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Intergovernmental Transfers and Own Revenues of Subnational Governments in Nigeria

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  • Kayode Taiwo

    (Universidade do Minho, Portugal and Adekunle Ajasin University, Nigeria)

Abstract

The paper explores the effect of intergovernmental transfers on the own revenues of subnational governments in Nigeria. This study employs the instrumental variables (IV) model to establish the impact of annual variation in intergovernmental transfers on the own revenues of subnational governments. The study reveals that states depend mainly on transfers from the federal government to run their operations; and transfers to second-level administrative units, states in Nigeria crowd out own revenues. A 1 percent rise in transfers leads to about 0.65 percent reduction in own revenues per capita. Also, the drive for own revenues goes down in the election year.

Suggested Citation

  • Kayode Taiwo, 2022. "Intergovernmental Transfers and Own Revenues of Subnational Governments in Nigeria," Hacienda Pública Española / Review of Public Economics, IEF, vol. 240(1), pages 31-59, March.
    • Handle: RePEc:hpe:journl:y:2022:v:240:i:1:p:31-59
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    2. Tahir Yousaf & Qurat ul Ain & Yasmeen Akhtar & Wasi Ul Hassan Shah, 2022. "The Crowding in (out) Effect of Intergovernmental Transfers on Local Government Revenue Generation: Evidence from Pakistan," Hacienda Pública Española / Review of Public Economics, IEF, vol. 242(3), pages 3-28, September.

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    More about this item

    Keywords

    Federalism; Intergovernmental transfer; Revenue; Subnational government; Instrumental variables;
    All these keywords.

    JEL classification:

    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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