IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 2 2024
DOI: https://doi.org/10.56201/ijebm.v10.no2.2024.pg17.36

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Determining Private Investments in Nigeria: The Effect of Domestic Debt

Ogaga, T. C., Robert B. J.

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Abstract

This study examined the effect of public debt on investments (private and public) in Nigeria for the long-run period of 1981 to 2022. The study examined a number of significant public debt variables that are difficult to neglect when trying to understudy the effects of public debt. The variable is government domestic debt (DMD). The control variables, which are GDP growth rate, total government revenues, total government expenditures, inflation and private sector credits in Nigeria are coded GDPG, GVR, GVX, INF and CPS. The result of the study showed that government domestic debt boosted private investment. In all, private investments have benefitted more from domestic public debt. This means that domestic public debt crowd in more of private investments, all things being equal. In line with the findings/conclusion made in this study, the following recommendations are put forward: The most concern drawn from the positive significance of government domestic debt is that its increases impede private sector credits. As this is, it means that the complementary role of the monetary policy has not been seen. The CBN, in the face of increasing domestic public debt, should enhance policy directions to also increase private sector credits.

keywords:

Domestic Public Debt; Private Investment; Crowding Out/In Effect; ARDL; Nigeria

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References:

Abubakar, A. B., & Mamman, S. O. (2021). Effect of Public Debt on Private Investment in
Nigeria: Evidence from an Asymmetric Dynamic Model. Economic and Financial
Review, 59(3), 59-86.

Akomolafe, K. J., Bosede, O., Emmanuel, O., & Mark, A. (2015). Public debt and private
investment in Nigeria. American Journal of Economics, 5(5), 501-507.

Anoke, C. I., Odo, S. I. & Nnabu, B. E. (2021). Public Debt and Domestic Private Investment: A
Crowding Effect in Nigeria. International Journal of Research and Innovation in Social
Science (IJRISS), 5(3), 1 – 8.

Asogwa, R. C., & Ezema, C. C. (2005). Domestic government debt structure, risk characteristics
and monetary policy conduct, evidence from Nigeria. Final Research Project Submitted
for the International Research Project on Macroeconomic Policy Challenges for Low
Income Countries, 1-44.

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