Government Borrowing Behaviour: Implications for Private Sector Growth in Nigeria

Ado, Ahmad Abubakar; Ibrahim, Adeleke Adegoke; Augustine, Ujunwa

doi:10.18488/journal.26.2019.82.68.82

Cited by 5 publications

(3 citation statements)

References 14 publications

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“…Studies that document a negative relationship between credit supply to government and credit supply to the private sector suggest that the negative relationship indicates a crowding-out effect. For instance, Ahmad, Adeleke and Ujunwa (2019) examine the relationship between government borrowing and private sector growth in Nigeria.…”

Section: Literature Reviewmentioning

confidence: 99%

Correlated Lending to Government and the Private Sector: What Do We Learn from the Great Recession?

Ozili¹

2023

SSRN Journal

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Section: Literature Reviewmentioning

confidence: 99%

Correlated Lending to Government and the Private Sector: What Do We Learn from the Great Recession?

Ozili¹

2023

SSRN Journal

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Section: Literature Reviewmentioning

confidence: 99%

Correlated lending to government and the private sector: what do we learn from the Great Recession?

Ozili¹

2023

AGJSR

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PurposeThe purpose of the study is to investigate the correlation between credit supply to government and credit supply to the private sector to determine whether there is a crowding-out or crowding-in effect of credit supply to government on credit supply to the private sector.Design/methodology/approachThe study used data from 43 countries during the 1980–2019 period. The study employed the Pearson correlation methodology to analyze the data.FindingsThere is a significant positive correlation between credit supply to government and credit supply to the private sector. There is also a significant positive relationship between credit supply to government and credit supply to the private sector, implying a crowding-in effect of government borrowing on private sector borrowing. The positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the period before the Great Recession, while the positive correlation is weaker and less significant during the Great Recession, and the correlation further weakens after the Great Recession. The regional analyses show that the positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the African region than in the Asian region and the region of the Americas.Originality/valueThere is no evidence on the correlation between credit supply to government and credit supply to the private sector during the Great Recession.

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“…Using a Structural Vector Autoregressions (SVAR),(see [2]) model to analyse the dynamics of government borrowing behaviour on the growth of private sector in Nigeria provided evidence that government borrowing behaviour has the propensity of impacting negatively on the effectiveness of private sector grow in Nigeria. In a study (see [27]) it was concluded that high interest rate crowds-out (reduces) private sector small and medium scale investment.…”

Section: Evidence From Nigeriamentioning

confidence: 99%

Government Domestic Borrowing and Private Sector Credit Crowding out: Empirical Evidence from Nigeria

Akanbi¹

2020

JIM

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The impact of government domestic borrowing on the private sector credit has been a subject of great interest to researchers in finance. This study looked at the impact of government domestic borrowing on private sector credit in Nigeria. Government domestic borrowing can affect the private sector by crowding out private sector credit directly or indirectly through rising interest rates. The study employed an ex-post research methodology. Secondary data was collected from the Debt Management Office Nigeria and the Central Bank of Nigeria. The study covered a 10-year period from 2009 to 2018. An OLS multiple regression model was used. Government domestic borrowing was proxied by federal government bond issuances as the dependent variable. The deposit money banks' prime lending rates, private sector lending by the banks, the bank's investment in treasury bills and government bonds were the independent variables. The data was tested for heteroscedasticity, stationarity, normality, multicollinearity and serial correlation to examine the robustness of the model. The results showed that prime lending rate has a positive effect on government bond issuance although not significant. The findings also indicated that there is a negative relationship between government domestic bond issuance and the banks credit to private sector. However, this relationship is not statistically significant implying that government borrowing may not have crowded-out private sector. The relationship between government bond issuances and bank investment in treasury bills and government bond is negative although not significant. The findings of this study suggest that government domestic borrowing in Nigeria may have resulted in the reduction of private credit and this works through the credit channel and the interest rate channel.

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Government Borrowing Behaviour: Implications for Private Sector Growth in Nigeria

Cited by 5 publications

References 14 publications

Correlated Lending to Government and the Private Sector: What Do We Learn from the Great Recession?

Correlated Lending to Government and the Private Sector: What Do We Learn from the Great Recession?

Correlated lending to government and the private sector: what do we learn from the Great Recession?

Government Domestic Borrowing and Private Sector Credit Crowding out: Empirical Evidence from Nigeria

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