Exchange Rate Changes and Price Differential at the Nigerian Border Markets

Exchange Rate Changes and Price Differential at the Nigerian Border Markets | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Exchange Rate Changes and Price Differential at the Nigerian Border Markets Olusola Oloba This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7518944/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract The study investigates the extent to which frequent fluctuations in exchange rates contribute to the price differentials observed in the Nigeria-Benin border markets. This inquiry is warranted due to the fact that different prices are being charged on the same staples of same quality across the Nigeria-Benin borders as evident from the literature. The Nigeria-Benin border lays claims to several efficient border markets involving two distinct nationalities with different currencies. The prevailing payment system in these markets still requires conversion from one currency to the other; however, the conversion of these currencies is fraught with challenges and is not readily accessible through conventional channels, potentially resulting in varied valuations for commodities traded on opposing sides of the border markets. Findings from the price cointegration analysis indicate the existence of a price adjustment mechanism that enables the two prices to converge towards their long-term equilibrium relationship, thereby implying the presence of linear and symmetric price transmission across the borders and consequently negating the likelihood of asymmetric price transmission. The research, employing the Autoregressive Distributed Lag (ARDL) model, concludes that a significant inverse relationship exists between the appreciation of the real effective exchange rate and the border value of a product, both in the short run and long run, thereby suggesting that as the currency strengthens, the prices of goods at the border decrease. This investigation advocates for enhanced efforts to be directed towards the implementation of an effective appreciation policy, as this would likely normalise the price of similar products at the in cross-border market. International Economics Macroeconomics Cross-border Markets Exchange Rate Price Cointegration ARDL Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7518944","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":510900309,"identity":"2d05abc3-b16a-496b-aef9-216b7d0dad3a","order_by":0,"name":"Olusola Oloba","email":"data:image/png;base64,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","orcid":"","institution":"Nigeria AfCFTA Coordination Office","correspondingAuthor":true,"prefix":"","firstName":"Olusola","middleName":"","lastName":"Oloba","suffix":""}],"badges":[],"createdAt":"2025-09-02 14:41:35","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-7518944/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7518944/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":91149314,"identity":"7dfbb028-d292-41fe-bc54-7406066dcb0f","added_by":"auto","created_at":"2025-09-12 06:48:41","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":656157,"visible":true,"origin":"","legend":"","description":"","filename":"PhDpaper3New2formerge.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7518944/v1_covered_76348126-dbda-45be-8c44-c320b2ecd316.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eExchange Rate Changes and Price Differential at the Nigerian Border Markets\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Cross-border Markets, Exchange Rate, Price Cointegration, ARDL","lastPublishedDoi":"10.21203/rs.3.rs-7518944/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7518944/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThe study investigates the extent to which frequent fluctuations in exchange rates contribute to the price differentials observed in the Nigeria-Benin border markets. 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