Does Deficit Financing Promote Economic Growth? The Nigerian Experience

Registration ID: IJNRD_202790

Published ID: IJNRD2312280

DOI: Click Here to Get

Dr. Boniface Linus Akpan , Dr. Aniefiok Benedict Udo

Fiscal Deficit; Financing; External Borrowing; Public Debt and ECM

The Nigerian government has been running huge deficits since the civil war years. The deficit as percentage of GDP has continued to be on the increase and evidence is in the escalating public debt. This study examined the effect of fiscal deficit financing on economic growth in Nigeria by using the Error correction mechanism to estimate the specified model based on the Neo-Classical Theoretical underpinning of economic growth. The result reveals that an increase in External Deficit Financing will bring about a 0.8 per cent increase in economic growth, an indication that External Deficit Financing has a positive relationship with economic growth. Also, an increase in non-banking deficit financing will bring about a 2.24 per cent increase in economic growth, an indication that non-banking deficit financing has a positive relationship with economic growth. For banking source of deficit financing, the result also revealed that an increase in Banking Deficit Financing will bring about a 6.7 per cent increase in economic growth, an indication that Banking Deficit Financing has a positive relationship with economic growth. However, none of the explanatory variables were statistically significance. The granger causality result showed that there is no causal relationship between Real Gross Domestic Product and External Deficit Financing. Therefore, the study concludes that that there is no significant relationship between the sources of fiscal deficit financing and economic growth Nigeria.

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Dr. Boniface Linus Akpan & Dr. Aniefiok Benedict Udo (December-2023). Does Deficit Financing Promote Economic Growth? The Nigerian Experience. INTERNATIONAL JOURNAL OF NOVEL RESEARCH AND DEVELOPMENT, 8(12), c831-c845. https://ijnrd.org/papers/IJNRD2312280.pdf

Volume 8 Issue 12, December-2023

Pages : c831-c845

Paper Reg. ID: IJNRD_202790

Published Paper Id: IJNRD2312280

Downloads: 000121999

Research Area: Social Science and Humanities 

Country: Uyo, Akwa Ibom State, Nigeria

Published Paper PDF: https://ijnrd.org/papers/IJNRD2312280.pdf

Published Paper URL: https://ijnrd.org/viewpaperforall?paper=IJNRD2312280

Journal Name: INTERNATIONAL JOURNAL OF NOVEL RESEARCH AND DEVELOPMENT(IJNRD)

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