.0016
LOG(INF) -0.184097 0.057124 -3.222740 0.0053
TOP 0.005453 0.003735 1.459849 0.1637
LOG(MPR) 0.275650 0.108233 2.546830 0.0215
LOG(OILP) -0.057057 0.073117 -0.780345 0.4466
C -2.262350 2.500484 -0.904765 0.3790

Dependent Variable: LOG(RER) Method: ARDL Date: 07/02/18 Time: 09:01 Sample (adjusted): 1985 2016 Included observations: 32 after adjustments Maximum dependent lags: 4 (Automatic selection)
Model selection method: Schwarz criterion (SIC)
Dynamic regressors (4 lags, automatic): LOG(RGDP) LOG(INF) TOP             
Fixed regressors: LOG(MPR) LOG(OILP) C Number of models evalulated: 500 Selected Model: ARDL(1, 2, 3, 4) Variable Coefficient Std. Error t-Statistic Prob.*  
LOG(RER(-1)) 0.785231 0.100691 7.798443 0.0000
LOG(RGDP) -3.914297 1.429835 -2.737586 0.0146
LOG(RGDP(-1)) 6.369284 1.958791 3.251641 0.0050
LOG(RGDP(-2)) -2.047722 1.014018 -2.019414 0.0605
LOG(INF) -0.218859 0.065922 -3.319971 0.0043
LOG(INF(-1)) 0.218816 0.088052 2.485061 0.0244
LOG(INF(-2)) -0.382473 0.085649 -4.465569 0.0004
LOG(INF(-3)) 0.108320 0.068398 1.583682 0.1328
TOP 0.003653 0.003742 0.976214 0.3435
TOP(-1) -0.007890 0.003544 -2.226199 0.0407
TOP(-2) -0.001241 0.003180 -0.390119 0.7016
TOP(-3) 0.004489 0.003455 1.299331 0.2122
TOP(-4) 0.009110 0.004000 2.277369 0.0368
LOG(MPR) 0.410557 0.171625 2.392181 0.0294
LOG(OILP) -0.084981 0.109917 -0.773137 0.4507
C -3.369572 3.941742 -0.854843 0.4053
R-squared 0.995821     Mean dependent var 3.751791
Adjusted R-squared 0.991903     S.D. dependent var 1.527431
S.E. of regression 0.137446     Akaike info criterion -0.824316
Sum squared resid 0.302263     Schwarz criterion -0.091448
Log likelihood 29.18906     Hannan-Quinn criter. -0.581391
F-statistic 254.1613     Durbin-Watson stat 3.237737
Prob(F-statistic) 0.000000 *Note: p-values and any subsequent tests do not account for model
        selection.
ARDL Bounds Test Date: 07/02/18 Time: 08:58 Sample: 1985 2016 Included observations: 32 Null Hypothesis: No long-run relationships exist
Test Statistic Value k F-statistic  5.857598 3 Critical Value Bounds Significance I0 Bound I1 Bound 10% 2.72 3.77 5% 3.23 4.35 2.5% 3.69 4.89 1% 4.29 5.61 Test Equation: Dependent Variable: DLOG(RER) Method: Least Squares Date: 07/02/18 Time: 08:58 Sample: 1985 2016 Included observations: 32 Variable Coefficient Std. Error t-Statistic Prob.  
DLOG(RGDP) -1.010143 1.581447 -0.638746 0.5310
DLOG(RGDP(-1)) -0.429258 1.235034 -0.347568 0.7322
D(INF) 0.003773 0.002718 1.388434 0.1819
D(TOP) -9.39E-05 0.004347 -0.021604 0.9830
D(TOP(-1)) -0.021101 0.005103 -4.135112 0.0006
D(TOP(-2)) -0.020405 0.005514 -3.700688 0.0016
D(TOP(-3)) -0.019007 0.004722 -4.025585 0.0008
LOG(MPR) 0.816539 0.201302 4.056292 0.0007
LOG(OILP) -0.139196 0.154009 -0.903817 0.3780
C -10.77009 4.548208 -2.367985 0.0293
LOG(RGDP(-1)) 1.016697 0.468058 2.172161 0.0434
INF -0.005754 0.002684 -2.144179 0.0459
TOP(-1) 0.013916 0.006457 2.155228 0.0449
LOG(RER(-1)) -0.356693 0.115991 -3.075189 0.0065
R-squared 0.773896     Mean dependent var 0.181354
Adjusted R-squared 0.610598     S.D. dependent var 0.314508
S.E. of regression 0.196260     Akaike info criterion -0.119122
Sum squared resid 0.693321     Schwarz criterion 0.522138
Log likelihood 15.90594     Hannan-Quinn criter. 0.093438
F-statistic 4.739172     Durbin-Watson stat 2.315979
Prob(F-statistic) 0.001428
Ramsey RESET Test Equation: UNTITLED Specification: LOG(RER) LOG(RER(-1)) LOG(RGDP) LOG(RGDP(-1))
        LOG(RGDP(-2)) LOG(INF) LOG(INF(-1)) LOG(INF(-2)) LOG(INF(-3))
        TOP TOP(-1) TOP(-2) TOP(-3) TOP(-4) LOG(MPR) LOG(OILP) C 
Omitted Variables: Powers of fitted values from 2 to 3
Value df Probability F-statistic  2.685760 (2, 14)  0.1030 F-test summary: Sum of Sq. df Mean Squares Test SSR  0.083814  2  0.041907 Restricted SSR  0.302263  16  0.018891 Unrestricted SSR  0.218449  14  0.015603 Unrestricted Test Equation: Dependent Variable: LOG(RER) Method: ARDL Date: 07/02/18 Time: 09:00 Sample: 1985 2016 Included observations: 32 Maximum dependent lags: 4 (Automatic selection)
Model selection method: Schwarz criterion (SIC)
Dynamic regressors (4 lags, automatic):  Fixed regressors: C Variable Coefficient Std. Error t-Statistic Prob.*  
LOG(RER(-1)) 0.684591 0.192261 3.560741 0.0031
LOG(RGDP) -3.139715 1.416949 -2.215828 0.0438
LOG(RGDP(-1)) 6.103057 1.886956 3.234341 0.0060
LOG(RGDP(-2)) -2.140048 0.929216 -2.303069 0.0371
LOG(INF) -0.247458 0.075757 -3.266470 0.0056
LOG(INF(-1)) 0.187543 0.083017 2.259103 0.0404
LOG(INF(-2)) -0.398179 0.095616 -4.164367 0.0010
LOG(INF(-3)) 0.032015 0.070386 0.454853 0.6562
TOP 0.005571 0.003639 1.530764 0.1481
TOP(-1) -0.006436 0.003628 -1.773623 0.0979
TOP(-2) -0.002917 0.002986 -0.976756 0.3453
TOP(-3) 0.001233 0.003877 0.317986 0.7552
TOP(-4) 0.010472 0.006216 1.684807 0.1142
LOG(MPR) 0.318188 0.252934 1.257992 0.2290
LOG(OILP) -0.212119 0.114188 -1.857620 0.0844
C -6.516848 4.812779 -1.354072 0.1972
FITTED^2 0.106986 0.126864 0.843316 0.4132
FITTED^3 -0.019283 0.015901 -1.212731 0.2453
R-squared 0.996980     Mean dependent var 3.751791
Adjusted R-squared 0.993312     S.D. dependent var 1.527431
S.E. of regression 0.124914     Akaike info criterion -1.024063
Sum squared resid 0.218449     Schwarz criterion -0.199586
Log likelihood 34.38501     Hannan-Quinn criter. -0.750772
F-statistic 271.8320     Durbin-Watson stat 3.049869
Prob(F-statistic) 0.000000 *Note: p-values and any subsequent tests do not account for model
        selection.
Breusch-Godfrey Serial Correlation LM Test: F-statistic 9.343464     Prob. F(2,14) 0.0026
Obs*R-squared 18.29422     Prob. Chi-Square(2) 0.0001
Test Equation: Dependent Variable: RESID Method: ARDL Date: 07/02/18 Time: 09:01 Sample: 1985 2016 Included observations: 32 Presample missing value lagged residuals set to zero.

Variable Coefficient Std. Error t-Statistic Prob.  
LOG(RER(-1)) 0.061312 0.072134 0.849974 0.4096
LOG(RGDP) 0.273909 1.053909 0.259898 0.7987
LOG(RGDP(-1)) -0.789095 1.443271 -0.546741 0.5932
LOG(RGDP(-2)) 0.209353 0.722460 0.289778 0.7762
LOG(INF) -0.002922 0.049460 -0.059077 0.9537
LOG(INF(-1)) -0.029660 0.068764 -0.431325 0.6728
LOG(INF(-2)) 0.026250 0.066334 0.395722 0.6983
LOG(INF(-3)) 0.041700 0.048912 0.852545 0.4083
TOP -0.001618 0.002795 -0.579013 0.5718
TOP(-1) -0.002431 0.002593 -0.937843 0.3642
TOP(-2) -0.000338 0.002227 -0.151715 0.8816
TOP(-3) -0.000183 0.002480 -0.073747 0.9423
TOP(-4) 0.000469 0.002961 0.158259 0.8765
LOG(MPR) 0.180345 0.137021 1.316184 0.2093
LOG(OILP) 0.101646 0.081018 1.254615 0.2302
C 2.101872 2.848003 0.738016 0.4727
RESID(-1) -1.068384 0.281217 -3.799146 0.0020
RESID(-2) -0.362084 0.290661 -1.245725 0.2333
R-squared 0.571694     Mean dependent var 1.23E-14
Adjusted R-squared 0.051609     S.D. dependent var 0.098744
S.E. of regression 0.096162     Akaike info criterion -1.547234
Sum squared resid 0.129461     Schwarz criterion -0.722758
Log likelihood 42.75575     Hannan-Quinn criter. -1.273944
F-statistic 1.099231     Durbin-Watson stat 1.815175
Prob(F-statistic) 0.434286
Heteroskedasticity Test: Breusch-Pagan-Godfrey
F-statistic 1.191710     Prob. F(15,16) 0.3650
Obs*R-squared 16.88590     Prob. Chi-Square(15) 0.3257
Scaled explained SS 3.680493     Prob. Chi-Square(15) 0.9986
Test Equation: Dependent Variable: RESID^2 Method: Least Squares Date: 07/02/18 Time: 08:59 Sample: 1985 2016 Included observations: 32 Variable Coefficient Std. Error t-Statistic Prob.  
C -0.308938 0.347663 -0.888614 0.3874
LOG(RER(-1)) -0.009525 0.008881 -1.072470 0.2994
LOG(RGDP) -0.081684 0.126112 -0.647715 0.5264
LOG(RGDP(-1)) 0.098348 0.172766 0.569255 0.5771
LOG(RGDP(-2)) 0.009699 0.089437 0.108441 0.9150
LOG(INF) -0.001347 0.005814 -0.231739 0.8197
LOG(INF(-1)) 0.006531 0.007766 0.840962 0.4128
LOG(INF(-2)) -0.004427 0.007554 -0.586058 0.5660
LOG(INF(-3)) 0.002433 0.006033 0.403309 0.6921
TOP -0.000138 0.000330 -0.417456 0.6819
TOP(-1) -0.000326 0.000313 -1.043040 0.3124
TOP(-2) -6.58E-05 0.000280 -0.234611 0.8175
TOP(-3) 0.000454 0.000305 1.490862 0.1554
TOP(-4) 0.000595 0.000353 1.686295 0.1111
LOG(MPR) 0.018181 0.015137 1.201060 0.2472
LOG(OILP) 0.005035 0.009695 0.519396 0.6106
R-squared 0.527684     Mean dependent var 0.009446
Adjusted R-squared 0.084888     S.D. dependent var 0.012673
S.E. of regression 0.012123     Akaike info criterion -5.680608
Sum squared resid 0.002351     Schwarz criterion -4.947740
Log likelihood 106.8897     Hannan-Quinn criter. -5.437683
F-statistic 1.191710     Durbin-Watson stat 1.354989
Prob(F-statistic) 0.364982

CHAPTER ONE
INTRODUCTION
1.1 Background of the Study. Electricity demand is increasing rapidly. Simplest optimization method is one of the better alternatives to fulfill this ever growing energy demand. Moreover, it reduces system energy loss, alleviates transmission congestion, improves voltage profile, enhances reliability and provides lower operating cost. Because of its small size compared with conventional generation units, optimization is more flexible to install in terms of investment and time. As a result, integration of transmitted energy resources (TER) with transmission network offers a promising solution; therefore, an intensive level of research is needed to understand the impacts of transmitted resources on transmission system. Before operating transmitted and dispersed generation in power system different technical, environmental, commercial and regulatory issues should be analyzed properly. Most significant technical barriers are protection, power quality, stability and outstanding operation. However, there are some other issues which should be analyzed before to maximize these technical benefits. From previous studies, it has been seen that different penetration level and various placement of DER will impact the transmission system differently (Rizy, 2010) moreover, improper optimization fuzzy size and inappropriate allocation of DER may lead to higher power loss than when there is no dispersed generation in the system at all (Mithulanthan). Therefore, detail and exact analysis method is required to determine the proper location and size of optimization more accurately and precisely. In transmission system, optimization should be allocated in an optimal way such that it will reduce system losses and hence improve voltage profile (Acharya, 2006). In our study, we will try to focus on optimum location and size of optimization to decrease total system power loss. In most of the previous researches of optimization, sizing and location of optimization has been connected with grid directly. Significant risks are associated in connecting such equipment directly to utility transmission system. The insulation level of the machines may not synchronize with the system. Therefore, direct connection of optimization fuzzy is often discouraged (Arritt, 2008).

1.2 Statement of the Problem.
The problem of inconsistent power supply has become the order of the day in our country Nigeria. The causes of this has arisen as a result of power losses in transmission network, distortion, harmonic, short circuit, burning of feeder pillar to mention a few. This project focuses its attention in power losses in transmission network as a result of distortion and harmonic. This unfortunate situation of inconsistent power supply in our country has demoralized the moral of investors to desist from so doing thereby enhancing the rate of unemployment in our country Nigeria. This can be overcome by using optimization
1.3 Aim and Objectives of the Study.
The aim of the research is to have a stable power supply
1. To determine power losses in transmission network using Newton Raphson method and to compare it with simplex optimization method.
2. To determine the phase values of the voltage at load buses
3. To determine the slack bus real and reactive powers
4. To determine power losses in transmission network using simplex optimization method.
5. To determine active power loss reduction in the buses.
6. To design a model that reduces power losses in transmission network using simplex optimization method.
1.4 Relevance of the research or Works.
This dissertation provides solutions coupled with improvement on the way losses are reduced in the transmission networks. This solution will enable companies to design new power system network and expansion of the existing network.
1.5 Significant of the work.
i. Enhance reliable power supply.
ii. Encourage investor to establish industries.
iii. Increase employment opportunities.
iv. Enable the field Engineers to easily detect fault in the lines.

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1.6 Limitation and Scope of Work.
The work focused attention in loss reduction in a transmission network to enhance regular power supply in local area power network and urban area power network coupled with wide area network.
1.7 Layout or Organization.
Summarily, in this research, dissertation of loss reduction in a transmission network, the topic was introduced in chapter one, review of previous related work in chapter two, the method adopted, the design and implementation on how the research was achieved are treated in chapter three. Data presentation and analysis in chapter four, while in chapter five conclusions were done and recommendations made for future work.

CHAPTER ONE
INTRODUCTION
1,1 INTRODUCTION
This chapter presents the background, statement of the problem, purpose, objectives and research questions for the study, significance of the study and the conceptual framework.
The purpose of this research project is to explore employees motivation and public service delivery at Somali federal government so to understand the best way to enhance the skills and improve the the quality service delivery to the community . Therefore, this study will fill this Knowledge gap and provide valuable information on Motivation on public civil servant impact.
1.2 BACKGROUND OF STUDY
Historically the concept of motivation can be traced from ancient Greeks, Socrates, Plato and Aristotle ages. Plato believed in a hierarchy organized such as dietary component, the emotional and the rational. Aristotle, for more than twenty years continued to affirm the hierarchy spiritual. However he used different reforms which were different from his original belief.
Motivation has its own basic role on the worker’s job effectiveness. A lot of theories and approaches have been discovered in order to clarify the nature of employees’ motivation in both private and public sectors. However, almost of the studies carried out were based on private sector alone. (Re’em, july 2011).
In developed countries, advocated that Motivation public service Employee is an effective way to improve employee satisfaction on service delivery and to overcome incentive problems in the public sector. According to (Georgellis, 2011) expiations, employees who are intrinsically motivated tend to exhibit high levels of organizational commitment, increasing productivity and improving organizational performance. In a similar (Georgellis, 2011) argues that public sector employees, presumably with higher levels of intrinsic motivation on average than non motivated employees, are likely to report high satisfaction scores with intrinsic job characteristics and a high level of commitment to the public sector institutions they work for.
Initially, motivation was considered an entity that compelled one to action. However by the early twentieth century motivation became increasingly conceptualized in terms of instinct explanation. The concept of Public Service Motivation was formalized in the late 1970s and early 1980s by authors like Buchanan, Mosher, Perry, Porter, and Rainey. Since then, it has gained international prominence.PSM varies between employees and it is difficult to generalize the motivations of everyone who works in the public sector(Georgellis, 2011).In developed countries, advocated that Motivation public service Employee is an effective way to improve employee satisfaction on service delivery and to overcome incentive problems in the public sector.
In Malaysia, the government has provided incentives such as salary increment and good remuneration system to ensure public servants are highly competent and motivated to do their jobs on service delivery. It was introduced due to the complaints associated with lateness, rudeness and lack of job committed in service delivery, made by the public. This might happen due to the lack of work motivation and resulted in their low performance. In order to retain good employees in the organizations, it is important for organizations to design and offer good remuneration and compensation system as one way to motivate the employees to work because failure to motivate employees will affect not only individual but also the organizations as a whole. (Clark, 2003).
In the most African countries differ what motivates employee organization to organization like Rwanda most public servant motivates high job security and job opportunity. Many studies revealed that most African public workers are less motivated because of less salary and care compared to private workers in addition this cause that public workers are more corrupted according to private employee (Iguisi).
In Nigeria the civil service was oversized and poorly remunerated, resulting in poor service delivery. Rapid public sector recruitment under military administrations had resulted in an oversized and under skilled work force in which employees often did not have the appropriate technical skills needed for their assignments (Okonjo-Iweala and Osafo-Kwaoko, 2007).
Robbins (2001) defined motivation As, the willingness to exert high levels of efforts to Reach organizational goals, conditioned by effort’s ability To satisfy some individual needs. Susan (1995) defined motivation as an energizing force that stimulates arousal, direction, and persistence of behavior. Motivation is both a force within an individual and a process used to get others to expend effort. Andrew (2000). Says that motivation is concern with the “why” of Behavior; the reason people do things.
The prolonged civil war and insecurity following the collapse of the Somali state in 1991 have caused immense human suffering and material losses across the south-central regions, leaving physical and emotional scars on all aspects of Somali society. In addition to death and destruction, the violent conflict has resulted in widespread displacement of people both within and beyond the country’s borders. In the report of International crises group (ICG, 2011) reported that the workers of Somali government are more corrupted in International donation. And also experienced a fall in motivation of public servants and service deliver, but at the recent years since 2006 up to now there is a temptation towards motivation of public servants and still not enough. Therefore this research paper will investigate the following: ‘Does public service motivation play a role in the Somali’s federal employee by influencing crucial HRM mediators such as salary payment, and promotions on service delivery’? and Does Public Service Motivation Predict Higher Public Service delivery level?.Thus the researcher want to know how motivation impact the employee morale and performance on their providing services delivery to the community and how the ministries staff get motivation such salary payment, bonus and promotion and what level of service delivery to society and then find the relationship between employee motivation and public service delivery in some selected government ministriess in Mogadishu, Somalia.

1.3 THE STATEMENT OF THE PROBLEM
Globally Motivating and improving public service delivery is one of the biggest challenges in worldwide .It has been over two decades since research on the “public service motivation” concept began. In the existing body of literature, public service motivation has been linked to various HRM outcomes (Vandenabeele 2008), such as performance, employer attractiveness, and ethical behavior.
In Nigeria the civil service was oversized and poorly remunerated, resulting in poor service delivery. Rapid public sector recruitment under military administrations had resulted in an oversized and under skilled work force in which employees often did not have the appropriate technical skills needed for their assignments (Okonjo-Iweala and Osafo-Kwaoko, 2007).
In Somalia since the collapse of the central in 1991, also experienced a fall in motivation of public servants and service deliver, but at the recent years since 2006 up to now there is a temptation towards motivation of public servants and still not enough. Therefore this research paper will investigate the following:
‘Does public service motivation play a role in the Somali’s federal employee by influencing crucial HRM mediators such as Salary payment, and promotions on service delivery’? and Does Public Service Motivation Predict Higher Public Service delivery level?
In the researchers, there is absence of evidence examining the effect of motivation and public service delivery in some selected federal institutions. there is a need to conduct such studies. Therefore the researcher was investigated the relationship between employee motivation and the public service delivery in some selected ministries of Somali federal government, Mogadis
1.4 PURPOSE OF THE STUDY
The purpose of this study was to investigate the relationship between the employee motivation and public service delivery of Somali federal government ministries in Mogadishu.

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1.5 OBJECTIVES OF THE STUDY
1.5.1 Major objective
The main objective of this study was to explore the Employees motivation and the
Public service delivery in Ministries of Somali federal government Mogadishu.
1.5.2 The specific objectives of this study are
1. To determine the impact of employee motivation in some selected ministries of Somali federal government.
2. To examine the level of public service delivery in some selected Ministries of Somali federal government.
3. To investigate the significant relationship between the employee motivation and public service delivery in some selected Ministries of Somali federal government.
1.6 RESEARCH QUSTIONS
1. What are the impacts of employee motivation in some selected ministries of Somali federal government?
2. How the level of public service delivery in some selected Ministries of Somali federal government?
3. What are the significant relationship between the employee’s motivation and public service delivery in some selected Ministries of Somali federal government?
1.7 SCOPE OF THE STUDY-
Content scope: This study aimed to investigate the impact of employee motivation and public service delivery in some selected ministries of Somalia federal government and it’s mainly focused on the effect of payments, promotion and bonus; this study is cross sectional study which utilizes questionnaire to collected data.
Geographical scope: The study was carried out at sex Ministries of Somalia federal government in Mogadishu.
Time scope: This study will cover the period 2016-2017
1.8 DIFITIONS OF TERMS OR VARIABLES
? Motivation: Motivation is an ongoing process” (Goudas, Biddle, & Fox, 2011). “Motivation is a desire for change” (Hong, Cheng, Hwang, Lee, & Chang, 2009). “Motivation is a desire to do something” (Kim, & Lee, 2008)
? Public service motivation: as the personal susceptible to answer to motives demonstrated basically in civil service agencies.
? Service delivery here implies tangible and intangible goods and services provided by the government in order to improve the wellbeing of the society. Then the researchers measure the variable quality of service and satisfaction of the beneficiaries.
1.9 SIGNIFICANT OF STUDY
It is anticipated that the findings of the study helps in bringing out clearly how the Employee Motivation and to work smoothly? and showed how they provided service to the community’s.
The problems identified and recommendation suggested were great value to improve and develop the civil servant that working on public service delivery and reduced the demotivational factors
1.10 CONCEPTUAL FRAMWORK
Dependent Variable

After the careful study of literature Review, the following conceptual model is formulated to illustrate the relationship between employee motivation and public service delivery.
Independent Variable
Employee Motivation

Salary

Promotion

Bonus
Public Service delivery

Primary Sourse:2018

THE STATEMENT OF THE PROBLEM
Globally Motivating and improving public service delivery is one of the biggest challenges in worldwide .It has been over two decades since research on the “public service motivation” concept began. In the existing body of literature, public service motivation has been linked to various HRM outcomes (Vandenabeele 2008), such as performance, employer attractiveness, and ethical behavior.
In Nigeria the civil service was oversized and poorly remunerated, resulting in poor service delivery. Rapid public sector recruitment under military administrations had resulted in an oversized and under skilled work force in which employees often did not have the appropriate technical skills needed for their assignments (Okonjo-Iweala and Osafo-Kwaoko, 2007).
In Somalia since the collapse of the central in 1991, also experienced a fall in motivation of public servants and service deliver, but at the recent years since 2006 up to now there is a temptation towards motivation of public servants and still not enough. Therefore this research paper will investigate the following:
‘Does public service motivation play a role in the Somali’s federal employee by influencing crucial HRM mediators such as Salary payment, and promotions on service delivery’? and Does Public Service Motivation Predict Higher Public Service delivery level?
In the researchers, there is absence of evidence examining the effect of motivation and public service delivery in some selected federal institutions. there is a need to conduct such studies. Therefore the researcher was investigated the relationship between employee motivation and the public service delivery in some selected ministries of Somali federal government, Mogadishu.

1.4 PURPOSE OF THE STUDY
The purpose of this study was to investigate the relationship between the employee motivation and public service delivery of Somali federal government ministries in Mogadishu.

OBJECTIVES OF THE STUDY
1.5.1 Major objective
The main objective of this study was to explore the Employees motivation and the
Public service delivery in Ministries of Somali federal government Mogadishu.
1.5.2 The specific objectives of this study are
4. To determine the impact of employee motivation in some selected ministries of Somali federal government.
5. To examine the level of public service delivery in some selected Ministries of Somali federal government.
6. To investigate the significant relationship between the employee motivation and public service delivery in some selected Ministries of Somali federal government.
CHAPTER TWO
LITERATURE REVIEW

2.0 INTRODUCTION
In this chapter the researchers reviewed literatures related to meaning, nature and concepts of employee motivation and public service delivery in Mogadishu _Somalia, this chapter consist of five sections, the study of reviews the definition of variables followed by characteristics of motivation. Third section, presents prior study the relationship of two variables. Fourth section, the study presents conceptual framework of the study, while last section presents summary and conclusion of the chapter.
2.1 CONCEPTS AND DEFINITIONS OF EMPLOYEE MOTIVATION
Motivation is generally defined as an internal state that initiates and maintains goal directed behavior” (Mayer, 2011) “Motivation can be defined as the desire to achieve some” goal (Hays, ; Hill, 2001).
Definitions of motivation abound. One thing these definitions have in common is the inclusion of words such as “desire”, “want”, “wishes”, “aim”, “goals”, “needs”, and” incentives”. Luthan (1998) defines motivation as, “a process that starts with a physiological deficiency or need that activates a behavior or drive that is aimed at a goal incentive”. Therefore, the key to understanding the process of motivation lies in the meaning of, and relationship among, needs, drives, and incentives. Relative to this, Minner, Ebrahimi, and Watchel, (1995) state that in a system sense, motivation consists of these three interacting and interdependent elements, i.e., needs, drives, and incentives.
The concept of motivation can be traced from ancient Greeks, Socrates, Plato and Aristotle ages. Plato believed in a hierarchy organized such as dietary component, the emotional and the rational. Aristotle, for more than twenty years continued to affirm the hierarchy spiritual. However he used different reforms which were different from his original belief
Moreover, the term public service motivation has first developed in 1980s through explaining the distinct between public and private work coordinators and managers. (Joanna O’Riordan &Brian Cawley, june 2013).
Motivation is a human psychological characteristic that contributes to a person’s degree of commitment (Stoke, 1999). It includes the factors that cause, channel, and sustain human behavior in a particular committed direction. Stoke( in Adeyemo1999) goes on to say that there are basic assumptions of motivation practices by managers which must be understood. First, that motivation is commonly assumed to be a good thing. One cannot feel very good about oneself if one is not motivated. Second, motivation is one of several factors that go into a person’s performance. Factors such as promotion, resources, and conditions under which one performs are also important. Third, managers and researchers alike assume that motivation is in short supply and in need of periodic replenishment. Fourth, motivation is a tool with which managers can use in organizations. If managers know what drives the people working for them, they can tailor job assignments and rewards to what makes these people “tick.” Motivation can also be conceived of as whatever it takes to encourage workers to perform by fulfilling or appealing to their needs. In order to give the best output and excellent performance in workplace, employees need to be motivated to their jobs. Employees in both public and private sectors need motivational factors to motivate them to work.
2.2 CHARACTERISTICS OF EMPLOYEE MOTIVATION
Employee motivation can be characterized by three main characteristics and they are Promotion, Salary, and Bonus.
2.2.1 Promotion: is the advancement of an employee’s rank or position in an organizational hierarchy system. Promotion may be an employee’s reward for good performance, i.e., positive appraisal. Before a company promotes an employee to a particular position it ensures that the person is able to handle the added responsibilities by screening the employee with interviews and tests and giving them training or on-the-job experience. A promotion can involve advancement in terms of designation, salary and benefits, and in some organizations the type of job activities may change a great deal. The opposite of a promotion is a demotion.
(Agnes Festre, November 2008) It could be said that every existence of specificity of the relationships b/w motivation, incentives and performance in the public sector is only due to the difficulties of measuring performance. The civil servant motivation is sometimes related to a performance related pay PRP system on the civil servants motivation. PRP system do increase performance but generally reduce public sector employees motivation, the efficient of the PRP system seems to depend strongly on the type of mission or activity such as health verses education. It is also conditioned by the hierarchical position of the employees; higher level employees seem to be more intrinsically motivated than lower level employees.
in some industries, the promotion only changes the title and salary, and there are no additional benefits or privileges (beyond the psycho-social benefits that may accrue to the individual). In some not-for-profit organizations, the values of the organization or the tightness of funding may result in there being only modest salary increases associated with a promotion. In other industries, especially in private sector companies, a promotion to senior management may carry a number of benefits, such as stock options, a reserved parking space, a corner office with a secretary, and bonus pay for good performance. The degree to which job activities change varies between industries and sectors. In some fields, even after an employee is promoted, they continue to do similar work. For example, a policy analyst in the federal government who is promoted to the post of senior policy analyst will continue to do similar tasks such as writing briefing notes and carrying out policy research.
2.2.2 SALARY: is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. From the point of view of running a public activities, salary can also be viewed as the cost of acquiring and retaining human resources for running operations, and is then termed personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.
The purpose of the pay is to compensate the employee for work done, to motivate the employee to perform well and to retain the employee, avoiding the need for expensive recruitment and training for replacements.
The base pay or salary is something that every civil servant receives regularly (usually fortnightly or monthly) from the government by virtue of being on its payroll (Ranjanaa Mukherjee).
More significantly, it presupposes the existence of organized employers—perhaps a government or a religious body—that would facilitate work-for-hire exchanges on a regular enough basis to constitute salaried work.
Salary is a fixed amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments of one-twelfth of the annual salary.
Salary is typically determined by comparing market pay rates for people performing similar work in similar industries in the same region. Salary is also determined by leveling the pay rates and salary ranges established by an individual employer. Salary is also affected by the number of people available to perform the specific job in the employer’s employment locale(Wikipedia)
2.2.3 BONUS: is extra pay due for good performance (Wikipedia). is a method of employee motivation meant to improve performance in the federal government by offering incentives such as salary increases, bonuses, and benefits. Professor Yasser believed that money was the main incentive for increased productivity and introducing the widely used concept of piece work .
In addition to motivating the rewarded behavior, standards-based methods can provide a level of standardization in employee evaluations, which can reduce fears of favoritism and make the employer’s expectations clear. Employees would be secure in knowing that their performance was evaluated objectively according to the standard of their work instead of the whims of a supervisor, or against some ever-climbing average of their group.
(Ranjanaa Mukherjee) . A civil servant is sometimes paid performance bonus depending on the degree to which performance goals are achieved. In Singapore, employees receive an annual bonus –depending on the national economic growth. Chinese civil servants receive an annual bonus, but because of difficult in assessing individual performance accurately, virtually the same amount has been paid to every person.
2.3. DEFINITIONS AND CONCEPTS OF SERVICE DELIVEY
Schein, (2009) states that the term service can have different situational meanings in different context. According to them service can be defined as a cluster of sequential activities, most of the time intangible in nature, between the services provider and service user which actually aids the later to resolve the problem. They noticed that there is big logical gap between manufacturing and services.
It is important to emphasize that the concept of service is not interchangeable with goods. Service delivery here implies tangible and intangible goods and services provided by the government in order to improve the wellbeing of the society.
(Bitner, Booms and Mohr, 1994) defined service delivery as “the consumer’s overall impression of the relative inferiority, superiority of the organization and its services”. This means that, service delivery is the key of survival to all servicing companies.
(Parasuraman, Zeithmal and Berry, 1985) defined services quality as a function of the differences between expectation performance along the quality as a function of the differences between expectation and performance along the quality dimensions?.
(Cronin and Taylor ,1994) viewed service quality as a form of attitude representing a long run overall evaluations. Maintaining service quality at certain level and improving service quality must be an effort to those companies who desire life-time prosperity in customers? heart.
HR Service Delivery definition (HR provides many functions to the organization, such as payroll processing, employee benefits and career advice. These services must be delivered to large workforces and the ways these are delivered are based on what’s known as the HR service delivery model).
There are two main types of model. The traditional model of ‘generalist’ HR staff revolves around a central team that will provide key services and handle the needs of line managers, employees and senior staff, although there may be internal divides based employee grades. This is the most common type of service delivery model.
The second model, and one that is increasingly gaining traction, is Ulrich’s three-legged stool model of HR service delivery, which involves three crucial strands – HR business partners, HR centres of expertise and shared HR services. Commonly-cited benefits include a greater ability for HR to be strategic.
Other key types of HR service delivery model include self-service, where employees use portals to access and input the information they need, and thus don’t have to approach HR representatives directly. A common way to facilitate self-service delivery is to include in-depth Q&As hosted on company intranets so that employees can find answers to their questions. Outsourced HR services may also involve a different model in that the internal HR function can re-focus on delivering strategic value rather than administrative value.
2.4. CHARACTERISTICS OF SERVICE DELIVERY
2.3.1.1 Services are processes; they are intangible and heterogeneous; they cannot be kept in stock and there is no transfer of ownership; production, distribution and consumption are simultaneous processes in the service context; the core value is produced in buyer –seller interactions and most importantly in service context customers participate in the production process (Gronroos 2000). In the area of public service delivery, there is a broad consensus regarding the main policy objectives—to have a well educated and healthy population as example. (Ghatak, 2007)
2.3.1.2 Service quality— quality is the most important when the issue of service delivery is discussed. The reason being that participation of customers in the production of service the quality of the service is directly perceived by the customer in the time of production. That is why service quality can be defined as the quality as perceived by customers (Gronroos, 2000 p.63) and therefore the measurement of service quality has been a real challenge for service delivery.
2.3.1.3 Time— time is the most essential feature in service delivery. 2.3.1.4 HR Service Delivery Scoped
2.3.1.4 HR Service Delivery was introduced in Istanbul. Scoping encapsulates HR data so that HR administrators can protect sensitive information and prevent interference from outside users and applications. All future development of new features and functionality will be made to the scoped version.
2.3.1.5 HR Service Delivery Non-Scoped The non-scoped version of HR Service Delivery is only available for customers that went live with HR in Helsinki or earlier. Beginning with Istanbul, new features and functionality are no longer supported and require migration to the scoped version of HR.
To facilitate the migration from non-scoped to scoped HR, the following tool is available:
2.3.1.6 Migration from Non-Scoped to Scoped HR The HR Migration tool assists customers migrating from the non-scoped to the scoped version of HR Service Delivery. You can migrate your HR data (tables and their corresponding columns and choice lists) and roles.

2.5 RELATIONSHIP BETWEEN EMPLOYEE MOTIVATION AND PUBLIC SERVICE DELIVERY
The motivation is an often used, but very rarely defined phenomenon of the social life. After a brief review for different related articles of comparing researches, there are several contributing factors that influence employees’ motivation to work. Rewards, promotions and also Bonus are among the factors identified by previous literatures. Rewards and promotion system is an important tool the management can use to channel employees’ motivation in desired ways. In other words, reward systems seek to attract people to join the organization to keep them coming to work and motivate them to perform at high levels (Puwanenthire, 2011).
Rizwan (2010) has conducted a study on the impact of rewards and recognition towards motivation stated that managers can provide recognition to employees by sitting with employees to have informal talks, spending time with them in form of a combined dinner or else in other activities like asking about their families and other crucial aspects related to their personal life. He also added that when effective rewards and recognition are practiced within an organization, favorable working environment is produced that can motivate employees to excel in their performance. Other than that, a study from China University of Geosciences stated that money possesses significant motivating power as much as it symbolizes intangible goals like security, power, prestige, and a feeling of accomplishment and success of service delivery (Faheem, Shuai, Mahroof and Mohsin, 2011).
Vroom (1964), supported the assumption that workers tend to perform more effectively if there wages are related to performance which is not based on personal bias or prejudice, but on objective evaluation of an employee’s merit. Though several techniques of measuring service delivery have been developed, in general the specific technique chosen varies with the type of work.
According to investigations on Effect of Reward on Employee Performance: A Case of Kenya Power and Lighting Company Ltd., Nakuru, Kenya, The main objective of the study was to Immediate Rewards are given to employees repetitively so that they can be aware of their outstanding performance. The management of individual performance within organizations has traditionally centered on assessing performance and allocating reward, with effective performance seen as the result of the interaction between individual ability and motivation. Also to provide in depth Information for the study. this design includes analyzing the Relationship between reward and employee performance. The results show that majority of employees have a perception that cash bonuses motivate performance. However Cash bonuses were perceived to have a great influence in motivating employees to achieve their targets as well as in motivating them to be more productive in their work; it only has significant influence when it comes to Motivating employee attendance. (W. L. Njanja1, 2013)
Researchers have argued that motivated employees are more committed to serving customers and providing quality service to the best of their ability (Loveman, 1998; Silvestro& Cross, 2000; Yoon &Suh 2003). Small service firms such as the imperial perking restaurant are more likely to experience constraints on organizational resources, therefore may rely more on the motivation of individual employees in providing good services to customers (McCartan-Quinn & Carson, 2003; Haugh& McKee, 2004; Coviello et al. 2006).
On the other hand, a study was made on Civil service reforms in Nigeria: The journey so far in service delivery. The objective of the study was to examine the civil service reforms in Nigeria from independence to the present and how they affected efficient and effective service delivery in the country. the descriptive method has been used. This study finally distributed that the kind of civil service reform that would tackle these problems should be evolutionary and pragmatic in nature to meet Nigeria developmental needs and the challenges of the modern world. (Rosemary O. Anazodo, 2012)
In the context of the study of Impact of Rewards and Motivation on Job Satisfaction in Banking Sector of Saudi Arabia ,The study found demonstrate that employees of private and public sectors in different banks are moderately rewarded, motivated and gratified in their organizations. (Jehanzeb, Rasheed, Rasheed, & Aamir, 2012)
Egwuridi (1981) also investigated motivation among Nigerian workers using a sample of workers of high and low occupational levels. The hypothesis that low-income workers will be intrinsically motivated was not confirmed, and the expectation that higher income worker will place a greater value on intrinsic job-factors than low-income workers was also not confirmed. This shows clearly the extent of value placed on extrinsic job factors. Akerele (1991) observed that poor remuneration is related to profits made by organization. Wage differential between high and low income earners was related to the low morale, lack of commitment and low productivity. Nwachukwu (1994) blamed the productivity of Nigerian workers on several factors, among them is employer’s failure to provide adequate compensation for hard work and the indiscipline of the privileged class that arrogantly displays their wealth, which is very demoralizing to working class and consequently reduced their productivity. Judging from all these empirical studies and findings, one may generally conclude that a good remuneration package, which ties financial rewards to individual performance, can be expected to result in higher productivity. Another study carried out, which is of importance to this research, is that of Wood (1974) 7 He investigated the correlation between various workers attitudes and job motivation and performance using 290 skilled and semi-skilled male and female paper workers. The study revealed that highly involved employees who were more intrinsically oriented towards their job did not manifest satisfaction commensurate with company evaluations of performance
2.6 SUMMARY AND CONCLUTION
The above-mentioned studies show that employee motivation and service delivery has been in many regions of the world, but the extent of such a gap has not been investigated in Somalia. In addition, studies examined motivation and service delivery in government ministries but in our best knowledge public services are not yet been investigated. Therefore, the present study investigates employee motivation and Public service delivery in some selected ministries Somalia federal government, Mogadishu.

CHAPTER THREE
METHODOLOGY
3.0 INTRODUCTION
This chapter presented research design, research population, research instrument, data gathering procedure, data analysis, and ethical consideration and research limitations
3.1 RESEARCH DESIGN
This study employeddescriptive and correlation designs. Descriptive studies are non-experimental researches that describe the characteristics of a particular individual, or of a group. It deals with the relationship between variables and development of generalizations and use of theories that have universal validity. It also involves events that have already taken place and may be related to present conditions (Kothari, 2004). Further, descriptive surveys are used to discover causal relationships (descriptive correlation), to provide precise quantitative description and to observe behavior.
3.2 RESEARCH POPULATIONS
The study population constituted mainly 120 National civil servants of Somali Federal Government Ministries in Mogadishu. (120)This population was choose because it is assumed to have adequate knowledge of the subject under investigation and the research variables.

3.2.1 Sample size
The sample size of this study was consisting of 120 respondents who were selected from the population of the study (120) respondents. The sample 120 was calculated following Slovenes formula which is: n=N/1+ (Nxe^2)
n = sample size of the study =? ;
N = population of the study = 120;
e = margin of error = 0.05
n=120/1+ (120×0.05^2)
?= 90
The researchers chose such sample because Roscoe (1975) recommended that sample sizes larger than 30 and less than 500 are appropriate for most studies. This table specifies sample civil servants and their ministries.
Categories Sample Size Population
Ministry of Education 18 24
Ministry of Health 18 24
Ministry of interior 18 24
Ministry of media 18 24
Ministry of Public Work 18 24
Total 90 120

3.2.2 Sample procedure
The sample procedure of the study was purposive sampling also called judgmental sampling.
Therefore purposive sampling enables the researches to decide who to include the sample. And it was used to collect the focused information. This study was occupy purposive sampling system technique. To select the respondents those believes that they have the relevant information. Purposive sampling used to decide on the civil servants.
3.3 RESEARCH INSTRUMENT
This study was designed to explore the relationship between Employee Motivation and Public Service delivery. Data were collected questionnaire. In this questionnaire, the Employee Motivation consists of three dimensions,. The three dimensions include Salary, Promotion and Bonus.
The four response choices were (strongly disagree, disagree, agree, and strongly agree). Finally, the data were encode used the Statistical Package for the Social Sciences (SPSS) Version 16 as 1 for strongly disagrees to 4 for strongly agree.

3.3.1 VALIDITY AND RELIABILITY OF THE INTSTRUMENT
The instrument were piloted in the department that was not included in the study sample and modified to improve their validity and reliability coefficient to at least 0.80. Items with validity and reliability coefficient of at least 0.80 are acceptable as valid and reliable in research.
The test-retest technique was used to determine the reliability (accuracy) of the researcher devised instruments to five qualified respondents. These respondents will not include in the actual study. In this test- retest technique, the questionnaires was administrated twice to the same subjects. If the test is reliable and the trait being measured was stable, the results were consistent and essentially the same in both times.
3.4 DATA GATHERING PROCEDURES
The following data collection procedure was implemented:
A. Before the administration of the questionnaire
After the research proposal approved, the researcher was first obtained an authority letter the student Affairs and registration department of Mogadishu University partnership with Asia University ( aeu ) to authorize the Researcher to carry out research about Employee Motivation in Public Service delivery in some selected Ministries Somali Federal Government in Mogadishu.

B. During the Administration of the questionnaire
The respondents will be requested to answer completely and not to leave any part of the questionnaires unanswered.
On retrieval, all returned questionnaires were checked if all are answered.
C. After the administration of the questionnaires
The data gathered collected, encoded into the computer and statistically treated using the Statistical Package for Social Sciences (SPSS).
3.5 DATA ANALYSIS
The mean and standard deviations was applied for the levels of influence of Employee motivation and Public service delivery. An item analysis was illustrate the strengths and weaknesses based on the indicators in terms of mean and rank. From these strengths and weaknesses, the recommendations were derived.
Mean Range Response Mode Interpretation
3.26-4.00 strongly agree Very high
2.51-3.25 Agree High
1.76-2.50 Disagree Low
1.00-1.75 Strongly disagree Very low
In the analysis the researchers interested in looking at relationship between variables. One way of doing correlation analysis is to use spearman’s r test to check the correlations between two groups of normal spread data. In the thesis the researchers used Spearman’s rho due to data normality correlation between Employee motivation and Public service delivery
3.6 ETHICAL CONSIDERATIONS
In this study, the researcher was considering the ethical issues throughout research project, and was kept the anonymity, privacy and confidentiality of the respondents. To keep ethical issues the data given by the respondents were used only for academic purpose. The respondents were informed of the contents and the aims of the research prior to administration of any instrument. This study was fully conducted ethically and all copyrights will be observed. And also there is barrier in language which was declined the understanding of respondents to the questionnaire so that to enhance validity of the study the researchers was explain the questionnaire in simple and understandable manner in order to accomplish this study and last work challenge.
3.7 LIMITATIONS OF THE STUDY
Some of the respondents was not willing to share with the researcher some of the information that they considered confidential but the researcher promised to keep the information got as confidential and only to be used for academic purposes. Choice of sample population also was cause a limitation, but the researcher chooses a sample population that is truly representative in terms of statistics and large enough to give a true picture of the whole population.

CHAPTER FOUR

DATA PRESENATION, INTERPRETATION AND ANALYSIS
4.0 INTRODUCTION
The previous chapter discussed a detailed description of the research methodology. Therefore, in this chapter, the data will be analyzed by using some statistical techniques. Current chapter has the following sections. Section 4.1 introduces the demographic data of the sample based on the data collected. Section 4.2 summarizes Employee Motivation as objective one of the study. In section 4.3 summarized the Public service delivery. Section 4.4 discussed the relationship between Employee motivation and public service delivery. Section 4.5 presents chapter summary.
4.1 DEMOGRAPHIC INFORMATION OF THE RESPONDETNS
The data comes from the Ministries of Somalia federal government in relation to the research objectives, and the implementation of employee motivation and public service delivery. The respondents of the questionnaire were: Directors, Head sections and Staff. The introduction statement of the research questionnaire was efficient the Significance, rationale and purpose of the study. Furthermore, the respondents have been given the confidence that all data they provided will be used only for the purpose of academic research and will be treated confidentially.

Table 4.1 Demographic Characteristics of the respondents.
Demographic Characteristics Frequency Percent Cumulative Percent
Gender Male 69 76.7% 76.7%
Female 23.3 23.3% 23.3%
Total 90 100% 100%
Age

20-33 59 65.6% 65.6%
More then 34 31 34.4% 34.4%
Total 90 100% 100%
Qualification Secondary 23 25.5.% 25.5%
Bachelor 42 46.7% 46.7%
Master 25 27.8% 27.8%
Total 90 100% 100%
Experience 1-2 15 16.6% 16.7%
3-4 33 36.7% 36.7%
More than 5 42 46.7% 46.7%
Total 90 100% 100%

Position Directors 7 7.8% 7.8%
Head section 19 21.1% 21.1%
Staff 84 71.1% 71.1%
Total 90 100% 100%
Source: Primary Data 2017
The profile of the respondents is looked upon in terms of: Gender, Age, qualification and experience. Table 4.1 shows the Gender of the respondents. 76.7% percent of the respondents were male, showing that most of the respondents considered as male. (23.3%) of the respondents were Female. finally the researchers could presume that in the above percentage, suggests a considerable number to be the male of the population.
Based on the collected questionnaires, majority of the respondents is composed male, while a small number of respondents were female. This result shows that the most Government institutions operates in Somalia involves the male.
Ages of the respondents, majority of them were in between the ages of 20-33 years (65.6%) while other respondents are above 34 years (34.4%) respectively.
Qualifications of the respondents, majority of them have bachelor degree of university (46.6%) while 27.8% of respondents have master degree and the remaining respondents 25.5% have secondary certificate.
Experiences of the respondents, majority of them are in 46.7% more than 5 years experience, 33of respondents (36.7%) have 3-4 years experience and the remaining respondents (16.6%) between 1-2years experience.
Position of respondents majority of them were Staff (71.1%), the 19 of respondents were head section (21.1%) and the remaining of respondents (7.8) of 7direcors.
4.2 THE IMPACT OF EMPLOYEE MOTIVATION
The first objective of this study was to identify the employee motivation impact in some selected ministries Somali federal government, in relation to public service delivery, respondents were required to indicate the extent to which they agree with each of the item by written the number that best describes their perceptions.To achieve this objective the respondents were asked several statements related to employee motivation as means of moral and motivating their providing service to the society. The results are summarised in the following table.
Table 4.2 Internal auditing practices(n=90)

Employee Motivation Mean Std. Deviation Interpretation Rank
Employee salary is essential factor for service delivery quality 3.54 .703 very high 1
Good Employee salary leads good service delivery to the society 3.54 .553 very high 2
Promotions are valuable for conveying employee high level of performance 3.43 .581 very high 3
Employee feel motivated when they are promoted 3.38 .631 very high 4
Employee works hard if the salary paid early and on time 3.33 .582 very high 5
Higher levels of salary lead to higher levels service delivery effectiveness. 3.32 .633 very high 6
Salary payment supports the employee satisfaction on their performance 3.16 .633 High 7
Employee recognize themselves as they provide service delivery effectively 2.97 .830 High 8
Employee Bonus is the force driving to provide service delivery effectively 2.74 .750 High 9
Employee receive Bonus based on their grades 2.14 .553 Low 10
Overall Mean 3.16 .678 High
Source: Primary Data 2018
According to the above table 4.2 presented that employee motivation was scored highly mean 3.16 overall and standard deviation 0.678. These results indicate that employee motivation is providing formal bases for moral and motivating in providing service to public is high.
Employee salary is essential factor for providing service quality was also scored highly mean 3.54 while standard deviation was 0.703.this indicates that employee motivation essential factor for providing service quality is very high.
Good Employee salary leads good service delivery to society which scored highly mean 3.54 and standard deviation was 0.553. This result shows that good salary leads to good service to is very high.
Promotions are valuable for conveying employee high level of performance was rated mean 3.43 while standard deviation was 0.581. This could indicate that promotions are valuable for high level performances of an employee are very high.
Employee feel motivated when they are promoted was scored mean 3.38 and standard deviation was 0.631. This result shows that the employee motivated when they get promotion are also very high.
Employee works hard if the salary paid early and on time was scored mean 3.33 while standard deviation was 0.582. This indicates that the employee woirk hard and salary payment on time and early in selected ministries is very high.
Higher levels of salary lead to higher levels service delivery effectiveness. the respondents appreciated mean of 3.32 and standard deviation was 0.633.this result shows that higher level of salary leads high level of service delivery also very high.
Salary payment supports the employee satisfaction on their performance was scored 3.16 while standard deviation 0.633. This result indicates that payments of salary support the satisfaction of staff is high.
Employee recognize themselves as they provide service delivery effectively was scored 2.97, while standard deviation was 0.830. This result suggested that an employee recognition themselves as they provide service effectively is high.
Employee recognition as driving force for employee satisfaction was scored 2.74, while standard deviation 0.750. This result indicates that employee recognition is a driving force for satisfaction is high.
Employee receive Bonus based on their performance of Public service delivery was scored the respondents 2.14 and standard deviation 0.553. Thus, this result indicates that the receive bonus of staff based on their performance are low.
4.2.1 THE LEVEL OF PUBLIC SERIVICE DELIVERY
The overall respondents provided similar response to the questions relating the employee motivation. All of the ministries have motivation to moral and work on their operations. In this study the researchers focus on ministries only those who provide service delivery to public, the researchers made selection from soma ministries. All responded that they have the effective motivation leads to enhance the performance of employee, in accordance with their public service delivery to society.
4.3 EXPLANAITION OF LEVEL OF THE PUBLIC SERVICE DELIVERY
The second objective of the study was to explain the level of public service delivery of selected ministries, for which respondents were required to rate the level public service delivery to the society by indicating the extent to which they agree with each item in the table.
The respondents were asked the how ministries provide service delivery firm, weather they use serviced quality, and also where the time of service works in order to achieve objectives. The questions included how Service delivery is active when the employee is promoted
and also effectiveness of service quality according to the objectives of the ministry, , Their responses were analyzed and described using means and standard deviations as summarized in table 4.3 below;

Table 4.3 explains the level of public service delivery (n=90)
Public service delivery Mean Std. Deviation Interpretation Rank
Service delivery is active when the employee is promoted 3.45 .581 very high 1
Public service motivation does matter, and among the intrinsic reasons that come into play when individuals chose where to work it is highly significant. 3.32 .649 Very high 2
People support government when they provide service quality 3.22 .814 High 3
Public Service delivery its only way to measure the performance of staff 3.17 .797 High 4
Employee feel more satisfaction while he/she provide delivery service to community 3.16 .758 High 5
Public service is the key encourage community to pay tax 3.14 .847 High 6
Good service delivery leads to motivate employee on their operation 2.49 .715 Low 7
The good service Ideas not moral of community or society 2.41 .602 Low 8
On time and quality service delivery leads effective employee discouragement 2.32 .776 Lo 9
Quality Service delivery and motivation of staff is dependency 1.94 .914 Low 10
Overall Mean 2.85 0.746 High
Source: Primary Data 2018
According to table 4.3 above, Service delivery is active when the employee is promoted was scored mean 3.45 while standard deviation was 0.581. This indicates that most of the selected ministries actively when employee motivated are very high.
Public service motivation does matter, and among the intrinsic reasons that come into play when individuals chose where to work it is highly significant which perceived by the respondents to be very high by mean scores 3.32 and standard deviation was 0.649. This result indicates that the public service motivation intends to achieve organizational objectives are very high
People support government when they provide good service quality was scored 3.22 and standard deviation 0.814.This result states that support of people based on service delivery are high.
Public Service delivery its only way to measure the performance of employee was perceived by respondents to be high by a mean scores 3.17 while standard deviation 0.797. This result indicates that the measurement of employee based on service delivery is high.
Employee feels more satisfaction while he/she provide delivery service to community was perceived by respondents to be high by mean scores 3.16 while standard deviation was 0.758. This indicates that satisfaction of employee is high.
Good service delivery leads to motivate employee on their operation was scores 3.14 and standard deviation 0.847. thus, this result shows that according to responses of respondents is high.
Public service is the key encourage community to pay tax was perceived to be low according to respondents of the research which scored 2.49 and standard 0.715.This result indicates that taxation payment depends on how government service delivery is low.
On time and quality service delivery leads effective employee discouragement was scored by respondents of the study 2.41 mean and standard deviation 0.602. Thus, this result suggested that the discouragement of employee will lead good quality is low Quality Service delivery and motivation of staff is dependency which has mean scores 2.32 and standard deviation 0.776. This result results that the quality service and motivation is dependency is low.
The good service does not relate moral of community or society which was scored by the respondents mean 1.94 while standard deviation is 0.914. Thus, this result shows that the moral of community does not relate good serviced quality is low.
The overall mean score for all the items under public service was computed and the overall score was 2.85 and stander deviation was 0.746. Thus, the result indicates that the public service delivery of selected some ministries of Somali federal government in Mogadishu, is high.
4.4 RELATIONSHIP BETWEEN EMPLOYEE MOYIVATION AND PUBLIC SERVICE DELIVERY
Based on the findings in objective one and objective two the researchers found out the overall mean of Employee motivation is (3.16) which indicate a high; means the impact of employee motivation in ministries of government and effective performances on their duties, while the overall mean of public service delivery is (2.85) also indicates high public service delivery in government ministries. In this objective the researchers focus the relationship between the employee motivation and public service delivery. As above mentioned the quality public service delivery depends on the effective employee motivation.
To investigate the relationship between employee motivation and public service delivery, Due to the normality issue the researchers selected Spearman’s rho which is used the Order Correlation coefficient, rs, is a non-parametric measure of the strength and direction of association that exists between two variables measured on at least an ordinal scale.
Table 4.4 Correlation Analysis with spearman’s rho
Spearman’s rho Employee motivation Public service delivery
Employee motivation Correlation Coefficient 1.000 .563
Sig. (2tailed) .000
N 69 69
Public service delivery Correlation Coefficient .563 1.000
Sig. (2tailed) .000 .
N 69 69
*Correlation is significant at the 0.05 level
Source: Primary Data 2018

4.6 CHAPTER SUMMARY
The first section of chapter presented the findings and discussion of the study including the demography of the data based on the respondents. The second two section discussed findings for both employee motivation and public service delivery, the final section of the study presented relationship between two variables and discussion of the results.

CHAPTER FIVE

DISCUSSION, CONCLUSION AND RECOMMENDATION
5.0 INTRODUCTION
This chapter presented the conclusion and recommendations of the study. The first section 5.1 presents conclusion of the research project, the second section 5.2 presents the recommendations of the researchers, and the third section 5.3 suggests father studies, and the final section is chapter summary.
5.1 DISCUSSION OF THE RESULTS
This study was intended to know that the impact of employee motivation on public service delivery. As researchers believe that if employee motivation is adapted fully public services can some extent be improved in different ministries of Somali federal governments. Therefore, the researcher
• The first objective was to determine the impact of employee salary on some selected ministries in Mogadishu, Somalia. The researcher found that the impact of this objective has the average mean of (3.16) which indicate very high condition.
7. The second objective of this study is To examine the level of public service delivery in some selected Ministries of Somali federal government. The researchers found that mean index of the questions which are asked to the respondents was (2.85) which indicate very high level.
• The third objective of this study found that there is a positive correlation between employee motivation and public service delivery. And the association between the two variables showed a high statistically significant result. The result was rs=0.563, p

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