IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i3p1475-1488.html
   My bibliography  Save this article

Determinants of Capital Formation in Nigeria

Author

Listed:
  • Dickson Amoruwa MEJEBI

    (Department of Accounting, Faculty of Social and Management Sciences, Benson Idahosa University, Benin City, Edo State.)

  • Sunday Nosa Ugbogbo

    (Department of Accounting, Faculty of Social and Management Sciences, Benson Idahosa University, Benin City, Edo State.)

  • Stanley Otakho Iyoha

    (Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City, Edo State.)

Abstract

The study investigated the determinants of capital formation in Nigeria. For the purpose of analysis, the unit root test was done by using the Augmented Dickey Fuller methodology (ADF) and Philip Peron while f-bound test and ARDL models were used to determine the long and short-run relationship respectively. The time series data gathered for the four variables were from World Bank development indicator from 1981 to 2019. The results from the stationarity test showed that not all the variables were stationary at level so it enabled the use of f-Bound test (long Run) and Autoregressive Distributed Lag Model (short- run) to long- run analysis. The coefficient of GNI as a percentage of GDP implies that a unit change in GNI led to about increase in capital formation during the period under review. This therefore conforms to apriori expectation of a positive relationship between Gross national Income and capital formation in an economy. Also, the coefficient of GNS as a percentage of GDP implies that a unit change in GNS led to an increase in capital formation during the period under review. Therefore, this conforms to apriori expectation of a positive relationship between Gross national Savings and capital formation in an economy. The coefficient of FDI as a percentage of GDP implies that a unit change in FDI led to a decline in capital formation during the period under review. This therefore failed to conform to apriori expectation of a positive relationship between foreign direct investment and capital formation in an economy. Furthermore, the coefficient of export Earnings as a percentage of GDP implies that a unit change in export earnings led to a decline in capital formation during the period under review. This therefore failed to conform to apriori expectation of a positive relationship between Export Earnings and capital formation in an economy. Based on these findings, the study recommends amongst others that; there should be the encouragement of savings culture and creation of a conducive environment for investment to thrive. Also, the government should not only find means of attracting foreign investment but also ensure that these funds drive capital formation both in the short-run and long-run.

Suggested Citation

  • Dickson Amoruwa MEJEBI & Sunday Nosa Ugbogbo & Stanley Otakho Iyoha, 2023. "Determinants of Capital Formation in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(3), pages 1475-1488, March.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:3:p:1475-1488
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-3/1475-1488.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/journals/ijriss/articles/determinants-of-capital-formation-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sebastian Kripfganz & Daniel C. Schneider, 2023. "ardl: Estimating autoregressive distributed lag and equilibrium correction models," Stata Journal, StataCorp LP, vol. 23(4), pages 983-1019, December.
    2. Godwin Emmanuel Oyedokun & Ayodeji Babatope Adeyemi, 2018. "Human Capital Formation and Economic Growth in Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 7(3), pages 44-65, July.
    3. Sebastian Kripfganz & Daniel C. Schneider, 2023. "ardl: Estimating autoregressive distributed lag and equilibrium correction models," Stata Journal, StataCorp LP, vol. 23(4), pages 983-1019, December.
    4. Akpokodje, D., 2000. "The Effect of Export Earnings Fluctuations on Capital Formation in Nigeria," Papers 103, African Economic Research Consortium.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nuno Carlos Leitão, 2021. "Testing the Role of Trade on Carbon Dioxide Emissions in Portugal," Economies, MDPI, vol. 9(1), pages 1-15, February.
    2. Boucekkine, R. & Laksaci, M. & Touati-Tliba, M., 2021. "Long-run stability of money demand and monetary policy: The case of Algeria," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    3. Adelina-Andreea Siriteanu & Erika-Maria Doacă, 2023. "Application of ARDL modelling in global structural shocks and their dynamic impact on FDI," Journal of Financial Studies, Institute of Financial Studies, vol. 14(8), pages 181-191, May.
    4. Endo, Tadashi, 2022. "Endogenous market development for government securities in lower-income economies," Emerging Markets Review, Elsevier, vol. 50(C).
    5. Bouazza Elamine Zemri & Sidi Mohamed Boumediene Khetib, 2024. "Can Sustainable Economic Development Curtail Carbon Dioxide Emissions? Insights from Algeria’s Industry," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 70-83.
    6. Stéphane Lemarié & Valérie Orozco & Jean-Pierre Butault & Antonio Musolesi & Michel Simioni & Bertrand Schmitt, 2020. "Assessing the long-term impact of agricultural research on productivity: evidence from France," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(4), pages 1559-1586.
    7. Sebastian Kripfganz & Daniel C. Schneider, 2020. "Response Surface Regressions for Critical Value Bounds and Approximate p‐values in Equilibrium Correction Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(6), pages 1456-1481, December.
    8. José F. Perles & Martín Sevilla & Ana B. Ramón-Rodríguez & María Jesús Such & Patricia Aranda, 2024. "Carry-over effects of tourism on traditional activities," Tourism Economics, , vol. 30(5), pages 1237-1256, August.
    9. Moutinho, Victor & Santos de Oliveira, Helena M. & Viana Espinosa de Oliveira, Henrique & Puime Guillén, Félix, 2023. "The augmented and integrative model of economic growth: Theoretical and empirical evidence from USA," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    10. Maria Karadima & Helen Louri, 2021. "Determinants of Non-Performing Loans in Greece: the intricate role of fiscal expansion," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 160, Hellenic Observatory, LSE.
    11. Max Resende & Juliano Leal & João Simoni, 2021. "Electricity demand in the iron ore industry: Evidence from Brazil," Economics Bulletin, AccessEcon, vol. 41(3), pages 929-937.
    12. Beri, Parfait & Molem, Christopher Sama, 2024. "The impact of economic globalisation on labour market outcomes in Africa," MPRA Paper 122554, University Library of Munich, Germany.
    13. Desire Wade Atchike & Zhen-Yu Zhao & Geriletu Bao, 2020. "The Relationship between Electricity Consumption, Foreign Direct Investment and Economic Growth: Case of Benin," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 507-515.
    14. Maria Karadima & Helen Louri, 2022. "Government debt accumulation and non-performing loans: An ARDL bounds testing approach," Economics and Business Letters, Oviedo University Press, vol. 11(4), pages 150-160.
    15. Olufunmilayo T. Afolayan & Henry Okodua & Hassan Oaikhenan & Oluwatoyin Matthew, 2020. "Carbon Emissions, Human Capital Investment and Economic Development in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 427-437.
    16. Somoye, Oluwatoyin Abidemi & Ozdeser, Huseyin & Seraj, Mehdi, 2022. "Modeling the determinants of renewable energy consumption in Nigeria: Evidence from Autoregressive Distributed Lagged in error correction approach," Renewable Energy, Elsevier, vol. 190(C), pages 606-616.
    17. Emilia Landa Shikomba & Elizabeth Elias & Sirorat Ruttanawijit, 2021. "Industry Policy Effects On Namibia'S Economic Growth," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 19(1), pages 13-22, May.
    18. Anupam Das & Leanora Brown & Adian McFarlane, 2023. "Asymmetric Effects of Financial Development on CO 2 Emissions in Bangladesh," JRFM, MDPI, vol. 16(5), pages 1-18, May.
    19. Xiuqin Zhang & Xudong Shi & Yasir Khan & Majid Khan & Saba Naz & Taimoor Hassan & Chenchen Wu & Tahir Rahman, 2023. "The Impact of Energy Intensity, Energy Productivity and Natural Resource Rents on Carbon Emissions in Morocco," Sustainability, MDPI, vol. 15(8), pages 1-22, April.
    20. Sascha Keil, 2021. "The Challenging Estimation Of Trade Elasticities:Tackling The Inconclusive Eurozone Evidence," Chemnitz Economic Papers 042, Department of Economics, Chemnitz University of Technology, revised May 2021.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:3:p:1475-1488. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.