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Public – Private Investment Nexus in Developing Economies: Does Financial Sector Development Matter for Nigeria?

Listed author(s):
  • Adegboye, Abiodun Adewale
  • Alimi, R. Santos
Registered author(s):

    Much of the social and economic infrastructural deficits in Africa have been attributed to inadequate investment levels in many countries of Africa. Although Nigeria is not lacking in foreign private investments, the present level of total investment is adjudged sub-optimal, and the public sector is perceived to be large, inefficient and also dominant. The question arising is whether the composition of investment matters for the overall investment behaviour in Nigeria. The main objectives of the paper are to investigate the complementarity or substitutability of public and private investment, as well as examine whether financial sector development drive private investment in Nigeria. The paper employed annual data covering the period of 1981 to 2015 and ARDL estimation. The bounds test results revealed that there exists a long-run relationship among the variables. The study found that public investment crowds out private investment in Nigeria. In other words, the complementarity effect between private investment and public investment is not justified in the study; rather, there exists a substitution effect between private and public investments in Nigeria. More so, the result suggested that the effect of financial development on private – public investment nexus is positive and significant (P

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    File URL: https://mpra.ub.uni-muenchen.de/80908/1/MPRA_paper_80908.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 80908.

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    Date of creation: Aug 2017
    Handle: RePEc:pra:mprapa:80908
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    1. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
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