Debt Burden and Economic Stability in Nigeria

  • Alagoa, S. C. Department of Finance and Banking, University of Port Harcourt, Rivers State, Nigeria
  • Ifionu, E. P. Department of Finance and Banking, University of Port Harcourt, Rivers State, Nigeria
  • Ogunbiyi, S. S. Department of Finance and Banking, University of Port Harcourt, Rivers State, Nigeria
DOI: https://doi.org/10.17605/OSF.IO/MRA5P
Keywords: Debt Burden, Co-integration Economic Stability

Abstract

The study investigated the nexus between debt burden and economic stability in Nigeria between the periods 1981 to 2020. The study developed a model where external debt, domestic debt, external debt servicing cost and domestic debt servicing cost are measure of debt burden while gross domestic product is used as a measure of economic stability. The study scope covers the period 1981 to 2020 where auto regressive distributed lag mechanism was used. We found that Foreign loan stock significantly contributed to economic stability in Nigeria in an inverse manner, Domestic debt stock does not seem to significantly contribute to economic stability in Nigeria, External debt servicing cost does not seem to significantly promote economic stability in Nigeria. Domestic debt servicing cost does not seem to significantly contribute to economic stability in Nigeria. Since result provided us with an evidence to assert that external debt has negatively contributed to economic stability in Nigeria which could be as a result of moral hazard, we recommended that external borrowing should be monitored to avoid diversion and should also be invested on productive capital investment across the nation which is capable of yielding profitable investment returns. By doing this, it significant effect will be positive on economic stability.

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Published
2023-01-11
How to Cite
S. C., A., E. P., I., & S. S., O. (2023). Debt Burden and Economic Stability in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(1), 86-93. https://doi.org/10.17605/OSF.IO/MRA5P
Issue
Vol. 4 No. 1 (2023): January 2023
Section
Articles
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