Financial System and Variation in Nigerian Foreign Direct Investment

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Financial System and Variation in Nigerian Foreign Direct Investment

FINANCIAL SYSTEM AND VARIATION IN NIGERIAN FOREIGN DIRECT INVESTMENT

Ejiofor, Tonna A.

Department of Banking and Finance

Nnamdi Azikiwe University, Awka

Mail: tejiofor@gmail.com

Adigwe, P.K.

.Department of Banking and Finance

Nnamdi Azikiwe University, Awka

Mail: pk.adigwe@unizik.edu.ng

 Eneh, Onyinye M

Department of Accountancy

Nnamdi Azikiwe University, Awka

Mail: o.eneh@unizik.edu.ng

Abstract

This study determined how credit to private sector, market capitalization, broad money supply and savings explained and affected the variation in industrial sector contribution to foreign direct investment. An Ex-Post Facto research design was adopted to examine how financial development has explained and affected the variation in the performance of the industrial sector in Nigeria. The time frame covers a period of thirty five (35) years that is, from 1986 to 2020. Data were obtained from the Central Bank of Nigeria (CBN) annual reports and statistical bulletin of 2020. The Auto-Regressive Distributive Lag (ARDL) estimation technique was applied in estimating the models via E-Views 10.0. The study revealed that credit to private sector, market capitalization, broad money supply and savings significantly explained and affected the variation in industrial sector contribution to foreign direct investment. To this end, this study concludes that financial development is pivotal to the growth of the industrial sector in Nigeria. It was recommended that in view of the financial intermediation roles of deposit money banks, the research supports the on-going efforts of the Central Bank of Nigeria (CBN) in promoting a sound and real sector-friendly financial system.

Keywords: Credit to private sector, Market capitalization, Broad money supply, Savings, foreign direct investment.

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