IDEAS home Printed from https://ideas.repec.org/a/nap/nijefr/2018p71-77.html
   My bibliography  Save this article

The Economic Growth Imperative of Foreign Portfolio Investment for Nigeria

Author

Listed:
  • Acha, Ikechukwu A

    (Department of Banking/Finance, University of Uyo, Akwa Ibom State, Nigeria)

  • Essien, Joseph M

    (Ken Saro Wiwa Polytechnic, Bori, Rivers State, Nigeria)

Abstract

This study examined the effect of Foreign Portfolio Investment (FPI) on economic growth in Nigeria. The research design adopted was a combination of exploratory and ex post facto research designs. Secondary data were sourced from the Central Bank of Nigeria (CBN) statistical Bulletin for the period 2005 to 2014. Gross Domestic Product was used as dependent variable while Foreign Portfolio Investment, Market Capitalization as well as exchange rate for the period were the independent variables. Ordinary Least Square (OLS) multiple regression was used to analyze the data. The result indicated that Foreign Portfolio Investment (FPI) and market capitalization have positive effect on Real Gross Domestic Product (RGDP) while exchange rate had an inverse relationship with RGDP. Durbin-Watson Coefficient Test shows that there is absence of auto-correlation. Based on this result, the hull hypothesis is rejected implying that there is a positive relationship between FPI and RGDP. The result agrees with the finding made by Baghebo and Apere (2014). It was therefore recommended that since economic performance is critical to attracting Foreign Portfolio Investment into any country, the Federal Government of Nigeria should create enabling environment that will stimulate the economy and strengthen its fundamentals. The government should also work towards the stabilization of the capital and money markets by putting in place appropriate investor friendly policies to sustain their internationalization and attractiveness to investors.

Suggested Citation

  • Acha, Ikechukwu A & Essien, Joseph M, 2018. "The Economic Growth Imperative of Foreign Portfolio Investment for Nigeria," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 3(6), pages 71-77, June.
    • Handle: RePEc:nap:nijefr:2018:p:71-77
    as

    Download full text from publisher

    File URL: https://www.napublisher.org/pdf-files/NIJEFR-144-71-77.pdf
    Download Restriction: no
    File URL: https://www.napublisher.org/?ic=journal&journal=5&month=06-2018&issue=6&volume=3
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Garg, Reetika & Dua, Pami, 2014. "Foreign Portfolio Investment Flows to India: Determinants and Analysis," World Development, Elsevier, vol. 59(C), pages 16-28.
    2. Tokunbo S. OSINUBI & Lloyd A. AMAGHIONYEODIWE, 2010. "Foreign Private Investment And Economic Growth In Nigeria," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 5, pages 105-127, June.
    3. Jarita Duasa & Salina H. Kassim, 2009. "Foreign Portfolio Investment and Economic Growth in Malaysia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(2), pages 109-123.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. USMAN, Jabir Muhammed & AGUNBIADE, Olabode & AKUSO, Jonah, 2024. "Public Budget Deficit and Economic Growth in Nigeria: Evidence from NARDL Approach," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3s), pages 3884-3896, September.
    2. Rosdiana Sijabat, 2023. "The Association between Foreign Investment and Gross Domestic Product in Ten ASEAN Countries," Economies, MDPI, vol. 11(7), pages 1-21, July.
    3. Huan Chen & Tingyong Zhong & Jeoung Yul Lee, 2020. "Capacity Reduction Pressure, Financing Constraints, and Enterprise Sustainable Innovation Investment: Evidence from Chinese Manufacturing Companies," Sustainability, MDPI, vol. 12(24), pages 1-16, December.

    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. Raza, Syed Ali & Sabir, Muhammad Sarwar & Mehboob, Farhan, 2011. "Capital inflows and economic growth in Pakistan," MPRA Paper 36790, University Library of Munich, Germany.
    2. Kunofiwa Tsaurai, 2017. "Is foreign Portfolio Equity Investment Inspired Growth Hypothesis Relevant in Emerging Markets?," EuroEconomica, Danubius University of Galati, issue 2(36), pages 78-90, November.
    3. Amassoma Ditimi & Azeez Oluwatobiloba, 2020. "Capital Inflows, Financial Deepening And Economic Growth Nexus: The Missing Link," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 18(1), pages 61-73, May.
    4. Tricia Mangal & Day-Yang Liu, 2020. "The impact of economic freedom on foreign portfolio investments: The case of the Caricom single market and economy," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 213-222, March.
    5. Assad Ullah & Muhammad Anees & Zahid Ali & Muhammad Ayub Khan, 2018. "Economic Freedom and Private Capital Inflows in Selected South Asian Economies: A Dynamic Panel Data Evidence," South Asian Journal of Business and Management Cases, , vol. 7(1), pages 41-52, June.
    6. Kayode Oluwadamilare Bankole & Israel O. Ukolobi & Onyuka Felix Mcdubus, 2020. "The Impacts Of Monetary Policies On Savings And Investment In Developing Economies: A Case Study," Working Papers hal-02520027, HAL.
    7. Monica Singhania & Neha Saini, 2018. "Determinants of FPI in Developed and Developing Countries," Global Business Review, International Management Institute, vol. 19(1), pages 187-213, February.
    8. Mehmet Mucuk & Mustafa Tahir Demirsel & ?brahim Erem ?ahin, 2014. "The Relationship Between Foreign Portfolio Investments And Economic Growth: The Case Of Turkey," Proceedings of International Academic Conferences 0702082, International Institute of Social and Economic Sciences.
    9. Bozhechkova, A.V. (Божечкова, А.В.) & Sinelnikova-Muryleva, Elena Vladimirovna (Синельникова-Мурылева, Елена Владимировна), 2016. "The Impact of Higher Interest Rates on Loans to the Economic Growth of the Russian Federation in the Current Environment [Влияние Высоких Процентных Ставок По Заимствованиям На Экономический Рост Р," Working Papers 21310, Russian Presidential Academy of National Economy and Public Administration.
    10. Alimi, R. Santos & Ibironke, Adesola, 2012. "Dolado - Lütkepohl Causality Tests between Foreign Direct Investment and Economic Growth in Nigeria," MPRA Paper 49277, University Library of Munich, Germany.
    11. Mourao, Paulo Reis, 2018. "What is China seeking from Africa? An analysis of the economic and political determinants of Chinese Outward Foreign Direct Investment based on Stochastic Frontier Models," China Economic Review, Elsevier, vol. 48(C), pages 258-268.
    12. Xu, Hao & Li, Songsong, 2023. "What impacts foreign capital flows to China's stock markets? Evidence from financial risk spillover networks," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 559-577.
    13. Lakdawala, Aeimit, 2021. "The growing impact of US monetary policy on emerging financial markets: Evidence from India," Journal of International Money and Finance, Elsevier, vol. 119(C).
    14. Tony Ikechukwu Nwanji & Kerry E. Howell & Sainey Faye & Adegbola Olubukola Otekunrin & Damilola Felix Eluyela & Adedoyin Isola Lawal & Sunday Chinedu Eze, 2020. "Impact of Foreign Direct Investment on the Financial Performance of Listed Deposit Banks in Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 323-347, April.
    15. Mr Insukindro & Arti Adji & Aryo Aliyudanto, 2014. "Analysis of the Unanticipated Factors in Portfolio Inflows to Indonesia: A SCVAR Approach, 2000: Q1 - 2012: Q4," EcoMod2014 7019, EcoMod.
    16. Adekunle, Wasiu & Sulaimon, Mubaraq, 2018. "A Re-examination of the Relationship between Foreign Capital Flows and Economic Growth in Nigeria," MPRA Paper 87754, University Library of Munich, Germany.
    17. Malik, Saif Ullah, 2013. "Role of Foreign Private Investment and Remittance in Stock Market Development: Study of South Asia," MPRA Paper 54530, University Library of Munich, Germany.
    18. Naresh, G. & Vasudevan, Gopala & Mahalakshmi, S. & Thiyagarajan, S., 2018. "Spillover effect of US dollar on the stock indices of BRICS," Research in International Business and Finance, Elsevier, vol. 44(C), pages 359-368.
    19. Vo, Xuan Vinh & Nguyen, Dong Phong & Ho, Viet Tien & Nguyen, Trung Thong, 2017. "Where do the advanced countries invest? An investigation of capital flows from advanced countries to emerging economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 51(C), pages 142-154.
    20. R, Sreelakshmi & Sinha, Apra & Mandal, Sabuj Kumar, 2021. "COVID-19 related uncertainty, investor sentiment and stock returns in India," MPRA Paper 109549, University Library of Munich, Germany.

    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:nap:nijefr:2018:p:71-77. 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: Managing Editor (email available below). General contact details of provider: https://www.napublisher.org/?ic=journal&journal=5&info=aims .

    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.