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Financial Market Long-Tenured Debt Instruments and Economic Growth in Developing Nations: Empirical Evidence from Nigeria

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  • ELEJE, Edward Ogbonnia (PhD)

    (Department of Banking and Finance, Federal University, Wukari, Taraba State, Nigeria)

  • NWANI, Christopher Onyemaechi

    (Department of Banking and Finance, Federal University, Wukari, Taraba State, Nigeria)

  • EZUEM, Daniel Moyotole

    (Department of Banking and Finance, Federal University, Wukari, Taraba State, Nigeria)

Abstract

Extant studies have attempted to establish the possible connection between financial market long tenured debt instruments and economic growth of nations especially, the developing countries. Results so far have appeared inconclusive and in some cases contradictory due to data set, timing, and even country peculiarities; hence, the continued need for further research in this dimension. The present study is therefore a contribution in this regard. The study basically evaluates the impact of bond, a major financial market long-tenured debt instrument on economic growth of a prototype developing nation, Nigeria. Specifically, it investigates the possible effect of federal, state, and corporate bonds on economic growth within a period (2003-2020). A computer based regression and correlation analysis aided by the Special Package for Social Science (SPSS) version 20 was employed to test three formulated hypotheses. The findings from the empirical evaluation reveal that federal government bonds have strong positive impact on economic growth whereas both state government and corporate bonds have weak but positive effect on economic growth in Nigeria. Consequently, the paper recommends among others that federal government should continue to explore domestic bond market financing option for capital projects while investors should invest on the FGN bond instruments due to their riskless characteristics. Besides, state and local governments as well as corporate entities should intensify more efforts at exploring the financing potentials of the bond market to boost local level growth and contribute meaningfully to economic growth and development of Nigeria.

Suggested Citation

  • ELEJE, Edward Ogbonnia (PhD) & NWANI, Christopher Onyemaechi & EZUEM, Daniel Moyotole, 2022. "Financial Market Long-Tenured Debt Instruments and Economic Growth in Developing Nations: Empirical Evidence from Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(8), pages 200-207, August.
    • Handle: RePEc:bcp:journl:v:6:y:2022:i:8:p:200-207
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    References listed on IDEAS

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    1. Jae Young Jang & Erdal Atukeren, 2019. "Sustainable Local Currency Debt: An Analysis of Foreigners’ Korea Treasury Bonds Investments Using a LA-VARX Model," Sustainability, MDPI, vol. 11(13), pages 1-23, June.
    2. Mr. Yibin Mu & Mr. Peter Phelps & Ms. Janet Gale Stotsky, 2013. "Bond Markets in Africa," IMF Working Papers 2013/012, International Monetary Fund.
    3. Mr. S. M. Ali Abbas & Mr. Jakob E Christensen, 2007. "The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Working Papers 2007/127, International Monetary Fund.
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