Private Sector Financing and Economic Growth in an Emerging Market Economy: Evidence from Nigeria

This study investigated the impact of private sector financing by the banking sector on economic growth in Nigeria using the augmented growth model which was estimated via the Ordinary Least Square (OLS) techniques. The annual time series data employed in the estimations covered the period from 1980 to 2013. The study employed unit root tests, co-integration analysis and Error Correction Mechanism to ascertain the short run dynamics of the explained variable visa-avis the explanatory variables. The results revealed that there exists a positive linear relationship between private sector financing by the banking sector and economic growth in both the long run and in short run. However, only the long run relationship was significant. The results further revealed that interest rates and inflation rates in Nigeria during the study period under investigation were consistently high. The study recommends the provision of long-term investment loans through the banking sector to the productive private sector. The study further recommends financial system development to ensure it plays its intermediary role effectively. Policies that will reduce the interest rate in Nigeria should be promoted to ensure that micro, small and medium scale enterprises that constitute a greater percentage of the private sector have access to bank credit. Keywords: Private sector financing, Banking sector, Capital Formation, Economic Growth, Emerging market econom

Impact of Foreign Direct Investment on the Economy of Nigeria

The study investigated the impact of foreign direct investment on economic growth in Nigeria using annual time series data from 1981 to 2013. The study also examined the effects of exchange rate of the naira and openness of the economy on economic growth in Nigeria. The ordinary least square technique and vector error correction model was employed in estimating the long run effects and the parsimonious short run dynamics of the parameter estimates. The results of the study revealed that in both the long run and short run, foreign direct investment has positive and significant impact on gross domestic product in Nigeria. The result also revealed that exchange rate of the naira has negative effect on economic growth in Nigeria while trade openness had no impact on economic growth in Nigeria. This study recommends policies that will encourage foreign direct investment in non-oil sector such as agriculture, mining and industrial sectors to boost economic activities and increase output level in Nigeria. It also recommends the removal of government induced distortions and provision of conducive environment for foreign investors to operate and the creation of friendly business environment in the country by the government to increase the level of openness. Keywords: Economic Growth, Foreign Direct Investment, Exchange Rate, Trade Openness, Domestic Inflatio

Financial Development and Cross- Border Financial Flows to Nigeria

This study evaluates different perspectives of financial development and how they impact on variants of international financial flows to Nigeria for  the period ranging from 1986 – 2019. Financial liberalization that started in Nigeria in 1986 and COVID-19 outbreak that shut down the world  economy, led to the choice of the research period. Three indices of financial development such as banking sector development, stock market  development and bond market development are constructed with the aid of principal component analysis (PCA). The controlled variables are  exchange rates, inflation and interest rates spread. The study employs Autoregressive Distributed Lag (ARDL) model in its estimation. The results  shows that, in the long-run, banking sector and stock market development indices have negative and significant impact on FDI. The long-run, bond  market development index has positive and significant impact on FDI. The investigation reveals that BSD, SMD and BMD have significant and  positive impacts on Net FPI flow in the short-run. While in the long-run the index for banking sector development (BSD) has negative and  insignificant impact on FPI. Stock market development (SMD) index has positive and insignificant impact on FPI, while, Bond market development  (BMD) index has positive but significant impact on PFI. The study concludes that financial development significantly influences cross-border financial  flows to Nigeria especially in the long-run. The study recommends that financial intermediation by the banks should be strengthened and  credit facilities made available to investors at reduced lending rate. Furthermore, institutional quality of Nigerian stock market should be improved  to reduce variations in cross-country financial flows which are best explained by fundamentals like quality of institutions, access to foreign export  markets, international price risk mitigation and an ideal macroeconomic policy

FISCAL BALANCE AND SUSTAINABLE ECONOMIC DEVELOPMENT IN NIGERIA

This study analyzed the effects of fiscal balance on sustainable economic development in Nigeria from 1981 to 2022. Autoregressive Distributed Lag (ARDL) model was employed in estimating the variables. The ARDL results indicated that the relationship between fiscal balance and sustainable economic development followed a long-run path. The study found that fiscal balance to GDP ratio, external debt to export ratio, and public debt service to revenue ratio had negative impact on growth rate of real GDP per capita (GDPgr). Total debt stock to GDP ratio had positive effect on GDPgr. Domestic debt to domestic investments ratio and recurrent expenditure to GDP ratio exerted negative and non-significant effect on GDPgr. Debt for gross fixed capital formation as a percentage of GDP and trade openness exerted positive and significant effect on GDPgr. The study recommended that the government should focus on viable capital investments that have the potential to generate revenue that can service public debt in order not to create debt that are not sustainable. Government should take proactive measures to ensure that public debt is employed in key productive sectors of the economy to boost domestic production and enhance export receipts in foreign currency capable of repaying the externally borrowed funds. There is need for government to reduce recurrent expenditures since it does not lead directly to revenue generation, capital formation, savings and investment in such manner that it would increase economic assets, boost production, and promote sustainable economic development