Domestic Debt and Growth Relations: Evidence from Nigeria

Abstract

This study investigated the impact of domestic debt on the growth of Nigerian economy. The data extracted from the Central Bank of Nigeria statistical bulletin showed absence of multicollinearity within the variables, the same variables are all integrated at order one. Result from error correction model revealed that economic growth proxied by Gross Domestic Product reinforces itself, that Central Bank of Nigeria and deposit money bank debt have positive and significant impact on economic growth within the period of the study, while non-deposit bank debt impacts insignificantly at on economic growth. It was also observed that Central Bank of Nigeria and deposit money bank debt have unidirectional effect with gross domestic product, whereas non-deposit bank debt exhibits no causal effect with gross domestic product using the pairwise granger causality test. The researchers therefore suggest that Central Bank of Nigeria and Debt Management Office should supervise the non-deposit bank debt in order to exert significantly on the growth of the economy.