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

Akanbi, Abiodun

doi:10.11648/j.jim.20200904.12

Cited by 2 publications

(2 citation statements)

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“…They find that government debt held by banks crowds-out bank credit to the private sector in developing countries and in high-income countries. Akanbi (2020) examines the impact of government domestic borrowing on private sector credit in Nigeria using data from 2009 to 2018. The study finds a negative relationship between government domestic bond issuance and bank credit to the private sector.…”

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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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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“…Specifically, Abachi and Iorember (2017), Abubakar et al. (2019), Akanbi (2020), Anyanwu et al. (2017), Ewubare et al.…”

Section: Theoretical and Empirical Issuesmentioning

confidence: 99%

Simulating the macroeconomic impact of expansion in total government expenditure on the economy of Nigeria

et al. 2021

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This study examines the impact of further expansion in government spending in Nigeria for the period of 1970–2016. Using a simulation analysis, the model divides the economy into five blocks which corresponds with five key sectors: government, price, supply, external, and monetary/financial sectors of the economy. The simulation scenario involves the average annual increase in total government expenditure, based on the projections of the Economic Recovery and Growth Plan (ERGP) of the Federal Government of Nigeria. The results reveal positive and negative shocks across the sectors. Specifically, the results indicate that the policy fuels the growth of non‐oil output/export and real gross domestic product, suggesting the sensitivity of output to government expenditure. It further reveals a generally positive reaction from the monetary/financial sector variables, worsens inflationary pressure and exchange rate volatility crisis, while the manufacturing sector output also witnesses a significant fall. This study concludes that fiscal expansion in the form of public expenditure would yield a positive impact on the various sectors of the Nigerian economy, and that it would particularly serve as a veritable tool for achieving the diversification drive of the government. Overall, the study confirms the relative efficacy of fiscal policy in Nigeria. The study recommends sustained increase in government expenditure vis‐a‐vis fiscal discipline via the institutionalised regulatory framework. The economy should also be consciously diversified from oil to a non‐oil‐based economy.

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

Cited by 2 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?

Simulating the macroeconomic impact of expansion in total government expenditure on the economy of Nigeria

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