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- Title
CAPITAL INFLOWS, FINANCIAL DEEPENING AND ECONOMIC GROWTH NEXUS: THE MISSING LINK.
- Authors
Ditimi, Amassoma; Oluwatobiloba, Azeez
- Abstract
The purpose of this study was to investigate direct effects of capital inflow, financial deepening on economic growth in Nigeria due to diverse contentions it stirred among researchers from 1981 to 2018 using the Autoregressive Distributive Lag (ARDL) co-integration approach. The findings from the study showed the existence of a long-run relationship between foreign capital inflows and economic growth in Nigeria. Furthermore, the ARDL regression estimate results pointed that foreign direct investment (FDI), foreign aids (FA) and financial development (FD) have a positive and significant impact on economic growth, while on the contrary, remittances exerted a negative and insignificant relationship on economic growth. Also inflation and exchange rate results showcased a negative impact on economic growth. Based on the findings of this study, we conclude that capital inflows (FDI, & FA) positively impact the Nigerian economy both in the short run and long-run within the study period via sound financial deepening, thus concluding that capital inflows are a potential driver of economic growth in Nigeria. Consequently, the study recommends that the central bank should employ a more restrictive monetary policy to suppress the adverse effect that could emanate from inflationary pressure which can distort proper channeling of capital inflows into the country.
- Subjects
NIGERIA; CAPITAL movements; ECONOMIC expansion; PRICE inflation; FOREIGN investments; INTERNATIONAL economic assistance
- Publication
Economic Review: Journal of Economics & Business / Ekonomska Revija: Casopis za Ekonomiju i Biznis, 2020, Vol 18, Issue 1, p61
- ISSN
1512-8962
- Publication type
Article