A CAUSALITY INVESTIGATION OF DOMESTIC DEBT AND THE PERFORMANCE OF NIGERIAN ECONOMY
Andabai, Priye Werigbelegha PhD
This research endeavours to investigate the intricate interplay among internal debt and the overall viability of the Nigerian economy, covering a substantial time frame from 1998 to 2022. The acquisition of secondary data is derived from the esteemed CBN Bulletin for the year 2022. The study used GDP and employment as dependent variables to assess the viability of the economy. Additionally, treasury bill, development stock, and interest rate are utilised as the independent variables in this study. A causality investigation is employed to empirically examine and scrutinise the postulated hypotheses. The outcome of the analysis indicates that the variables under consideration do not exhibit the presence of unit roots. In Nigeria, it is pertinent to acknowledge the existence of a profound and enduring equilibrium connection between the domestic debt and the gross domestic product. The empirical findings substantiate a short-run adjustment speed of approximately 63% in response to long-run disequilibrium. The phenomenon of domestic debt exhibits a discernible causal nexus with the metric of gross domestic product. The R2 reveals that approximately 54% of the fluctuations in the Nigerias economic performance can be elucidated by alterations in internal debt variables. The research findings posit that there exists a discernible cause-and-effect relationship between the accumulation of internal debt and the overall viability of the economy. The study posits that it would be prudent for the government to uphold a debt-to-bank deposit ratio that does not exceed 35 percent while also advocating for a heightened reliance on tax revenue as a means to fund its various undertakings. It is imperative that the government relinquish its involvement in endeavours that can be effectively managed by the private sector, such as the refining of crude oil into petroleum products and the transportation thereof. It is imperative for the government to uphold a judicious equilibrium among short-term and long-term debt tools, with a particular emphasis on the prevalence of long-term tools within the debt market.
Keywords: debt, domestic GDP, performance, Nigeria
Journal Name :
EPRA International Journal of Economics, Business and Management Studies (EBMS)
Published on : 2023-09-20