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Finance, Investment and Economic Growth: The Nigerian Experience

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  • George Chisom Okorie

Abstract

Most countries strive to achieve high investment because of its literature acknowledged advantages as a tool of economic growth. Nigeria though faced by the problem of saving-investment gap has one of its principal objectives under the new democratic dispensation as “the towards growth sustenance†. This study investigated the impact of finance on investment and the impact of investment on economic growth of Nigerian economy. An error correction distributed lag model and a distributed lag model were estimated via the classical least squares. Results suggest that increase in private sector credit (PSC) leads to increase in economic growth of Nigerian economy as 10% increase in private sector credit (LPSC) led to 30% increase in total domestic investment (TDI). The result also showed that the saving level in Nigeria is not sufficient to match the investment opportunities as typified by non-significance of saving in the very short run. However, the total domestic investment of Nigeria in the long run had a positive impact on the Nigeria’s economic growth as 10% increase total domestic investment led to 6% increase in economic growth of Nigeria. This suggests that Nigeria has to encourage increased inflow of finance to meet the investment requirements of the economy focusing on helping to lower the costs of investment by giving high priority to the provision of economic infrastructure like electricity, reducing risks associated with investment in Nigeria through having a politically and economically stable economy. Most importantly, there is need for promoting responsible business practices in such areas as labour relations, the environment and anti-corruption policy implementation.

Suggested Citation

  • George Chisom Okorie, 2014. "Finance, Investment and Economic Growth: The Nigerian Experience," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 2(2), pages 63-69.
    • Handle: RePEc:rss:jnljee:v2i2p2
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    1. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
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    1. Dewan Abdullah Al Rafi & Sanzida Taurin & Kentaka Aruga & Md. Monirul Islam & Arifa Jannat, 2022. "Revealing the pathway of reluctancy toward agricultural credit repayment: a case study on fish farmers in Bangladesh," SN Business & Economics, Springer, vol. 2(6), pages 1-24, June.
    2. Olukemi I. Lawanson & Dominic I. Umar, 2020. "Education Expenditure-Led Growth: Evidence from Nigeria (1980-2018)," International Business Research, Canadian Center of Science and Education, vol. 13(3), pages 133-133, March.

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