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. 10 2024
DOI: 10.56201/ijebm.v10.no10.2024.pg112.127

---

The Impact of Foreign Trade Financing On Per Capita Gross Domestic Product in Nigeria

Chidum Chibueze CHINDA, Ezebunwo NYECHE

---

Abstract

The study examined the impact of foreign trade financing on per capita gross domestic product in Nigeria spanning from 1981 to 2022. The study makes use of secondary data (time series) from various sources which include; the Central Bank of Nigeria Statistical Bulletin and Annual Report (various issues), and World Development Indicators. Variables used for the study include Deposit Money Banks’ Credit to Export Trade, Deposit Money Banks’ Credit to Import Trade, Nigeria Export and Import Credit, Letter of Credit, and Exchange Rate as explanatory variables, while per Capita Gross Domestic Product serves as the dependent variable. The Eview10.5 Software was used to empirically and econometrically analyze data and ARDL was used as method of estimation. The findings from the result showed that NEXIMC bank credit has a positive effect on gross domestic product in the short run and a negative effect in the long run, an increase in export trade credit has a positive effect on per capita gross domestic product, deposit money banks credit to import trade has a positive effect on per capita gross domestic product, issuance of the letter of credit hurts per capita gross domestic product, an appreciation of the exchange rate hurt per capita gross domestic product. The study concludes that international trade financing using deposit money bank loans negatively affected per capita gross domestic product in Nigeria. The study therefore recommends that import trade should be more on capital-intensive goods where Nigeria has a disadvantage in either production or expertise, credit to the private sector should be channelled into the production of capital goods and services which will attract more foreign exchange into the country and before the adoption of the import substitution policy, efforts should be made to promote or improve the quality of education in Nigeria.

keywords:

Foreign trade financing, Per capita gross domestic product, Nigeria, and ARDL

---

References:

Adewole, J. A., Akinmulegun, S. O., Akinde, J. A., & Popoola, M. A. (2018). Deposit money bank
credit and economic growth in Nigeria (2006-2015). International Journal of Advance
Research and Innovative Ideas in Education, 4(3), 1711-1722.
Ahn, J., Amiti, M., & Weinstein, D. E. (2011). Trade finance and the great trade
collapse. American Economic Review, 101(3), 298-302.
Andersen, T. B., & Tarp, F. (2003). Financial liberalization, financial development and economic
growth in LDCs. Journal of International Development: The Journal of the Development
Studies Association, 15(2), 189-209.
Beck, T. (2012). The role of finance in economic development–benefits, risks, and politics. Oxford
University Press.
Central Bank of Nigeria, (2009). Annual report, Abuja: Central Bank of Nigeria
Deliarnov, D. (1995). Pengantar ekonomi makro. Penerbit Universitas Indonesia Press.
Diamond, P. (1984). Money in search equilibrium. Econometrica: Journal of the Econometric
Society, 8(3), 90-110.
Edgar, O. (1987). The future of freedom in the developing world: Economic development as
political reform. (No Title).
Godson, U. N. (2021). Foreign direct investment and growth nexus: Further evidence from
Africa’s largest economy. Journal of Infrastructure Development, 13(1), 65-78.
Greenwood, R. E, & Jovanovic, T. U. (1990). From Marshall plan to debt crisis: Foreign aid and
development choices in the world economy. University of California Press.
Itah, A. J., & Bidemi, O. J. (2022). Non-oil exports financing: An implication for economic growth
Nigeria. European Journal of Accounting, Finance and Investment, 8(9), 1-2.
Marshal, I., Solomon, I. D., & Onyekachi, O. (2015). Bank domestic credits and economic growth
nexus in Nigeria (1980-2013). International Journal of Finance and Accounting, 4(5),
236-244.
Nwakanma, P. C., Nnamdi, I. S., & Omojefe, G. O. (2014). Bank credits to the private sector:
potency and relevance in Nigeria’s economic growth process. Accounting and Finance
Research, 3(2), 1-23.
Okunlola, O. C., & Akinlo, E. A. (2021). The impact of export promotion schemes on agricultural
growth in Nigeria. African Journal of Economic Review, 9(1), 60-86.
Olasode, O. S, & Babatunde, T. S. (2016). External debts and economic growth in Nigeria: An
empirical study using autoregressive distributed lag model. Business and Economic
Journal, 7(3), 1 – 9.
Paravisini, D., Rappoport, V. & Schnabl, P. (2011). Specialization in bank lending: Evidence from
exporting firms. The Journal of Finance, 9(4), 76-83.
Sanusi, L. S. (2010). Growth prospects for the Nigerian economy. Convocation Lecture delivered
at the Igbinedion University Eighth Convocation Ceremony, Okada, Edo State.
Sipahutar, M. A., Oktaviani, R., Siregar, H., & Juanda, B. (2016). Linkage of credit on BI rate,
funds rate, inflation and government spending on capital. Jejak, 10(1), 1-11.
Stiglitz, J. E., & Weiss, A. (1983). Asymmetric information in credit markets and its implications
for macro-economics. Oxford Economic Papers, 44(4), 694-724.
United Nations (2023). Inequality measurement. Development policy and analysis division
department of economic and social affairs.
Yusuf, F. (2020). Causal relationships between financial development, trade openness and
economic growth: the case of Turkey. Journal of Social Sciences, 5(1), 33-42.

DOWNLOAD PDF

---

Back