IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025i15p765-778.html
   My bibliography  Save this article

Impact of Multilateral Debt Stock on Economic Growth in Nigeria: Evidence from a Vector Error Correction Techniques

Author

Listed:
  • Saleh, Atiku Dambatta

    (Department of Accounting and Finance, Baze University, Abuja)

Abstract

This study investigates the impact of multilateral debt on economic growth in Nigeria within the theoretical framework of Public Choice Theory, which emphasizes the role of institutional behaviour and fiscal decision-making in economic outcomes. Using quarterly data from 2007Q1 to 2024Q2, the study employs real gross domestic product (RGDP) as a proxy for economic growth, while multilateral debt (MUD), inflation rate (INF), exchange rate (EXH), and debt servicing (DBS) serve as the independent variables. Data were sourced from the Central Bank of Nigeria (CBN), the Debt Management Office (DMO), and the Budget Monitoring Office (BMO). To assess the time-series properties of the variables, the Augmented Dickey-Fuller (ADF) test was conducted, confirming that all variables are integrated in order one, I(1). The Johansen Cointegration Test reveals the existence of long-run relationships among the variables. The Vector Error Correction Techniques (VECM) confirmed the presence of a significant short-run adjustment mechanism. Furthermore, the Wald Short-Run Causality Test and the Toda-Yamamoto Causality Test provide evidence of unidirectional causality from multilateral debt, debt servicing, and exchange rate to real GDP. These results suggest that while multilateral debt can promote economic growth, its effectiveness largely depends on proper fiscal governance, transparency, and productive utilization of borrowed funds. The study recommends prudent debt management policies and structural reforms to optimize the growth-enhancing potential of multilateral borrowing in Nigeria.

Suggested Citation

  • Saleh, Atiku Dambatta, 2025. "Impact of Multilateral Debt Stock on Economic Growth in Nigeria: Evidence from a Vector Error Correction Techniques," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(15), pages 765-778, June.
    • Handle: RePEc:bcp:journl:v:9:y:2025:i:15:p:765-778
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-15/765-778.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/impact-of-multilateral-debt-stock-on-economic-growth-in-nigeria-evidence-from-a-vector-error-correction-techniques/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Bernardin Senadza & Agbemavor Korsi Fiagbe & Peter Quartey, 2017. "The Effect of External Debt on Economic Growth in Sub-Saharan Africa," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 11(1), pages 61-69, December.
    3. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
    4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    5. Benno J. Ndulu & Stephen A. O'Connell, 2000. "Correction: Governance and Growth in Sub-Saharan Africa," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 241-242, Summer.
    6. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    7. Panagiotis Pegkas, 2018. "The Effect of Government Debt and Other Determinants on Economic Growth: The Greek Experience," Economies, MDPI, vol. 6(1), pages 1-19, February.
    8. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    9. Aliyu, Shehu Usman Rano, 2009. "Impact of Oil Price Shock and Exchange Rate Volatility on Economic Growth in Nigeria: An Empirical Investigation," MPRA Paper 16319, University Library of Munich, Germany, revised 10 Jun 2009.
    10. Lerato Mothibi, 2019. "The impact of foreign debt and government debt on economic growth in South Africa," Proceedings of International Academic Conferences 9912015, International Institute of Social and Economic Sciences.
    11. Krugman, Paul, 1988. "Financing vs. forgiving a debt overhang," Journal of Development Economics, Elsevier, vol. 29(3), pages 253-268, November.
    12. Toan Quoc Nguyen & Mr. Benedict J. Clements & Ms. Rina Bhattacharya, 2003. "External Debt, Public Investment, and Growth in Low-Income Countries," IMF Working Papers 2003/249, International Monetary Fund.
    13. Talknice Saungweme & Nicholas M. Odhiambo, 2019. "Government debt, government debt service and economic growth nexus in Zambia: a multivariate analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1622998-162, January.
    14. Abdulkarim Yusuf & Saidatulakmal Mohd & David McMillan, 2021. "The impact of government debt on economic growth in Nigeria," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1946249-194, January.
    15. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Naeem AKRAM*, 2017. "Role of Public Debt in Economic Growth of Sri Lanka: An ARDL Approach," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(2), pages 189-212.
    2. Kevin S. Nell & A.P. Thirlwall, 2017. "Why does the productivity of investment vary across countries?," PSL Quarterly Review, Economia civile, vol. 70(282), pages 213-245.
    3. M. Danquah & B. Ouattara, 2014. "Productivity Growth, Human Capital And Distance To Frontier In Sub-Saharan Africa," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 39(4), pages 27-48, December.
    4. Ejike Udeogu & Shampa Roy-Mukherjee & Uzochukwu Amakom, 2021. "Does Increasing Product Complexity and Diversity Cause Economic Growth in the Long-Run? A GMM Panel VAR Evidence," SAGE Open, , vol. 11(3), pages 21582440211, August.
    5. Antonio Paradiso & Saten Kumar & B. Bhaskara Rao, 2013. "The growth effects of education in Australia," Applied Economics, Taylor & Francis Journals, vol. 45(27), pages 3843-3852, September.
    6. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    7. Ikonen, Pasi, 2010. "Effect of finance on growth through more efficient utilization of technological innovations," Bank of Finland Research Discussion Papers 21/2010, Bank of Finland.
    8. Robert J. Barro, 2013. "Health and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 329-366, November.
    9. Charles Ackah, & Oliver Morrissey, 2007. "Trade Liberalisation is Good for You if You are Rich," Discussion Papers 07/01, University of Nottingham, CREDIT.
    10. repec:zbw:bofrdp:2010_021 is not listed on IDEAS
    11. Ekaterina Ponomareva & Alexandra Bozhechkova & Alexandr Knobel, 2012. "Factors of Economic Growth," Published Papers 172, Gaidar Institute for Economic Policy, revised 2013.
    12. Attard, Juergen, 2019. "Public Debt and Economic Growth nexus: A Dynamic Panel ARDL approach," MPRA Paper 96023, University Library of Munich, Germany.
    13. Nicholas Apergis & Puja Padhi, 2013. "Health expenses and economic growth: convergence dynamics across the Indian States," International Journal of Health Economics and Management, Springer, vol. 13(3), pages 261-277, December.
    14. Michael Peneder & Karl Aiginger & Gernot Hutschenreiter & Markus Marterbauer, 2001. "Structural Change and Economic Growth," WIFO Studies, WIFO, number 20668.
    15. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    16. Hibrahim Limi Kouotou & Boniface Ngah Epo, 2022. "Duration of heads of state in power and economic growth: a Sub-Saharan African tale," Economics Bulletin, AccessEcon, vol. 42(2), pages 1153-1170.
    17. Kevin D. Hoover & Stephen J. Perez, 2004. "Truth and Robustness in Cross‐country Growth Regressions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(5), pages 765-798, December.
    18. Imen Mohamed Sghaier, 2022. "Foreign Capital Inflows and Economic Growth in North African Countries: the Role of Human Capital," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2804-2821, December.
    19. Suri, Tavneet & Boozer, Michael A. & Ranis, Gustav & Stewart, Frances, 2011. "Paths to Success: The Relationship Between Human Development and Economic Growth," World Development, Elsevier, vol. 39(4), pages 506-522, April.
    20. Oussama Elkhalfi & Rachid Chaabita & Kamal Zahraoui & Hicham El Alaoui, 2023. "Public Spending on Human Capital and Economic Growth in Morocco," International Journal of Economics and Financial Issues, Econjournals, vol. 13(4), pages 102-110, July.
    21. Adele Bergin & Ide Kearney, 2004. "Human Capital, The Labour Market and Productivity Growth in Ireland," Papers WP158, Economic and Social Research Institute (ESRI).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:9:y:2025:i:15:p:765-778. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.