IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 4 NO. 1 2019

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Deficit Financing and Economic Growth: The Nigerian Experience

Ifeanyi O. Nwanna (Ph.D) & Umeh Gloria Nkiruka

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Abstract

The study examined the effect of deficit finance on Nigeria economic growth. The main objective of the study is to empirically examine the effect of deficit financing on Nigeria’s economic growth. The study used secondary data from CBN statistical bulletin on various issues as relevant for the period under study (1981-2016). Augmented Dickey Fuller (ADF) unit root test, Johanson Co-integration test and normality test were employed for the analysis. The research findings revealed that deficit financing through External debt borrowing has a significant negative effect on Nigeria’s economic growth. Also Domestic debt has a positive significant effect on Nigeria’s economic growth, while Debt service has no significant effect on Nigeria’s economic growth. The study therefore, recommends that Government should set up monitoring teams that will make sure that the budget is well and carefully implemented and as well as loan borrowed in other to reduce corruption, linkages and wastages, the team will do this by holding everyone accountable for every kobo of government money spent.

Deficit financing, Domestic debt, External debt, Debt service, Real gross domestic product

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