IDEAS home Printed from https://ideas.repec.org/a/nwe/eajour/y2025i3p884-908.html

Can Corruption Explain Public Debt Accumulation in Nigeria?

Author

Listed:
  • Ibrahim Iliyasu

    (Department of Economics, Umaru Musa Yar’adua University Katsina State-Nigeria)

  • Ibrahim Mohammed

    (Department of Economics, Umaru Musa Yar’adua University Katsina State-Nigeria)

Abstract

This study examines the effect of corruption on public debt stock in Nigeria for the period 2010q1-2020q4. An ARDL bound test to cointegration, canonical cointegration regression (CCR), dynamic ordinary least squares (DOLS) and fully modified ordinary least square (FMOLS) techniques were used for the analysis. We find consistent evidences of a positive long-term relationship between the ratio of public debt to GDP and corruption alongside the ratio of government expenditure to GDP, and a negative relationship between the ratio of public debt to GDP and government revenue to GDP as well as logarithm of GDP per capita, GDP growth rate and unemployment rate. Overall, the evidence suggests that corruption has an increasing effect on public debt irrespective of the magnitude of government expenditure; on average a unit increase in corruption index increase public debt stock by about 14.88 percent. Further results show that, the adverse effect of corruption persists in foreign and domestic debt components, albeit, the effect on domestic debt components was statistically not significant. These findings imply that better control of corruption can be a potential instrument for taming the rising public debt stock in Nigeria.

Suggested Citation

  • Ibrahim Iliyasu & Ibrahim Mohammed, 2025. "Can Corruption Explain Public Debt Accumulation in Nigeria?," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 884-908, September.
    • Handle: RePEc:nwe:eajour:y:2025:i:3:p:884-908
    as

    Download full text from publisher

    File URL: https://www.unwe.bg/doi/eajournal/2025.3/EA.2025.3.13.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sadia Shabbir & Hafiz M. Yasin, 2015. "Implications of Public External Debt for Social Spending: A Case Study of Selected Asian Developing Countries," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(1), pages 71-103, Jan-June.
    2. Ibrahim Iliyasu & Ibrahim Muhammed, 2023. "Growth effects of government expenditure in Nigeria: Does the level of corruption matter?," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 10(1), pages 1-10.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    4. Walid BENAYED & Foued Badr GABSI & Samia OMRANE BELGUITH, 2015. "Threshold Effect of Public Debt on Domestic Investment: Evidence from Selected African Countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(605), W), pages 189-198, Winter.
    5. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 205-231.
    6. Saikkonen, Pentti, 1992. "Estimation and Testing of Cointegrated Systems by an Autoregressive Approximation," Econometric Theory, Cambridge University Press, vol. 8(1), pages 1-27, March.
    7. Luigi Benfratello & Alfredo Del Monte & Luca Pennacchio, 2018. "Corruption and public debt: a cross-country analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 25(5), pages 340-344, March.
    8. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-355, December.
    9. Nurudeen Abu & Awadh Ahmed Mohammed Gamal, 2020. "An Empirical Investigation of the Twin Deficits Hypothesis in Nigeria: Evidence from Cointegration Techniques," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.
    10. Anisah Alfada, 2019. "Corruption and Economic Growth in ASEAN Member Countries," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 65, pages 111-131, Desember.
    11. Nurudeen Abu, 2019. "Inflation and Unemployment Trade-off: A Re-examination of the Phillips Curve and its Stability in Nigeria," Contemporary Economics, Vizja University, vol. 13(1), March.
    12. Tang, Chor Foon, 2008. "A re-examination of the relationship between electricity consumption and economic growth in Malaysia," Energy Policy, Elsevier, vol. 36(8), pages 3067-3075, August.
    13. repec:lje:journl:v:20:y:2015:i:1:p:71-103 is not listed on IDEAS
    14. Nurudeen Abu & Mohd Zaini Abd Karim & Joseph David & Musa Abdullahi Sakanko & Onyewuchi Amaechi Ben-Obi & Awadh Ahmed Mohammed Gamal, 2022. "The Behaviour of Tax Revenue amid Corruption in Nigeria: Evidence from the Non-Linear ARDL Approach," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 55-76.
    15. Clara Delavallade, 2006. "Corruption and distribution of public spending in developing countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 30(2), pages 222-239, June.
    16. Mauro, Paolo, 1998. "Corruption and the composition of government expenditure," Journal of Public Economics, Elsevier, vol. 69(2), pages 263-279, June.
    17. Adeleke Salami, 2011. "Taxation, Revenue Allocation and Fiscal Federalism in Nigeria: Issues, Challenges and Policy Options," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 56(189), pages 27-50, April – J.
    18. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    19. Nurudeen Abu & Marcin Waldemar Staniewski, 2019. "Determinants of corruption in Nigeria: evidence from various estimation techniques," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 3058-3082, January.
    20. Nurudeen Abu & Bilyaminu Kadandani & Ben Obi & Murtala Modibbo, 2019. "How Does Pensions Affect Savings in Nigeria? Evidence from Quarterly Data," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(4), pages 541-558, December.
    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. Nurudeen Abu & Bilyaminu Kadandani & Ben Obi & Murtala Modibbo, 2019. "How Does Pensions Affect Savings in Nigeria? Evidence from Quarterly Data," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(4), pages 541-558, December.
    2. Piotr Bartkiewicz, 2020. "Quantitative Easing: New Normal or Emergency Measure?," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.
    3. Nurudeen Abu & Awadh Ahmed Mohammed Gamal, 2020. "An Empirical Investigation of the Twin Deficits Hypothesis in Nigeria: Evidence from Cointegration Techniques," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.
    4. Alfredo Monte & Luca Pennacchio, 2020. "Corruption, Government Expenditure and Public Debt in OECD Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(4), pages 739-771, December.
    5. Alfredo Monte & Luca Pennacchio, 0. "Corruption, Government Expenditure and Public Debt in OECD Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 0, pages 1-33.
    6. Nedra Baklouti & Younes Boujelbene, 2022. "Corruption, Democracy, and Public Debt: a Case of the Arab Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 574-586, March.
    7. Dincer, Oguzhan & Teoman, Ozgur, 2019. "Does corruption kill? Evidence from half a century infant mortality data," Social Science & Medicine, Elsevier, vol. 232(C), pages 332-339.
    8. Qamar Abbas & Li Junqing & Muhammad Ramzan & Sumbal Fatima, 2021. "Role of Governance in Debt-Growth Relationship: Evidence from Panel Data Estimations," Sustainability, MDPI, vol. 13(11), pages 1-19, May.
    9. Tran, My Thi Ha, 2021. "Public Sector Management And Corruption In Asean Plus Six," OSF Preprints stxw4, Center for Open Science.
    10. repec:osf:osfxxx:stxw4_v1 is not listed on IDEAS
    11. Ana-Maria Bercu & Gigel Paraschiv & Dan Lupu, 2019. "Investigating the Energy–Economic Growth–Governance Nexus: Evidence from Central and Eastern European Countries," Sustainability, MDPI, vol. 11(12), pages 1-21, June.
    12. Hongyun Han & Shuang Lin, 2019. "Government Size and Regional Capital Flows in China," Sustainability, MDPI, vol. 11(23), pages 1-19, November.
    13. Daniel Ştefan Armeanu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2017. "Empirical Study towards the Drivers of Sustainable Economic Growth in EU-28 Countries," Sustainability, MDPI, vol. 10(1), pages 1-22, December.
    14. Georgios Bertsatos & Plutarchos Sakellaris & Mike G. Tsionas, 2022. "Correction to: Extensions of the Pesaran, Shin and Smith (2001) bounds testing procedure," Empirical Economics, Springer, vol. 62(2), pages 635-635, February.
    15. José Abraham López Machuca & Jorge Eduardo Mendoza Cota, 2017. "Salarios, desempleo y productividad laboral en la industria manufacturera mexicana. (Wage, Unemployment and Labor Productivity in the Mexican Manufacturing Industry)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 185-228, October.
    16. Mohammad I. Elian & Khalid M. Kisswani, 2018. "Oil price changes and stock market returns: cointegration evidence from emerging market," Economic Change and Restructuring, Springer, vol. 51(4), pages 317-337, November.
    17. Yamamura, Eiji & Andrés, Antonio R., 2011. "Does corruption affect suicide? Empirical evidence from OECD countries," MPRA Paper 31622, University Library of Munich, Germany.
    18. Mustafa Naimoğlu & Serkan Şahin & Sefa Özbek, 2025. "Governance, Corruption, Trade Openness, and Innovation: Key Drivers of Green Growth and Sustainable Development in Türkiye," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(3), pages 4147-4162, June.
    19. Ansgar Belke & Robert Czudaj, 2010. "Is Euro Area Money Demand (Still) Stable? Cointegrated VAR Versus Single Equation Techniques," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(4), pages 285-315.
    20. Mohamed Dridi, 2014. "Corruption and Education: Empirical Evidence," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 476-493.
    21. Olimpia Neagu, 2019. "The Link between Economic Complexity and Carbon Emissions in the European Union Countries: A Model Based on the Environmental Kuznets Curve (EKC) Approach," Sustainability, MDPI, vol. 11(17), pages 1-27, August.

    More about this item

    Keywords

    ;
    ;
    ;

    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:nwe:eajour:y:2025:i:3:p:884-908. 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: Vanya Lazarova (email available below). General contact details of provider: https://edirc.repec.org/data/unweebg.html .

    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.