Economic Recovery, Price of Funds and Domestic Investment: Evidence from Nigeria

AFRAG035

Economic Recovery, Price of Funds and Domestic Investment: Evidence from Nigeria

Atseye, Fidelis Anake Lawal, Sulieman Gbenga Aliyu Rilwanu Saad

Department of Banking and Finance Faculty of Management Sciences University of Calabar, Calabar, Nigeria Corresponding Author: anakefidel@yahoo.co.uk and anakefidel@unical.edu.ng

Abstract

The paper provided empirical evidence of the effect of price of funds in the financial market and inflation rate on domestic investment as gateway to economic recovery. Time series data were extracted from the Central Bank of Nigeria (CBN) statistical bulletin and the National Bureau of Statistics quarterly digest during the period 1990-2020. The study adopted the ordinary least square (OLS) multiple regression model. Pre-estimation statistics included Augment Dickey – Fuller (ADF) to detect the presence of unit root, Johnson Co-integration to test the existence of long– run relationship, and the error correction model (ECM) to estimate the speed at which the domestic investment returned to equilibrium in response to change in price of funds influence rate and in venue level. Results indicated a significant impact of income level on domestic investment. Also, interest rate and price of funds exerted non- significant impact on the value of domestic investment. Based on these results, it was recommended that the monetary authorities evolve policies aimed at raising the level of disposal income with a view to increasing the level of savings to add to the stock of capital to promote investment.

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